Things Foreigners Should Consider When Buying Residential Properties In Singapore

Foreigners may discover staying in a hotel room for the entire duration of their stay in Singapore to be a truly costly quandary. If a foreigner owned a residential property in Singapore, the expensive dilemma could have been averted.

The Singapore government officials do not prevent expatriates from owning residential properties in the country.

The Residential Property Act of Singapore basically stands behind Singapore nationals in their purchase of their own residential properties by giving affordable prices. In addition, this Act supports foreign nationals who are considered by the Singapore government to have made significant contributions to the economic prosperity of the city-state in their wish to purchase residential properties within the country.

Even without any permits or sanctions from the Singapore government, a foreigner may acquire non-restricted residential properties. The following are residential properties that belong to the non-restricted category:

- apartment units within a structure that is not higher than 6 floors – condominium units in approved condo development sites under the Planning Act – a lease term on a restricted residential property; the agreement must not exceed 7 years

Foreign nationals who want to buy all units in an apartment or condo in an approved development site must have prior sanction from Singapore’s Minister for Law.

Likewise, a foreign national without any prior approval from Singapore’s Minister of Law cannot acquire residential properties that are classified as restricted.

The Residential Property Act of Singapore specifies these restricted residential properties as follows:

- an empty residential land – town houses, separate or semi-detached homes, or terraced houses standing on residential lands – properties not authorized for condo development under the Planning Act

If an expat intends to own a restricted residential property, he or she is obliged to fill out a request form and submit this, together with other required documents, to the Singapore Land Authority. This branch of the government is responsible for receiving the requests of the expatriate regarding the acquisition of a restricted residential property. The Singapore Land Authority will assess and approve or disapprove the application, depending on the virtues of the expatriate’s qualifications.

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Never Regret Your First House Purchase: Here’s How

Congratulations! You are now financially viable and the moment is right for you to make your first house purchase. So, you fell in love at first sight at a house you saw in a certain neighborhood that you feel will be close to perfect in raising a family in your near future.

But, hold on for a moment. Before you shell out your hard-earned income on the down payment, you must consider several essential factors. Acquiring a house is probably going to be the most expensive purchase you are going to have in your life, after all. You would not wish to regret this decision.

A lot of people let their emotions to govern their decisions when it comes to purchasing homes for the first time. They dismiss glaring matters that should have been addressed right at the start. And then, when the excitement of their acquisition wears off and they experience the inconveniences caused by the glaring issues that they should have looked into earlier, they become disillusioned and angry with their new home.

Therefore, to rescue yourself from the heartaches of wrong decisions, here are several matters to consider before you buy the house you have set your heart on.

1. Consider the neighborhood

At your first visit, a neighborhood may look safe and quiet. if you intend to buy a house set in a certain neighborhood, try visiting the place at different times of the day to get an overall picture of the place and to get to know the community before making a final decision.

2. Consider the community

We know that we could safely raise our kids in a neighborhood where residents take care and look out for each other.

3. Consider the structural defects

The structure you are seeing might be the house of your dreams. It is still to your advantage, nonetheless, to closely check the house for signs of defects, leakages, plumbing problems, or pest invasions.

4. Consider the space

If you wish to have a family in the future, your new house must have enough space for the additional members of your growing family.

5. Consider the price

Your bank or housing loan agency will assess your income, credit history, employment track record, your available assets, etc., and based on the information will determine the amount that they will be able to lend you. Make sure that you secure a pre-approval of the mortgage so that you will know if you would be able to afford the house of your dreams.

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Refinancing Your Home

When it comes to mortgages, numerous people do not refinance. A substantial number are unaware they have the choice of switching their loan to different financier; others are simply apathetic. They stick with their very first loaner and the “reward” for such loyalty tends to be higher interest rates. Due to the magnitude of mortgages and the tenure that the home loan is amortised over, the interest we are talking about here can well stretch from 1000′s to hundreds of thousands of dollars. Take a look at the following components to see whether it’s time for you to consider refinancing.

Current Mortgage Interest Rate

It is decidedly a good indication for you to research refinancing when your current interest rate is higher than available loan packages on the market. A first step to take is to go back to your existing bank or financial institution and ask them to revise your package, otherwise known as repricing. If your lender comes back with an offer, it will usually be better than your current one. You can then compare this offer with offers from other lenders to see whether you should switch or stay put.

Lock-in and Clawback Periods

When you take up a mortgage, there may be a lock-in period where your mortgage lender will charge you a penalty fee, commonly a percentage of your outstanding loan amount, if you were to fully repay your mortgage. Almost all housing loans also come with a clawback period where the lender will claim back “freebies”, such as legal subsidies, that they “gave” you when you take up your mortgage (Note: lock-in period is separate from clawback period). It may not be commendable for you to refinance due to such costs.

Loan Quantum

The larger your mortgage amount, the greater your savings for the same reduction in interest rates. For example, 1% on a loan of S$100,000 is much less than 1% on a loan of S$500,000. However, fixed cost to refinancing, which represents mainly of legal fees, do not vary much with loan quantum. The difference between your current and refinancing interest rates, therefore, has to be bigger for a comparatively smaller mortgage as fixed cost eats into a more fundamental share of your interest rate savings.

Perceived Interest Rate Movements

Your view on how interest rates is moving can be a factor when considering whether you should refinance. If you are presently on a fixed rate package and think interest rates are dropping, you may want to refinance to a floating rate package. Conversely, if you are on floating rates and believe interest rates are rocketing, changing to fixed rates may be a solid choice.

Personal Financial Assessment

If there is a change in your financial state, you may want to change your package particulars via refinancing. For example, you are opening your own company and do not want unpredictability in other areas. Give some thought to taking up a fixed rate package. Maybe you want cash to invest in another place. Consider increasing your loan quantum. Or your monthly income has increased and you want to reduce interest loan payments. Contemplate reducing your loan tenure.

If looking through this article is giving your a headache or you simply want to save yourself the trouble, contact us for a non-obligatory loan interview. Our professional advisors not only frees up your time but also do not charge any fees to help you get the best deal. Refinancing does not have to be a tedious process.

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Reinvest Your Home

Many people are unaware that they have the option of switching their loan to other investor; others are simply uninterested. They tend to be loyal with their very first lender but they don’t know that such loyalty will bring higher interest rates. Because of increasing number of housing loans and amortization period, the interest can range from thousands to hundreds of thousands of money. Below are some considerations when reinvesting your home.

Latest Interest Rate

When your current interest rate is higher than available housing loan packages on the market, it is time for you to consider reinvesting. Go back to your current bank or financial institution and ask them to reprice your loan package. Your lender might give you an offer. Make a comparison between this offer and with offers from other lenders to see whether you should switch or stay put.

Lock-in and Clawback Time Periods

When you get a housing loan, there may be a lock-in period wherein your mortgage lender will charge you a penalty fee, maybe a percentage of your outstanding loan amount, if you were to fully repay your loan. Most of housing loans have a clawback period wherein the lender will claim back “giveaways”, such as legal subsidies, that they “gave” you when you take up your housing loan. Lock-in period is different from clawback period. Thus, it is not advisable for you to reinvest due to these extra costs.

Loan Quantum

The higher the amount of your loan, the greater your savings for the same decrease in interest rates will be. Yet fixed cost to reinvesting does not vary much with quantum loan. The difference between your latest and reinvesting interest rates has to be larger for a relatively smaller loan as fixed cost consumes into a more considerable portion of your interest rate savings.

Distinguish Interest Rate Movements

Your analysis on how interest rates are moving can be a factor when considering whether you should reinvest. Try a floating rate package as an alternative to fixed rate package if the interest rates are decreasing. Conversely, if you are on floating rates and believe interest rates are increasing, switching to fixed rates may be a good choice.

Personal Financial Evaluation

Try to get a fixed rate package. Consider increasing your loan quantum. When your monthly income increased and you want to decrease interest payments, try to reduce your loan tenure.

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Choosing Between Fixed And Variable Interest Rates – Darn What A Choice!

Once you resolve to take up a home loan, the immediate thing that tempests your mind is selecting between fixed and floating rate of interest. It is easy to get stuck at this point if you are not financially trained.

Usually, when the media splashes reports on banks increasing mortgage interest rates in and their impact on Monthly Installments, you may take for granted that it is better to opt for fixed home loan rates. In fact, your banker may also counsel you to go for the same.

Now ideally as it should be, we take for granted that once you select fixed rate plan for yourself the rate of interest will remain unaltered for the entire period you have fixed the interest rate for irrespective of any incidental increase in the same. But actually this is not always the situation.

Here we demystify the nature of fixed interest rate housing loan transaction for you so that you can make an informed decision over the matter.

* Check the small print of a loan. The bank has the right to serve you 30 or 60-days notice that it intends to increase its rates.

* The bank’s first-year rates are binding on the bank only for that short period of 1 or 2 months. The 2nd-year home loan rates are not binding at all. Neither are the bank’s 3rd-year loan rates.

* Force Majeure Clause

So, while you read your mortgage contract, you can spot clauses like this:

“Provided further that from time to time, the bank may in its sole discretion alter the rate of interest suitably and prospectively on account of change in the internal policies or if unforeseen or extraordinary changes in the money market conditions take place during the period of the agreement.”

This is called Force Majeure Clause that enables the bank to undertake appropriate alterations in the interest rates on home loans they sanction to their borrowers.

So remember to look at refinancing every couple of years so that you do not pay too much. If you select a good mortgage broker company you can save a lot of money over the life of your housing loan and in most cases the consulting cost is free.

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Refinancing Your Home

Even though refinancing a mortgage can save you 1000′s of dollars you will be startled that not that many individuals actually take the time to do it. If you considered the time it takes and calculate the cost saving and compare that to how much you get paid per hour it could be like not going to work for several weeks. Consider the following aspects so that you can see how easy it is to refinance your loan today.

Current Interest Rate

It is definitely a positive indication for you to explore refinancing when your current interest rate is higher than available mortgage packages on the market. A first step to take is to go back to your current bank or financial institution and ask them to revise your package, otherwise known as repricing. If your lender comes back with an offer, it will ordinarily be better than your current one. You can then compare this offer with offers from other lenders to see whether you should switch or stay put.

Lock-in and Clawback Periods

When you take up a housing loan, there may be a lock-in period where your housing lender will charge you a penalty fee, usually a percentage of your outstanding loan amount, if you were to fully repay your mortgage. Almost all mortgages also come with a clawback period where the lender will claim back “freebies”, such as legal subsidies, that they “gave” you when you take up your mortgage (Note: lock-in period is separate from clawback period). It may not be worthwhile for you to refinance due to such costs.

Loan Quantum

The larger your mortgage amount, the larger your savings for the same reduction in interest rates. For instance, 1% on a loan of S$100,000 is much less than 1% on a loan of S$500,000. However, fixed cost to refinancing, which comprises mainly of legal fees, do not vary much with loan quantum. The difference between your current and refinancing interest rates, therefore, has to be bigger for a relatively smaller housing loan as fixed cost eats into a more substantial part of your interest rate savings.

Perceived Interest Rate Movements

Your view on how interest rates is moving can be a factor when considering whether you should refinance. If you are currently on a fixed rate package and think interest rates are dropping, you may want to refinance to a floating rate package. Conversely, if you are on floating rates and believe interest rates are skyrocketing, switching to fixed rates may be a good choice.

Individual Financial Appraisal

If there is a change in your financial state, you may want to vary your package particulars via refinancing. For instance, you are beginning your own business organization and do not want unpredictability in other areas. Give some consideration to taking up a fixed rate package. Maybe you want cash to invest in different property. Consider increasing your loan quantum. Or your monthly income has increased and you want to reduce interest loan payments. Consider reducing your loan tenure.

If looking through this article is giving your a headache or you simply want to save yourself the trouble, contact us for a non-obligatory home loan consultation. Our professional advisors not only frees up your time but also do not charge any fees to help you get the best deal. Refinancing does not have to be a boring process.