By: Zeng Han Jun, CPCG, Singapore

A home loan is a loan that is secured by a property, which can be residential or commercial. If you are planning to apply for home loan then you should take in account a few important factors like loan amount, loan tenure, repayment rules, interest rate etc. There are many finance terminologies which can make the people confuse, especially when you plan to get a home loan, obviously all of us are not finance people. Therefore, some tips and basic knowledge can also help you in the selection of the right housing loan, or you can speak to a mortgage broker and have him or her to talk you through the loan application.

There are many banks and financial institutions, where you can apply for this type of loan. Alternatively you can apply your housing loan through a mortgage broker and they normally offer a wide range of loan products from all the banks plus their service is free. The packages that are offered through a mortgage broker is the same as those that are offered through the bank, just that you can negotiate for lower legal fees, do a comparative analysis of all the existing loans and have your mortgage planned as well.

Similarly, housing loans are also available in various types depending upon the factors mentioned above. Therefore, always select a loan by considering the features of the loans. Banks can provide you with these loans as well, but I think it is always better to go to a mortgage company because they exclusively deal with mortgage financial services. After the selection of a renowned company from the market, the next step is the selection of the interest rate. The major factor, which can make differences among the housing loans of various companies, is the interest rate and it should be very sensibly selected. For this, you should have a little knowledge about the market interest rates and the rates offered by other companies. There are two types of interest rates, fixed rate and the floating rate but as nowadays, market is very uncertain, therefore I prefer fixed interest rate loans because of the fact that they can save you from the risk of interest rate fluctuations.

The amount of the loan and the interest payments are distributed over a period of time and the longer will be the maturity of the loan the higher will be the number of payments and smaller will be the amount of each payment. Banks and finance institution offer different loan tenures like 10 years, 20, 30 and so on. Therefore, you have to adjust every installment within your income range, so carefully select the maturity period of loan.

Housing loans can make your dream home desires come true and just in a couple of weeks you can get the approval of the housing loan. My advice is “Never take more than you can receive.” Therefore, have a mortgage broker to plan out the loan amount that you can undertake, and make sure that you can service that level of debt.

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