The bank mortgage loan is one of the most suitable loans for people seeking to purchase properties as it meets their needs. However, there are a few factors to consider before taking this gamble. This article discusses the factors that one should be aware of before deciding on whether to take a bank mortgage loan in Singapore or not
- Credit score
When taking a bank mortgage loan, the lender will look at the borrower’s credit score. A perfect credit score will show that you are capable of paying back the money. As Singapore is a loan-centric society, banks and financing companies have set up their own standards to determine whether or not they will grant loans to customers seeking mortgages. To apply for a bank mortgage loan, you need to be approved by the bank or financing company by providing them with your credit report. The borrower’s credit history will be reviewed and if the borrower owes a lot to other creditors, then the chances of getting a mortgage loan with the bank are low. This is because the chances of you not returning the loan will increase.
- Monthly income
Monthly income plays an important factor when deciding to take or not to take a mortgage loan. It establishes how much you are capable of paying monthly in order to meet your mortgage payment requirements and other living expenses. It is recommended that you meet at least 60% of the expenses such as your mortgage payment, food, water, and electricity. It is advisable to add a buffer of 30% to cover unexpected expenses.
- Rental property experience
Rental properties are more stable than residential properties. If you have experience with rental properties, then chances of getting approved for a mortgage loan are more likely to happen. However, it is advisable that you get a few years of experience in renting before applying for a bank mortgage loan.
- Employment status
Employment status plays an important factor in whether or not you are approved for a bank mortgage loan. The wages of the applicant as well as the reason why they are obtaining the loan will be taken into consideration. If the borrower is employed, they have an advantage, but if they are unemployed, then it will be harder for them to get a loan.
- Credit card debt
Credit card debt is bad as it can affect your ability to pay off your mortgage loan and interest rates. The lender will need to consider your credit card debt before giving you a bank mortgage loan. If the borrower has a lot of credit card debts, the chances of getting a loan are slim.
Conclusion
In conclusion, these are the factors that you need to consider before deciding on whether to apply for a bank mortgage loan. The factors mentioned above will help you in making an optimal decision if you are planning on taking a bank mortgage loan. It is always good to be aware of your financial status and also have some protection from the unforeseen circumstances that may come. Before taking a bank mortgage loan, make sure that you understand it clearly and only decide after having a clearer idea of what you need.