How can I get financing for a 20% down payment on my home mortgage loan in Singapore?
Home ownership in Singapore is a total struggle when it comes to raising money for equity or a down payment. Your home mortgage loan may be secured by real estate, but you must pay the cash portion of the down payment out of your own pocket or your own source of funds. Let’s put it this way. If your loan application qualifies for an 80% loan, then you need to find money and raise the remaining 20%. In Singapore, you must pay out of your own funds the difference between the purchase price of the residential property and the approved amount under each credit facility. How do you think you can achieve this?
Borrow from your company or employer
It is possible to borrow money from your company. Companies have the prerogatives to help their staff and give the money they need for capital. Some corporations are generous enough to loan money to their employees without interest for several months.
Borrow from your parents, friends or relatives
Based on the new decision, you should be careful about taking out more loans, because this will affect your application for credit at the bank, especially the approved amount. At some point, you will probably need money that is not on hand. You can contact your parents, family, friends or relatives who can withdraw funds for you in a shorter time with little or no interest.
You can view your total CPF savings and pay the down payment. If it is not enough, then you should consider paying the balance in cash. Top up your balance later when you pay the amount you have withdrawn from your CPF savings. Buying a home is the biggest and can be the longest financial commitment you can make and should be carefully planned before the actual purchase takes place. Your expected approved loan amount depends entirely on your income, existing debt obligations, available savings and existing expenses.
What can you afford?
To prepare your budget, you should allow for additional expenses such as property taxes, insurance, and some buffer for a possible increase in interest rates. These things you have to pay in cash because you can’t take that out of your CPF savings. This includes covering your other existing financial commitments, such as your current monthly living expenses.
Get your cash savings handy. You need this to look for your down payments when you decide to buy your homes. Remember that CPF savings can only be used for freehold or leasehold land. Once you reach the permitted withdrawal limit, you cannot use the CPF savings and must pay the remaining amount in cash. It’s taboo to tell the seller to wait when you really want that home. Have an immediately available source of cash that is about three to six months of your gross income. The loan principal and repayment take up a large portion of your savings and expected income. This is more relevant when you are out there renting a property while you wait for your new home to be ready. The thing is, you need to prepare for cash flow issues.
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