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Purchasing a house can be a valuable form of investment. However, it requires considerable thought and careful financial planning before taking on such a big step. If owning a house is part of your financial goal, then you’ll need to know whether you can afford from your income and savings. You can use our housing loan calculator to find out your monthly instalment, total repayment and total interest for any particular housing loan packages.
 
 
Most people take on a housing loan from a banking institution which offer different loan packages to cater for the needs of different users. Be sure to compare rates and choose a loan based on its features, fees and charges as well as the quality of service offered by the institution. Also, make sure you have all the required documents for your application by making a checklist.
 
 
You can choose from either term loan, overdraft facility or a combination of both based on your situation. The table below illustrates the differences:
 
 
Term Loan
Overdraft Facility
Combination
   
 

Monthly instalments are fixed
for a period of time
   

Payments consists of the loan
amount plus the interest
   
   
   
 

Credit line granted based on
predetermined limit
   

No fixed monthly instalments as interest is calculated based on daily outstanding balance
   

Allows more flexibility to repay
the loan
   

Interest charged is generally
higher than term loan
   
   
   
 

Eg. 70% as term loan and
30% as overdraft
   

For the term loan portion,
regular loan instalments are
required
   

For overdraft portion,
repayment is flexible
 
 
 
Depending on the market value of the property, the margin of financing can go as high as 95% of the property’s value. This is assessed on factors such as:
 
Type of property
Location of property
Borrower’s age
Borrower’s income
 
 
Commonly, the length of a housing loan can last up to 30 years or when the borrower reaches the age of 65, whichever is earlier. Each loan package differs from one institution to another, so do not base your decision on any single feature. Look out for features like flexible repayment terms or graduated payment schemes to suit your repayment capability.
 
 
When you purchase a house, it’s extremely important that you provide insurance coverage for your home as this acts as a form of financial security for you and your loved ones. Consider the following insurance products:
 
House Owner/Fire Insurance Policy
Mortgage Life Assurance (MRTA)
 
When taking up a housing loan, you’ll need to be aware of your rights and duties as a borrower and that of the banking institution’s as you will be dealing with the banking institution for a long period of time.
 
 
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For more information on housing loans, download our booklet or visit our FAQs to help you with your queries.
 
 
 
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