A guide on choosing between terms in a mortgage when purchasing a home or refinancing one. There are many things to consider other than interest rates.

1. Mortgage Housing Loan
TIP OF THE MONTH
“Get a in-principle approval mortgage to confidently make a buying
offer when you finally find dream home”
What to Look for in a Mortgage
If you already know that you have good credit, you will have a host of In This Month’s Issue
loan options to choose from. Lender could in fact be chasing you. But
to make sure that you have the best deal available, you have to look at
closing costs and the costs of financing. Page 1: What to Look for in
a Mortgage
Financing Costs
Page 2: A Key Question
The most common type of mortgage are pegged to a floating rate. In
some places, these are called adjustable rate mortgages. For more When You Get Your
transparency, it would be a good idea to get one that is pegged to a
Mortgage
publicly available index rate.
Fixed-rate home loans are also popular as they can give borrowers a Page 3: Choosing a Short
certainty on the costs that they will incur. For hardcore personal Term Home Loan
finance planners, this allows them to plan their finances to the exact
cent. If mortgage rates dive in future, they have the option to
refinance to a lower rate as well.
For floating mortgages, borrowers usually will incur lower interest during initial years of the loan while
rates will rise in future. This is suitable for investors with a shorter exit strategy. Home buyers who fully
expect to relocate in a few years will also find these packages favourable to their situation.
~1~

2. Loan tenor
The shorter the tenor of your mortgage is, the lesser you will have to pay in accumulated interest
charges. You will expect to be making a higher monthly repayment though. A lot of home buyers take up
the maximum tenor they are allowed to. But depending on your personal financial circumstance, decide
on a tenor that makes most financial sense to you. If you have no use for extra cash, saving on interest
charges by taking up a shorter tenor can be a good move.
Lenders
Mortgage rates can vary greatly from lender to lender. So
it is in your best interest to get at least 3 different quotes
from 3 different lenders to make a property comparison.
When you have decided on a lender, ask if there any terms
that you have to adhere to when accepting their mortgage
offers. Sometimes, good deals require you to also buy
mortgage insurance together with your loan. You might
also be asked to put up a time deposit with the bank for a
certain amount up to a certain amount of time. You always
have the option f walking away if you are not happy.
A Key Question When You Get Your Mortgage
Whether you are refinancing or purchasing a property, interest rates are no the only thing that matters
in a mortgage. Your decision has to also based on your personal plans and financial objectives. Here are
some questions to ask yourself.
How long do I plan to stay here?
It could be a straight forward answer to a lot of people. But for those who travel and relocate often, this
question can be a real deal-maker or deal-breaker.
The answer can influence which types of mortgage is most suitable for you.
~2~

3. Choosing a Short Term Home Loan
If you have the intention to sell off your property in a few years, mortgage loans with low initial interest
rates will definitely appeal to you even with high closing costs. But for long term property owners, the
choice would be obvious as well.
Mortgage loans with lower initial rates will allow you to pay a lower interest rate and it also means a
lower monthly payment as well. This will play nicely into your plans if you have already decided that this
property you are buying is for a short term stay,
Floating interest rates are usually lower than fixed rates because
lender assume that you will only hold onto the property for a
relatively short period of time. This means that they do not have
to worry about being stuck with a low rate mortgage over the
long term like 30 years. This is also why fixed rates are usually
higher as lenders are mindful that giving you a low fixed rate
could mean huge opportunity costs in future should interest
rates rise.
The risk of floating rate mortgages among mortgage issues is that
index rates fluctuate. And they can rise to levels that you are
unable to afford. The good thing is if you are looking at a short
term investment horizon, you are limiting your costs as you will
be letting go of the property soon. If you really have to take up a
fixed rate mortgage for stability and assurance, at least take up
one with a short lock in period so that you will not incur a hefty
penalty fee when you sell your property after a few years.
~3~