Home buyers urged to do homework before taking up loans

Home buyers should consider their financial situation carefully before committing to a home loan in the market.

This, according to experts who warn buyers against being swayed by new loan offerings.

United Overseas Bank (UOB) drew controversy recently when it introduced a new home loan spanning 50 years, the longest available in the market – which it said is geared towards young executives.

On Sunday, National Development Minister Khaw Boon Wan referred to this initiative as “gimmicks”, and advised Singaporeans to buy a home within their means, instead of opting for long-term loans.

In a reply to Channel NewsAsia, the bank said the majority of its home loan customers, at present, apply for loans of between 20 and 35 years.

Still, industry experts said home buyers should assess their financial situation before choosing the appropriate loan products.

Timothy Kua, director, SmartLoans, said: “I would caution home buyers to do their homework and compare (one bank’s loan packages) with multiple banks’ offerings… compare their interest rates, what the features are of the packages, before making their decision.”

Channel NewsAsia Singapore’s Facebook page saw participants comment that the government should take greater action in making housing more affordable and low-interest housing loans more readily accessible to Singaporeans.

According to the Housing and Development Board (HDB), its housing loan rates are fixed at 2.6 per cent.

HDB said bank loan rates are now at low levels because of unique macroeconomic conditions.

It added that potential home buyers are best advised not to assume housing loan rates will be kept low in the long-term, as most housing loan rates have a variable component pegged to the country’s interbank lending rate.

Source : Channel NewsAsia – 6 Aug 2012

Join The Discussion

Compare listings