Is 5.5 Interest Rate Great for Mortgage
We all dream of being homeowners, a goal we want to be realized sooner than later. But what does it take? Sacrifice, hard work, and determination! Yes, the three qualities can only translate into a home after being converted into money first. How much are we talking about? How much does a house in Singapore cost?Taking a mortgage is a route many love to follow. But what are the costs? Is it a better option to acquire mortgage? Let’s pick 5.5 for a mortgage interest rate. Isn’t that too high? Or is it low?Well, different factors affect the rate a mortgage lender will give you. Let’s look at these factors first.
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Factors Affecting Mortgage Interest Rates
Different lenders will adjust mortgage rates based on various factors. They know. We want you to know too.
Deposit
It is obvious the higher the deposit, the lower the interest you are likely to get. The reasoning is this; the risk involved is more economical because you have a higher stake.
Normally, borrowers paying a down payment of 20% or more are highly favored. Any percentage less than 20 will require you to purchase a Private Mortgage Insurance (PMI). That is more costly.
Time
The time between when you acquire a mortgage and the time you finish repayment also influences the interest rate you get. With that in mind, remember the more extended the mortgage term, the higher the interest rate. This will translate to increased overall costs. Although, with shorter periods, you will have to bear with high monthly payments.
Fixed or Adjustable?
Interest rates vary in types. There are two kinds; fixed and adjustable. Whichever you choose determines the interest rates you will get. For the fixed-rate, what you get does not fluctuate. With this rate, you will pay a constant amount. Although, the other factors will determine the exact rate you will be charged.
For the adjustable rate, you will start with a low-interest rate. This rate will change with time.Normally, it increases. Therefore, the type of interest rate you choose will determine the rate you repay with.
Credit Rating
A mortgage is a risk. Therefore, precaution has to be taken to mitigate any imminent loss. On that note, lending companies look at the borrower’s credit score. Your credit rating shows how reliable you are.High ratings imply reliability. Therefore, even if given a lower interest rate, the lender is sure the amount will be paid back in full and in time. That is why one is advised to check their credit score before even thinking of applying for a mortgage.
Valuation
The price of the home you are purchasing also determines the interest rate you will get. The interest rates will increase or reduce based on the amount of loan borrowed plus the price of the home. If the rates are incredibly high, you may decide to go to the website and borrow money online.
Location
Some locations are so prime that lenders can’t help but increase the interest rate. Others are really not highly regarded locations forcing mortgage issuers to reduce the interest rate by a little margin.Therefore, be sure to spend more money in the form of interest for homes on prime land.
Mortgage Rates in Singapore
Singapore is home to one of the most costly houses in the world. On midpoint, the average interest rate of acquiring a home in Singapore was 2.2% as of 2019. Although this rate varies based on different factors. If your house is HBD flat or a building still under construction, or even a commercial premise, expect different interest rates on those categories.
First-year Interest Rate Comparison
For HBD homes, expect ratios of between 2.15% and 2.45% for a fair price. Compared to private property, you will spend a little more. Private property has an average rate range of 2.16% and 2.54%.
Rest Rates
Fixed Rates vs. Floating Rates
The Bottom Line
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