Understanding Your Singapore Property Mortgage
What is a Property Mortgage?
A property mortgage, or housing loan, is a loan taken from a financial institution (like a bank) to finance the purchase of a property. The property itself typically serves as collateral for the loan. You repay the loan, plus interest, in regular instalments over an agreed period, known as the loan tenure.
Key Factors Affecting Your Mortgage
- Loan Amount (Principal): The total sum borrowed. This is usually a percentage of the property's price, determined by the Loan-to-Value (LTV) ratio. Our calculator assumes a 75% LTV if you input the property price, meaning a 25% downpayment.
- Interest Rate: The percentage charged by the lender on the loan amount. Rates can be fixed or floating (variable). Higher rates mean higher monthly payments and more total interest paid.
Note: The interest rate used in this calculator is for estimation purposes. Actual rates vary between banks and depend on market conditions and individual eligibility. It's recommended to check with major banks in Singapore or consult a reputable mortgage broker for the latest and most suitable rates for your situation. - Loan Tenure: The duration over which you repay the loan. Longer tenures result in lower monthly payments but higher total interest paid over the life of the loan. In Singapore, tenures can go up to 30-35 years, subject to age and property type.
Fixed vs. Floating Interest Rates
Fixed Rates: The interest rate remains constant for a set period (e.g., 2-5 years), offering predictable monthly payments. After this period, it usually converts to a floating rate.
Floating (Variable) Rates: These rates are typically pegged to a benchmark plus a spread. Common benchmarks in Singapore include SORA (Singapore Overnight Rate Average). Monthly payments can fluctuate as the benchmark rate changes. They might start lower than fixed rates but carry more uncertainty. For more information on SORA, you can visit the Monetary Authority of Singapore (MAS) website.
Choosing between fixed and floating rates depends on your risk appetite and market outlook. This calculator allows you to input any rate to see its impact.