Having their own property is one of the goals that individuals who are entering the twilight of their working career have in mind. However, the idea of attaining it via instant pay out may seem a bit out of hand. As an alternative, they result to acquiring a mortgage loan, or simply mortgage.
What is a mortgage loan?
Mortgage loan is used either by purchasers of real property to raise funds to buy real estate. Alternatively, it is also used by existing property owners to raise funds for any purpose, while putting a lien on the property being mortgaged.
Mortgage lending is the principal means used in many countries like Singapore to finance private ownership, whether it be residential or commercial property. It can be the most practical way to acquire your dream property.
According to Value Penguin, as of September 2017, the average interest rates of home loans in Singapore was around 2%. The current mortgage rates in Singapore can vary depending on whether your property is a HDB flat, a private residence, or a building under construction. But rates can also be different for home loans that are used to refinance an existing home loan. So if you’re out looking for the lowest mortgage rates in Singapore, it might be helpful to check on the following basic components of a mortgage loan.
Property
Basically, this is the physical residence being financed. This pertains to what you are planning to offer which will act as collateral in exchange for the money you are borrowing to finance the mortgage for a house.
Mortgage
Legally defined, mortgage is a legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor’s property, with the condition that the agreement of title becomes nullified upon the payment of the debt. It will become the security interest of the lender in the property, which may entail restrictions on the use or disposal of the property.
Borrower
This is you, the person borrowing who either has or is creating an ownership interest in the property.
Lender
This is usually a bank or other financial institution but it can also be an investor who owns a business interest in the mortgage.
Principal
This pertains to the original size of the loan or the outstanding balance of your mortgage. It is the amount borrowed from the lender, minus the amounts repaid to the lender, and which have been applied to the reduction of principal. As monthly mortgage payments are made, the mortgage principal is reduced.
Interest
This is the financial charge for use of the lender’s money that must be paid in addition to the principal. It is connected to remaining interest rate levels and may be adjustable or fixed. Fixed rate mortgages have identical amortized payments for the life of the loan.
Foreclosure or repossession
Housing repossession and foreclosure are legal processes that both refer to a creditor taking away your home.
Foreclosure is a legal procedure in which a lender tries to regain the remaining balance of a loan from a borrower who has hold back from making payments to the lender by forcing the sale of the asset used as the collateral for the loan.
Meanwhile, repossession of the property doesn’t typically happen during the foreclosure process. Assets can only be repossessed if the lender was the seller, which is often the case with cars but not usually houses.
Completion
This is the legal completion of the mortgage deed or the start of the mortgage. In simple terms, this is the day when all the money changes hands, you get the keys to your new place, and can start moving in.
Redemption
The equity of redemption refers to the right of a mortgagor in law to redeem his or her property once the debt secured by the mortgage has been discharged
Mortgage & Property 