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Understanding Home Equity Loans / Cashing Out On Your Property

January 26, 2018

Some Questions You May Have About Home Equity Loans In Singapore

Why Should You Consider Taking A Home Equity Loan/ Cashing Out Of  Your Property?

Lower interest rates! Home Equity Loans allows you to take a loan out on your home, at an interest rate that is at the time of writing at 1.50%, which is much lower than the interest rates for Personal Loans, Credit Cards or even Car Loans. You can then use the cash you take out to do any number of things at your own discretion.

Why Are Home Equity Loan Interest Rates So Much Lower Than Other Types Of Loans?

This is principally caused by the type of collateral you are putting up for your loan. Home Equity Loans are secured by your home, a large asset which in general is thought to be appreciate with time. Compare this against a car loan which is secured by your car, which depreciates year on year. Credit cards and personal loans have the highest interest rates because they aren’t secured by anything at all, just the creditworthiness of a customer. This is a key factor in the reason why interest rates are substantially lower for home equity loans compared to other types of loans.

Sounds Great, So Can I Cash Out On My HDB Flat?

Unfortunately, you can’t cash out on a HDB flat according to HDB regulations. In the Singapore market, only private properties are allowed to take out home equity loans.

How Much Can I Borrow With A Home Equity Loan?

How much you can borrow through a home equity loan/ cash out is determined by several factors including:

– Your Total Debt Servicing Ratio (TDSR)
– Any outstanding loans/ obligations you have on your property
– The value of your property
– Your creditworthiness

To find out more about how much you might be able to borrow, you might consider talking to a Mortgage Broker like EasyRates.

So How Do I Find The Best Home Equity Loan/ Cash Out Interest Rates?

A great way to find a good home equity loan for you is to use a mortgage broker like EasyRates! Why a Mortgage broker and not a bank you might ask. Well here are a few reasons you can save thousands of dollars by using a mortgage broker instead of going straight to a bank:

– Impartial Advice: Unlike bankers who are obligated to sell their bank’s products, mortgage brokers don’t favour one bank or another and can guide you to the best loan packages for you wherever they may be. It is also important to note that all banks in Singapore pay the same commissions to a broker, so there is no reason for a mortgage broker to favour one bank over another.

– Its Free: Mortgage brokers do not charge you for their services. They instead are paid by banks for each successful referral they make.

– Saves You Time: Mortgage brokers have rates from every bank on hand so you won’t have to go from bank to bank enquiring about the relevant rates.

– Exclusive Rates: Mortgage brokers may have access to exclusive rates that you as a consumer may not be able to get simply by walking into a bank branch.

Looking for a mortgage broker to help you with your home equity loan needs? Contact us here for more information!

With that we hope you’ve been left with a better understanding of home equity loans/ cashing out on your property. If you found this article useful, share us on Facebook! Think we missed something out? Leave us a comment in the section below!

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Wayne Quek

Wayne is a Chartered Financial Analyst (CFA), and holds a Bachelor of Business Management (Finance) from Singapore Management University (SMU). A successful Relationship Manager during his time with DBS and HSBC, Wayne used his expertise in financial markets to help his clients build up comprehensive investment portfolios. The entrepreneur is also the founder of Home Loan Whiz, a mortgage consulting firm that assists clients with selecting ideal mortgages for their needs.

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  1. Hoyt Montell September 15, 2018

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