When assessing the housing loan they are willing to lend, banks may assume that up to about one-third of your gross monthly income will be used to pay debts (which includes housing instalments). Each bank may have its own credit assessment guidelines.
But should you borrow the maximum loan? Do remember that it’s possible you may be spending the next 20 to 30 years (or even more) paying off the housing loan. There are many factors that may affect our ability to keep up with the instalments. |
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At the least, we recommend that you do your sums first before deciding on your choice of home (especially if you’re buying a private property because they are more expensive than HDB flats).
Take note: While a longer repayment period means you’ll be paying lower instalments every month, your total interest payment will be higher.
For example, for a $400,000 housing loan with an interest rate of 4% pa, 25% of your total payment will be for interest charges if you take a 15-year loan. But if you take a 25-year loan, 37% of your payments will be for interest!
|
Repayment Period (Years) |
Monthly Instalment ($) |
Total Repayment (Principal + Interest) ($) |
Total Interest ($) |
% of Interest in Total Repayment |
|
15 |
2,959 |
532,575 |
132,575 |
25% |
|
20 |
2,424 |
581,741 |
181,741 |
31% |
|
25 |
2,111 |
633,404 |
233,404 |
37% |
We suggest that you spend some time to explore the following online calculators.
Estimate how much you may be able to afford for housing
Estimate the total payment (loan amount plus interest) for your housing loan
Information on HDB’s mortgage loan scheme for purchase of new flats and resale flats | |