Once again, this is an article that all existing home-owners and aspiring home-buyers should never miss. Many Singaporeans tend to focus on the interest rates offered in the market when shopping for home loans. However, the biggest nightmare for home-owners is not the rising interest rates. After all, even if the interest rate of your home loan did spike overnight, the monthly installment amount is not going to be catastrophically high. Instead, the scary thing about home loan is when you are faced with margin call due to the loan-to-value (LTV) ratio.
What is margin call? What is loan-to-value (LTV)? Why do they matter and how could they possibly lead to your financial downfall? Once again, I am putting a disclaimer that this article is not meant to be a financial advice. I am sharing this article based on my home-buying experiences. If you have any doubts, please seek advice from your property agent or financial adviser.
If you are using HDB loan to finance your property, then you can sleep well as you would not be subjected to margin calls. This is because HDB loan is a form of concessionary loan granted to Singapore citizens. Unlike banks, HDB would not force home-owners to top up the loan difference in the event that the value of the HDB flat plummeted.Read more