Minimum loan amount?

[Cyberkinetic]

Hi,

am house hunting for my house now to be ready for my wedding next year. Our combined salaries does not qualify us for a HDB loan, so we're now looking at bank loan arrangement.

I notice when going to various bank websites that the minimum amount for loan is usually set at $100k, but I'm looking more at approx. $50-60k at the most since we've both been working for quite a few years and have a fair amount of money in CPF.

Does anyone know which bank offers loan of less than $100k? Any advice? Thanks.

[HalcyonVI]

It's better to take up a higher loan first, then pay down your loan using your CPF. This will open up more loan options as the initial loan amount is greater than 100K and the legal subsidy you get should be higher than the interest you are paying as a result of the higher loan. You will, of course, have to choose a package that allows you to pay down your loan without penalty.

[Cyberkinetic]

Hi, thanks for the advice.

Meaning to say, if my house is $320k, and I have say $250k in total CPF... I shouldn't take just a loan of $70k, but instead ask for one which is say around $100k(minimum) or so...but the loan package should allow me to pay off more than what is required as monthly installment as and when I chooses without penalty? Would that mean my loan repayment period will be shorten or the amount that I have to pay per month is lessen? Any difference in either arrangements?

Thanks.

It's better to take up a higher loan first, then pay down your loan using your CPF. This will open up more loan options as the initial loan amount is greater than 100K and the legal subsidy you get should be higher than the interest you are paying as a result of the higher loan. You will, of course, have to choose a package that allows you to pay down your loan without penalty.

[HalcyonVI]

You got the gist. In fact, you may want to take up an 80% loan to max out the legal subisidy. Assuming a housing loan interest of 3%, the monthly interest is only around 0.25% (3% divided by 12). The legal subsidy is normally 0.4%, higher than the monthly interest. Remember to give prepayment notice immediately upon loan drawdown though. Once you pay down your loan, you will normally have a choice of reducing your monthly instalment and maintain the loan tenure or reduce the loan tenure and maintain your monthly instalment