When buying a home in Singapore, a housing loan is a choice almost everyone makes. This is because Singapore allows everyone to take out a loan to buy property—whether you are a local resident or a pure investor not living in Singapore—as long as you can prove you have sufficient income and the ability to repay, you can apply for a housing loan.
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A Step-by-Step Guide to Using a Mortgage Calculator
The calculation formula behind a mortgage is very complex, but our mortgage calculator can make this mathematical problem quick and simple.
First, fill in the necessary Property Status—new purchase or refinancing, property type, and status.
Next, in “Loan Amount,” enter the amount you need to borrow. Please note: this is not the purchase price of the house or its current value. If you’re unsure how much you need to borrow, you can calculate it based on the house’s purchase price/home equity and the down payment amount. The down payment is the cash you pay upfront for the house, and home equity is the value of the home minus what you owe.
Next, you need to enter the “Loan Term.” The term we usually choose is 30 years, but you can choose 20, 15, 10, 5 years, or any duration—our calculator will compute the repayment schedule for various terms.
Finally, in the “Current Loan Interest Rate” box, you can enter the rate you expect to pay. The calculator is pre-filled with the current average rate, but you can adjust it. The interest rate will vary depending on whether it’s a new home purchase or refinancing. You can also check the box “Please help me calculate my monthly payment based on the current best interest rate.”
After entering these numbers, you can see the “Monthly Repayment” amount on the right, as well as a detailed breakdown of the repayment plan, including the monthly “Principal,” “Interest,” and “Remaining Principal.”
What Are Monthly Mortgage Payments?
Each month, your mortgage payment consists of “principal” and “interest.”
- Principal is the amount you borrowed from the lender.
- Interest is the fee the lender charges you for borrowing the money. The interest rate is expressed as an annualized percentage.
- Remaining Principal is the amount of the loan you still owe the lender.
Understanding this concept can help you assess your mortgage affordability.
Monthly Payment Formula
Want to know your monthly mortgage payment amount? For math enthusiasts, we have a formula to help you manually calculate your mortgage payment, which is also the logic behind our mortgage calculator:
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M Monthly Payment P Principal Loan Amount r Monthly interest rate (Banks usually provide an annual interest rate, so you’ll need to divide that number by 12 to get the monthly rate. If your interest rate is 5%, your monthly rate would be 0.004167 (0.05/12=0.004167)). n Number of payments over the life of the loan (Multiply the number of years in your loan term by 12 to get the number of loan payments. For example, a 30-year fixed mortgage will have 360 payments). |
This formula can help you calculate whether you can afford your dream home. Using our mortgage calculator can save you a lot of trouble and help you understand if you can or should adjust your loan term. Of course, we recommend that you consult with our mortgage specialists for a detailed understanding and evaluation to ensure you get the best possible mortgage deal.
How Can a Mortgage Calculator Help You?
When choosing a house, determining your monthly mortgage payment is crucial—it’s likely to be one of your largest recurring expenses. When you take out a loan for a home purchase or refinance, our mortgage calculator can help you estimate various mortgage possibilities. You can explore different scenarios simply by entering different information into the calculator.
How the calculator can help you make decisions:
- Choose the right loan term for you. If you’re on a tight budget, a 30-year mortgage might be the best choice—the monthly payments are lower, but you’ll pay more in interest over the life of the loan. If you have a more generous budget, a 10-year mortgage will reduce the total interest you pay, but your monthly payments will be higher.
- Decide whether to refinance. With interest rates rising due to various factors this year, mortgages will cost more in interest, and those with floating-rate mortgages may already feel the pinch. This is where home loan refinancing comes in handy. Using a mortgage calculator can help you determine if refinancing can save you money.
- Is it beyond your means? If your monthly expenses are becoming a struggle, you can use the mortgage calculator to determine if your monthly payments exceed what you can comfortably afford.
- How much to pay as a down payment. Although the default is often to borrow up to the maximum Loan-to-Value (LTV) limit (80% or 75% of the purchase price/property value), you don’t have to stick to this. A larger down payment can reduce the overall interest paid.
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