Home loans in Singapore are not as standard as they were a few years ago. What a big difference a few years makes. Interest rates have dropped by as much as 80 percent. The principal, or loan-to-value ratio, has remained at about 80 percent of the original purchase price. A property purchase with such a low loan-to-value ratio of 80 per cent (average is 55 per cent) has a monthly mortgage payment of about $1,900 and compound interest of about 4 per cent per month. With property prices around SG$3,000,000, we can assume that about 80 per cent of the purchase price is owed by the borrower, so the compound monthly interest rate is about 4 to 5 per cent. As we saw in the graph previously, the amount of monthly income required to cover such loan payments is very small (see the red curve); what is needed is between SG$1,000 and SG$1,500. Now, most income earners would only need to show a gross monthly turnover of SG$450,000; but this does not include the cost of paying the mortgage loan and taxes. Well, a gross turnover of more than SG mortgage loan: Singapore’s property lender takes $1.5bn hit in flawed debt probe as bank’s profit warning hits.
Property lender Landmark Property Trust said that its bad debts fell by about S$6 million last quarter after regulators investigated its operations. However, it still suffered a S$2.1 million loss for 2016, according to its latest financial results posted on Singapore Exchange.
Landmark Group shares fell 3 per cent to S$2.88 each in midday trading on Wall Street.
The regulator has yet to release full details of its investigation, which involves about 90 Landmark Group companies. Landmark Group is one of the country’s oldest banks, whose share price has lost nearly half its value in the last trading session in June this year.
However, the latest results show that Landmark Property Trust’s losses were smaller than those of its rival OCBC Private. The share price of Landmark Property fell 6.9 per cent to S$2.76 after losing nearly 11 per cent so far this year. Earlier in the year, OCBC Private lost 9 per cent.
“It is too early to tell about what impact the regulatory investigation has had or will have on our business and results for this quarter,” said a Landmark Property
Mortgage loans: It’s essential to take out a loan against the house, so you don’t have to stay in the place, which is not a good option.
Home loan: essential to take a loan to buy a house. The purpose of one is to avoid the high mortgage rates that can be very high in some countries.
Credit cards: the primary purpose is to be able to use them. Sometimes they are helpful for emergencies. In other cases, they can be beneficial in paying off debts. Credit cards are also used to buy things and also to travel.
Savings: Money that you don’t want to spend. To put it in safe investments. A good example is with shares. You invest $1000 with a brokerage firm run by professionals for 7 years. You get an income of $13,000 from this investment. That means $13,000 is worth $13,000. You don’t want to spend it on luxuries. It can also be the reason why you don’t have money for travel.
Taxes: you have to pay a certain amount of taxes. A good example is the amount spent on a surcharge, which is relatively high. The government charges more from everyone.
Debt: Debts are good if you know how to managed it wisely