How To Calculate Housing Loan Monthly Instalment In Singapore

Written by Shannon Wong on February 19, 2023

If you anticipate securing your dream home or refinancing, you may consider taking a housing loan.

With a home loan, you will have to service your loan monthly on a stipulated period of time agreed upon with your lender.

Understanding how to repay the loan will help you stay calm within the repayment period. This is possible with the use of a monthly instalment calculator.

An instalment calculator will not only help you estimate your monthly pay, but will greatly assist you in knowing what type of a home you can afford.

As long as you stick to your monthly repayment schedule, your housing loan decreases, and you can be able to pay the full loan amount at the end of your servicing term.

A housing loan calculator in Singapore should help you plan your finances to allocate your loan expenses accordingly.

If using a monthly instalment calculator for the first time, it would help to understand how to estimate your monthly loan repayment.

Here is a guide to help you know how to calculate housing loan monthly instalment to finance your property purchase.

What Is A Mortgage Repayment?

Mortgage repayment is the amount you pay a lender in multiple monthly payments until you repay your principal amount and any accrued interest in full.

Before you apply for any housing loan, you need to know what you will be paying every month and whether you can service such an amount until the end of your repayment period.

Ahousing loan calculator in Singapore works best in estimating what to pay.

It would be best to plan to own your new home comfortably without being overwhelmed. That’s when monthly instalments make sense. A mortgage calculator helps you know what you can afford to pay monthly until you pay off your debt.

How To Calculate Housing Loan Monthly Instalment

Whether you want to refinance your current home or need a home loan, the first step is to know in advance what you need for your monthly instalment.

A housing loan calculator, also known as a mortgage calculator, proves useful when calculating your mortgage repayment.

You use a loan repayment calculator to calculate your monthly instalment based on the amount financed by your lender. Such an amount is calculated based on your outstanding loan balance. The balance keeps on reducing as you make payments every month.

Below is an illustration of using a loan repayment calculator to help you understand better.

Assume your dream home is worth $1,000,000. The interest rate is 2.5% with loan tenure of 10 years.A mortgage calculator will show results as follows:

  • Your monthly repayment will be $9,427; the overall interest will be $131,239, and a total amount of $1,131,239 to be completed in 120 payments.
  • If you extend the loan repayment period to 20 years, your monthly repayment reduces to $5,299, and your overall interest cost will be $271,767, with a total amount of $1,271,767 to be completed in 240 payments.
  • If you choose a repayment period of 20 years, you will end up paying more interest by $140,528.

If you opt for a shorter repayment period, you save on interest paid. However, you will have to pay high monthly repayments.

With the monthly repayment loan calculator, you can work out what is best depending on your financial position.Only use a proper home loan calculator in Singapore to obtain accurate results.

To understand the whole deal about your mortgage repayment, you need to learn what details to input in your mortgage repayment calculator in Singapore.

How To Use A Mortgage Calculator

A proper Singapore mortgage loan calculator should display a fully amortised schedule of your payments.

The monthly instalment calculator schedule gives you a clear picture of what you can afford.But for this to happen, you should input the correct details below:

Loan Amount

It’s the amount you have applied for from your lender and will repay in full. Note that this amount should not be confused with your loan balance or any amount financed. Your original loan amount depends on many factors, suchas your income and other financial commitments.

Loan Tenure

Loan tenure is also referred to as the loan repayment period. It’s the time you will take to repay your principal amount and the accrued interest fully.

The Monetary Authority of Singapore sets the maximum housing loan for HDB flats and non-HDB properties to be 30 years and 35 years, respectively.

Interest Rates

This is the initial interest rate before any change thereafter.

Note that the initial interest rate is always lower compared to a change thereafter. For instance, if your year one initial interest rate is fixed at 1.5% and later becomes SIBOR + 1.25%, the initial rate remains 1.5%.

Currently, HDB flats attract an interest rate of 2.6%. But, there is a floating rate pegged at+0.10% above the prevailing CPF Ordinary Account (OA) interest rate. You can use a CPF loan calculator, which computes your maximum loan based on your ability to pay off such a loan.

The above details should give you the correct amortisation schedule.

How Much Mortgage Payment Can You Afford?

A home loan calculator in Singapore will help you know how much you can afford for your home. The results will show an amortised schedule with all the payments you will make in the future.

You get a breakdown of the interest to pay over the agreed period and your outstanding loan amount tabulated in a table.

With aSingapore property loan calculator, you clearly understand how much you owe your lender at different repayment periods. At the end of the data tabulated, there should be zero balance.

A good Singapore mortgage loan calculator will help you input your loan amount, interest rate, and tenure. With this, you plan accordingly and gauge how much you can pay without overwhelming yourself with other financial responsibilities.

How Much Loan Can You Borrow For Your New Home?

How much you can borrow depends on your personal needs, goals, and risk appetite.

Further, lenders will check your Total Debt Servicing Ratio (TDSR), Mortgage Servicing Ratio (MSR), and LTV to decide what to lend as follows:

  • TDSR which is useful for private property buyers means that only 55% of your gross monthly income should go to debt.
  • MSR, currently capped at 30% of your gross monthly income gives an accurate estimation of the amount you can commit to for yourproperty purchase. It only applies to executive condominiums (ECs) purchases and HDB flats.
  • The LTV will act as a safeguard for lenders to know if you are carrying too much debt. A bank loan caps the maximum LTV ratio to 75%   if it’s your first loan. The remaining 25% is a combination of 5% to be in cash and the 20% balance to be a combination of cash and CPF-OA savings.

Conversely, if it’s an HDB Concessionary Loan, the maximum LTV is 80% of the purchase price or value of your property. You can use your CPF savings for your monthly instalments. You can use the CPF loan calculator to estimate what to pay monthly.

As a first-time buyer, things may be complicated as you determine how much loan you can borrow. The best way would be to use a property loan calculator in Singapore. It will guide you on how much you need when selecting a property.

Only borrow what you can manage to repay over the agreed-upon period. And as long you manage to make monthly repayments; your mortgage balance will keep decreasing. This will enable you to hit your loan repayment target.

You can get good advice from a licensed money lender or a bank on how to calculate home loan repayments. It will discuss its products and help you decide on what’s best based on your financial needs.

Getting A Housing Loan

If you are planning to buy a HDB flat, knowing how to calculate home loan repayments with an instalment calculator will greatly assist you to budget your finances.

But if you’re unsure on how to use a repayment mortgage calculator to calculate housing loan monthly instalment, seek advice.

You can contact 1AP Credit for clear housing loan analysis information or apply for a loan. We offer the best loans with the best interest rates that suit your financial position.

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