How does a bank loan work

A bank loan for residential properties typically works as follows:

- Maximum Loan Sum: Up to 75% of the purchase price or valuation sum, whichever is lower.
- Loan Period: Maximum of 35 years for private houses and 30 years for HDB flats.
- Security: The property is mortgaged to the bank.
- Interest Rate: Can be fixed or variable.
- Repayment: Not more than 60% of gross income for private residential properties; and 30% for HDB flats.

For fixed-rate home loan packages, fixed rates apply for an initial period (e.g., 3 years), after which floating rates apply. For floating or variable rate home loan packages, variable rates are usually tied to a reference interest rate.

I hope this helps!