Home Finance In Singapore
Even though refinancing a housing loan can save you 1000's of dollars you will be astonished that not that many individuals in reality take the time to do it. If you considered the time it requires and figure out the cost saving and compare that to how much you get paid per hour it could be like not going to work for several weeks. Consider the following aspects so that you can see how simple it is to refinance your housing loan today.
Current Mortgage Interest Rate
It is definitely a positive indication for you to research refinancing when your current interest rate is higher than available housing loan packages on the market. A first step to take is to go back to your current banking company or financial institution and ask them to revise your package, otherwise known as repricing. If your lender comes back with an offer, it will usually be better than your current one. You can then compare this offer with offers from other lenders to see whether you should switch or stay put.
Lock-in and Clawback Periods
When you take up a housing loan, there may be a lock-in period where your mortgage lender will charge you a penalty fee, ordinarily a percentage of your outstanding loan value, if you were to fully repay your home loan. Almost all housing loans also come with a clawback period where the lender will claim back "freebies", such as legal subsidies, that they "gave" you when you take up your housing loan (Note: lock-in period is separate from clawback period). It may not be commendable for you to refinance due to such costs.
Loan Quantum
The larger your housing loan amount, the greater your savings for the same decrease in interest rates. For example, 1% on a loan of S$100,000 is much less than 1% on a loan of S$500,000. However, fixed cost to refinancing, which comprises mainly of legal fees, do not vary much with loan quantum. The difference between your existing and refinancing interest rates, therefore, has to be bigger for a comparatively smaller loan as fixed cost eats into a more significant share of your interest rate savings.
Perceived Interest Rate Movements
Your view on how interest rates is moving can be a factor when thinking whether you should refinance. If you are presently on a fixed rate package and think interest rates are dropping, you may want to refinance to a floating rate package. Conversely, if you are on floating rates and believe interest rates are skyrocketing, changing to fixed rates may be a positive choice.
Individual Financial Appraisal
If there is a change in your financial state, you may want to alter your package particulars via refinancing. For instance, you are beginning your own business organisation and do not want unpredictability in other areas. Give some consideration to taking up a fixed rate package. Maybe you want cash to invest in another property. Consider raising your loan quantum. Or your monthly income has increased and you want to minimise interest loan payments. Contemplate reducing your loan tenure.
Consider calling us today if you are looking for refinancing in Singapore. We can save you a lot of money plus give you the latest advice all for free.
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