Even though refinancing a housing loan can save you 1000\’s of dollars you will be surprised that not that many individuals in reality take the time to do it. If you considered the time it takes and figure out the cost saving benefits and equate 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 Interest Rate

It is definitely a good indication for you to explore refinancing when your current interest rate is higher than available home loan packages on the market. A first step to take is to go back to your existing bank or financial institution and ask them to revise your package, otherwise known as repricing. If your lender comes back with an offer, it will ordinarily 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 housing lender will charge you a penalisation fee, commonly a percentage of your outstanding loan amount, if you were to fully repay your loan. Almost all housing loans also come with a clawback period where the lender will claim back \”freebies\”, such as legal expenses, that they \”gave\” you when you take up your home loan (Note: lock-in period is separate from clawback period). It may not be valuable for you to refinance due to such costs.

Loan Quantum

The larger your home loan amount, the larger your savings for the same decrease in interest rates. For instance, 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 represents mainly of legal fees, do not vary much with loan quantum. The difference between your current and refinancing interest rates, therefore, has to be bigger for a comparatively smaller mortgage as fixed cost eats into a more significant part of your interest rate savings.

Perceived Interest Rate Movements

Your view on how interest rates is moving can be a factor when considering whether you should refinance. If you are currently 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 effective choice.

Personal Financial Assessment

If there is a change in your financial state, you may want to change your package particulars via refinancing. For example, you are starting your own business organization and do not want volatility in other areas. Give some consideration to taking up a fixed rate package. Maybe you want cash to invest in different 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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In Singapore, housing loan packages have two categories: fixed rates or floating (variable) rates.

Singapore fixed rate packages are usually tendered for up to 3 years, but there are some lenders that cover up to 5 years fixed rates or even 10 years. This is unlike from some Western countries where rates can be fixed throughout the loan tenure.

On the other hand, floating rates are classified into published rates or board rates. Like Singapore Interbank Offered Rate (SIBOR) or Singapore Swap Offer Rate (SOR), published rates are normally rates that are released daily. Meanwhile, board rates are determined by the respective bank or financial institution. Many of the lenders posted their board rates to a certain financial benchmarks, yet the right factors are sometimes not clear and variations in board rates become uncertain.

In general, there are no restrictions on emigrants having housing loans in Singapore but do pay attention of the following.

Loan to Value

The maximum loan to value (LTV) in Singapore is 90% of the purchase price or rating, whichever is lower. Housing loan packages for 90% funding are limited as some lenders do not extend maximum LTV to emigrants. Loan approval for 90% funding is also tighter than for LTV 80% and below.

Income Proof

To have approval for a housing loan your latest income tax assessment or a letter of appointment from your local employer is essential. Tax assessments from some countries may not be honoured by the local mortgage loaners.

Landed Property

The commendation from Singapore Land Authority is mandatory before emigrants can purchase restricted properties such as vacant estate or landed properties such as bungalows, semi-detached, and terrace houses.

In-principle Approval

You may also regard an in-principle approval before purchasing. Consider of hiring a honored and professional housing loan consultant. This may help you save time and money with your loan approval.

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Regular assessment of your household finances is important to the family\’s financial well-being. Here are some guidelines to control your household finances.

Credit Card Use

Use your credit if you have one. However, remember to pay your outstanding balance, not the minimum amount, before its due. Utilisation of credit card should be done wisely.

Rule of Thumb

Household expenses should be lower than 33% of household income. If it is higher, think of cutting down your expenses. Here are some tips to lower your expenses.

1. Always clean your air-conditioners.

2. Wash your laundry on full load.

3. Put thimbles on your taps

Allocate Book Keeping Reponsibilities to Your Kids

If you have kids, share them a simple task in book keeping, like data-entry. This will make them understand basic financial principles. Moreover, it will also give them a sense of responsibility and promotes good financial practice.

Keep a File of Your Financial Statements

Take note of your finances. Have a notebook or a ledger. If you have a computer, put everything into a spreadsheet. You don\’t even have to pay up cash for a spreadsheet.

Here are some tips in organizing your financial statements.

1. To save time from entering data, get soft copies of bills and statements, if possible.

2. Back-up all your files, save them into CD-R or thumb drive. Then keep them in a safe place.

Financial Planning

If you have a little source of income, and there is only one person working in your family, think of getting an insurance plan for the breadwinner. Financial worries are not something your family should cope with in the event the sole breadwinner is incapacitated.

Make It a Routine

When you are not doing your task, it piles up. Set aside 30-60 minutes each week to maintain your finances.

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Most of the people don\’t know that take can change their loan to other investor; others are simply uninterested. They tend to be loyal with their very first lender but they don\’t know that such loyalty will bring higher interest rates. Because of increasing number of housing loans and amortization period, the interest can range from thousands to hundreds of thousands of money. The following factors may help you consider reinvesting your home.

Latest Interest Rate

When your current interest rate is higher than available housing loan packages on the market, it is time for you to consider reinvesting. Ask your bank or financial institution to reprice your loan package. Most likely, your lender will give you an offer, which is better than your current one. Try to compare this offer to the other packages and then decide if you should switch or not.

Lock-in and Clawback Periods

When you get a housing loan, there may be a lock-in period wherein your mortgage lender will charge you a penalty fee, maybe a percentage of your outstanding loan amount, if you were to fully repay your loan. Most of housing loans have a clawback period wherein the lender will claim back \”giveaways\”, such as legal subsidies, that they \”gave\” you when you take up your housing loan. Lock-in period is different from clawback period. Because of this, reinvesting is not recommended.

Loan Quantum

The higher the amount of your loan, the greater your savings for the same decrease in interest rates will be. Yet fixed cost to reinvesting does not vary much with quantum loan. The difference between your current and reinvesting interest rates has to be larger for a relatively smaller loan as fixed cost consumes into a more considerable portion of your interest rate savings.

Identify Interest Rate Movements

Analyze how interest rates flow. Try a floating rate package as an alternative to fixed rate package if the interest rates are decreasing. Conversely, if you are on floating rates and believe interest rates are increasing, switching to fixed rates may be a good choice.

Own Financial Evaluation

Try to get a fixed rate package. Think of increasing your loan quantum. On the other hand, if your monthly income has increased and you want to lower interest payments, think of reducing your loan tenure.

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