Singapore Refinancing Your Home

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When it comes to mortgages, numerous people don’t refinance. A significant number are oblivious they have the choice of changing their loan to another financier; others are simply apathetic. They stick with their very first lender and the “reward” for such loyalty tends to be higher interest rates. Due to the magnitude of mortgages and the tenure that the mortgage is amortised over, the interest we are speaking about here can well extend from thousands to hundreds of thousands of dollars. Take a look at the following components to see whether it’s time for you to consider refinancing.

Current Interest Rate

It is definitely a good indication for you to explore refinancing when your current interest rate is higher than available loan packages on the market. A first step to take is to go back to your existing 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 normally 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 mortgage. Almost all 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 worthwhile for you to refinance due to such costs.

Loan Quantum

The larger your home loan amount, the larger your savings for the same reduction 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 relatively smaller mortgage as fixed cost eats into a more fundamental 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, converting to fixed rates may be a effective choice.

Individual Financial Appraisal

If there is a change in your financial state, you may want to change your package details via refinancing. For example, you are opening your own company and do not want unpredictability in other areas. Give some thought to taking up a fixed rate package. Maybe you want cash to invest in another property. Consider increasing your loan quantum. Or your monthly income has increased and you want to reduce 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.

Find out more about a premier Housing Loan advisory firm, providing Housing Loans with free mortgage broking.

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Article Citation
MLA Style Citation:
Smith, Barron "Singapore Refinancing Your Home." Singapore Refinancing Your Home. 29 Dec. 2009. uberarticles.com. 9 Apr 2012 <http://uberarticles.com/web-owners/marketing/singapore-refinancing-your-home/>.

APA Style Citation:
Smith, B (2009, December 29). Singapore Refinancing Your Home. Retrieved April 9, 2012, from http://uberarticles.com/web-owners/marketing/singapore-refinancing-your-home/

Chicago Style Citation:
Smith, Barron "Singapore Refinancing Your Home" uberarticles.com. http://uberarticles.com/web-owners/marketing/singapore-refinancing-your-home/

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