Singapore Refinancing Your Home
Even though refinancing a mortgage can save you 1000′s of dollars you will be stunned that not that many people actually take the time to do it. If you considered the time it takes and figure out the cost saving 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 easy it is to refinance your home loan today.
Current Mortgage 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 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 ordinarily be better than your existing 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 mortgage, there may be a lock-in period where your mortgage lender will charge you a penalty fee, commonly a percentage of your outstanding loan value, if you were to fully repay your mortgage. 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 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 home loan amount, the larger 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 relatively smaller loan as fixed cost eats into a more fundamental share 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 rocketing, shifting to fixed rates may be a effective choice.
Personal Financial Assessment
If there is a change in your financial state, you may want to alter your package details via refinancing. For instance, you are beginning 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 another place. Consider raising your loan quantum. Or your monthly income has increased and you want to minimise interest loan payments. Consider 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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