Posts Tagged ‘housing loans’
In Singapore, housing loan packages have two categories: fixed rates or floating (variable) rates.
Singapore fixed rate packages are noramally 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 different from many 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 published daily. Meanwhile, board rates are set by the respective bank or financial institution. Most lenders attach their board rates to certain financial benchmarks such as the SIBOR but the exact factors are often confusing and variations in board rates tend to be versatile.
In general, there are no confinements on emigrants obtaining housing loans in Singapore but do pay attention of the following.
Loan to Value
In Singapore, the maximum loan to value (LTV) is 90% of the purchase price or valuation, whichever is smaller. Some loaners do not give maximum LTV to emigrants, thus, housing loan packages for 90% financing are limited. Loan approval for 90% financing is also tighter than for LTV 80% and below.
Proof of Income
A letter of appointment from your local employer or your latest income tax assessment is asked for housing loan. Tax assessments from some countries may not be honoured by the local mortgage lenders.
Landed Property
Before an emigrant can buy restricted properties like vacant lot or landed properties such as bungalows, semi-detached, and terrace houses, the approval from Singapore Land Authority is needed.
In-principle Approval
Try to apply for an in-principle approval before carrying on with a purchase, since loan applications are more complicated for emigrants. Think of hiring a respected and professional housing loan consultant. This may help you save time and money with your loan approval.
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Even though refinancing a housing loan can save you thousands of dollars you will be astonished that not that many people actually 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 easy 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 housing 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 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 housing lender will charge you a penalisation fee, normally a percentage of your outstanding loan amount, if you were to fully repay your housing loan. Almost all mortgages 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 greater 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 comprises 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 relatively smaller loan as fixed cost eats into a more substantial part 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, shifting to fixed rates may be a solid choice.
Individual Financial Appraisal
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 unpredictability in other areas. Give some thought 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 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. You are welcome to reprint this article – but get your own unique content version here.
Once you resolve to avail a housing loan, the immediate matter that storms your brain is selecting between fixed and floating rate of interest. It is easy to get dumbfounded at this point if you are not financially trained.
If the media and banks are screaming about increased interest rates you make feel pressed to go and rush into fixing your home loan rates. Your bank or financial consultant may even recommend this.
Now ideally as it should be, we assume that once you choose fixed rate plan for yourself the rate of interest will remain unchanged for the entire period you have fixed the interest rate for irrespective of any incidental increase in the same. But actually this is not necessarily the situation.
Here we demystify the nature of fixed interest rate mortgage transaction for you so that you can make an educated decision over the matter.
* Check the small print of a loan. The bank has the right to serve you 30 or 60-days notice that it intends to increase its rates.
* The bank\’s first-year rates are binding on the bank only for that short period of 1 or 2 months. The 2nd-year home loan rates are not binding at all. Neither are the bank\’s 3rd-year loan rates.
* Force Majeure Clause
So, while you read your mortgage contract, you can spot statement like this:
\”Provided further that from time to time, the bank may in its sole discretion alter the rate of interest suitably and prospectively on account of change in the internal policies or if unforeseen or extraordinary changes in the money market conditions take place during the period of the agreement.\”
This is called Force Majeure Clause that enables the lender to undertake appropriate modifications in the interest rates on home loans they sanction to their borrowers.
So remember to look at refinancing every couple of years so that you do not pay too much. If you select a good mortgage broker company you can save a lot of money over the life of your housing loan and in most cases the consultation cost is free.
Find out more about a premier housing loan advisory firm, providing housing loans with free mortgage broking. You are welcome to reprint this article – but get your own unique content version here.
Regular assessment of your household finances is important to the family\’s financial well-being. The following tips will help you take charge of your household finances.
Credit Card Use
If you have a credit card, use it, but don\’t forget to pay the entire sum, not the minimum amount, at the end of the month. Use your credit card wisely.
Rule of Thumb
If the total household expenses is higher than 33% of your household income, it\’s time to cut down on expenses. Below are useful tips to cut down your household expenses.
1. Cleaning of air-conditioners should be done regularly.
2. Wash your laundry on full load.
3. Place thimbles on your taps
Allocate Book Keeping Responsibilities to Your Children
Do you have children? Think of assigning simple tasks such as data-entry to them. Through this, they will learn the basic financial principles. It will also teach them to become responsible and promote good financial practice.
Organize Your Financial Statements
List down your finances. Have a notebook or a ledger. If you have an access to a computer, organize the physical bills and statements by putting everything into a spreadsheet. You don\’t even have to pay up cash for a spreadsheet.
The following tips will help you organize your financial statements.
1. Keep soft copies of bills and statements, if available. This will save time from entering data.
2. Back-up all your files, save them into CD-R or thumb drive. Then keep them in a safe place.
Financial Planning
If there is only one in the household is working, and there is not much sources of income, consider an insurance plan for the breadwinner. This will help you from financial problems when the breadwinner become disabled
Make It a Routine
When you are not doing your task, it piles up. Give at least half an hour each week to analyze 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 simply become firm with their first lender but they don\’t know that it could 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. Below are some considerations when reinvesting your home.
Latest Interest Rate
If your latest interest rate is higher than other housing loan packages, consider reinvesting. Go back to your current bank or financial institution and ask them to reprice your loan package. Your lender might give you an offer. Make a comparison between this offer and with offers from other lenders to see whether you should switch or stay put.
Lock-in and Clawback Periods
Lock-in period is when your lender give you a penalty if you want to fully repay your loan. Many housing loans have drawback period. This is when the lender will take back what they gave you when you get your housing loan. Lock-in period and clawback period are different from each other. Thus, it is not advisable for you to reinvest due to these extra costs.
Loan Quantum
If the amount of your loan is larger, the savings for the same decrease in interest rates will also be also larger. However, fixed cost to reinvesting, which comprises mainly of legal fees, does not vary much with loan quantum. The difference between your latest and reinvesting interest rates has to be larger for a relatively smaller loan as fixed cost takes into a more considerable part 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. However, if you are on floating rates, try to switch in fixed rates if the interest rates are increasing.
Own Financial Evaluation
If your financial state changed, consider reinvesting. Give some thought to take fixed rate package. Think of increasing your loan quantum. When your monthly income increased and you want to decrease interest payments, try to reduce your loan tenure.
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