When it comes to mortgages, numerous individuals don't refinance. A significant number are oblivious they have the option 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 order of magnitude of housing loans and the tenure that the mortgage is amortized over, the interest we are speaking about here can easy stretch from 1000's to hundreds of thousands of dollars. Take a look at the following elements to see whether it's time for you to consider refinancing.
Current Interest Rate
It is definitely a positive 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 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 commonly 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 penalisation fee, ordinarily a percentage of your outstanding loan value, 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 subsidies, that they "gave" you when you take up your 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 greater 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 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 relatively smaller mortgage 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 currently on a fixed rate package and believe 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, switching to fixed rates may be a positive choice.
Personal Financial Assessment
If there is a change in your financial state, you may want to change your package details via refinancing. For instance, you are opening your own business organisation 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 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. - 29904
Current Interest Rate
It is definitely a positive 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 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 commonly 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 penalisation fee, ordinarily a percentage of your outstanding loan value, 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 subsidies, that they "gave" you when you take up your 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 greater 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 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 relatively smaller mortgage 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 currently on a fixed rate package and believe 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, switching to fixed rates may be a positive choice.
Personal Financial Assessment
If there is a change in your financial state, you may want to change your package details via refinancing. For instance, you are opening your own business organisation 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 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. - 29904
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