Refinancing in Singapore

The Monetary Authority of Singapore (MAS) has broadened its refinancing regulations/exemptions about refinancing loans related to owner occupied properties bought before the Total Debt Servicing Ratio (TDSR). However, the TDSR threshold of 60% continues to apply in all of the investment property loans.

The MAS allows a transition period until June 30, 2017 to refinance any investment property loans above the 60% threshold. However, to avail of this refinancing scheme, your OTP should have been granted before June 29, 2013 and you had fulfilled the credit assessment of the financing institution. In addition, you should commit/agree to the debt reduction plan at the point of financing.

Refinancing is the term used when you switched to a lower interest rate offered by another bank. After June 30, 2017, all borrowers should strictly comply with the 60% TDSR. They cannot apply for refinancing if they are not in compliance with the TDSR. Borrowers should start cutting their debts so there would be no negative cash flow each month.

Having a home loan is a long term commitment and you should know if refinancing is the right choice for you. It is best to include the other charges and fees in your computation to get a good grasp of the difference. In addition, you should take the service and the terms of the package into consideration.

Banks usually offer refinancing or new loan packages with a fixed, floating, or variable rate. However, there are banks that offer hybrid bundles. You may want to take a look at the hybrid bundle offerings. Review your investment and insurance portfolio to know if you are near to achieving your financial goals because it is not advisable to apply for refinancing while you are still locked in with your existing bank, unless the rate is really that substantial.

Refinancing allows you to look for better rates and help lower your monthly payments so you are able to raise your capital gains on sale. Refinancing is common in Singapore due to the competition between banks and the developments of home loan packages. It is simply ending your package with the present bank and carrying on payments with another bank’s lowered rate, better loan offering.

The secret of refinancing is to really calculate the interest rate differential at which to refinance. The technique is to make sure the optimal difference in savings covers the refinancing costs.

Interest rates tend to spike in the 4th year of the term. One reason why refinancing has become a trend among homeowners. In the first three years the interest rate offers a lower spread from SIBOR.

We are a Singapore home loan and Compare Home Loan consultancy firm offering free expert advice on compare home loan mortgage financing packages using the most advanced loan analysis system.

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