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Considerations To Take Note Of When Refinancing

Aug 24, 2008
Considerations to take note of when refinacing your mortgage:

1. Any penalties imposed by current bank? Unsually, when there is a refinancing, the home owner has to redeemed or paydown fully his existing loan. The existing bank would impose a penalty if the home loan is still within the penalty period. This is normally around 2-3 years for Singapore mortgage loans. If it is, you may wish to calculate the cost savings of refinancing against the cost of the penalty. If the positive benefits are small, it may not be worth the while then to refinance at this point in time.

2. Study carefully the terms of the new housing loan package Main points to take note when reviewing your new home loan: - check out the penalty for full redemption - penalty for partial prepayment - any lock in feature - legal subsidy - any clawback period for legal subsidy.

3. Fixed vs Variable housing loan interest rates Ascertain if the interest rates are fixed or variable. Typically, variable rate packages do not require a lock-in i.e. the homeowner can 'walk out' of the loan and move it to another bank without the full redemption penalty (normally around 1.5%)

4. Lower global interest rates are good for refinancing It is important to have an idea of where global interest rates are at this point in time and which direction they would be heading. Typically, global interest rates will rise in a growing economy in order to slowdown the effects of inflation arising from an overheating economy. Rising rates would add more costs to your financing. For now, we are still enjoying fairly low rates comparatively. With the slowdown in global economies, academically speaking, rates are not expected to shoot up aggressively. This is good for houseowers and borrowers in general.
About the Author
Obtaining objective loan refinance advice may seem daunting. However, you may contact us at (65) 9018-2177 or email us at mortgages@maplecommerce.com or visit our website http://mortgages.maplecommerce.com to walk you through your refinancing options. Visit us today.
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