You might have noticed that Lendingpot has recently made a foray into supporting Mortgage refinance our clients. Maybe you've thought about refinancing your mortgage too, but you've only given it a passing thought.
Is now the right time? How do I know I’m getting the best rates? Could they go lower or higher?
It can be hard to take the first step especially when timing the market or making future predictions is difficult. However, do you know that it is almost always better to make a refinance when your mortgage is eligible?
When you refinance your home loan, you are switching from your present loan to one from another bank. When people refinance, they usually want lower mortgage interest rates so they can save money on interest, or they want a bigger loan amount so they can get more money (known as cash-out refinancing).
Repricing is not the same as refinancing; repricing entails staying with the same bank but negotiating a lower interest rate, whereas refinancing entails switching banks and incurring legal fees (which you can negotiate a subsidy from the bank providing you with your new home loan).
That’s a lot of work isn’t it? Let our mortgage specialist help you compare and find the best rates for your mortgage package (with legal subsidies and cashback of course! ;) )
When refinancing your home loan, always get a lower interest rate to lower your monthly instalments. Your refinancing window opens four months before your current house loan is due to expire. If you don't refinance or reprice with your existing bank, and stick with your present house loan, keep in mind that mortgage interest rates will rise back to the non-promotional rates which could be 1 full percentage point higher, resulting in greater monthly payments.
You can use your private property as collateral for a home equity loan if you own one. You can usually recover up to 60% or 75% of the value of your home in cash (less the remaining loan amount and any CPF spent for the same property). You can then put the money toward debt consolidation, investments, or even your business. However, avoid taking the maximum cash-out allowed to give leeway for changes in your property's valuation.
Another reason people refinance their mortgages is to obtain better interest rates by switching from a fixed to a floating interest rate (or vice versa). The interest rate on a fixed rate package is fixed for a set length of time (ranging from 1 to 5 years). Since it’s more stable, the interest rate is slightly higher compared to a floating rate package. If you hold a floating rate package, your interest rate will fluctuate depending on whether it is connected to SIBOR or the bank's fixed deposit interest rates. There may or may not be a lock-in period with these floating rate packages. Home buyers who are locked into a floating rate mortgage may switch to a fixed rate mortgage to better plan and manage their long-term finances.
The loan tenure may be changed while refinancing for a maximum of 35 years, or until you reach the age of 75. Supposing you’ve picked a loan package with a 25-year tenure and some years later, you’ve decided to pursue your passion in another field resulting in a pay cut. Causing you to not be able spend as comfortably after your monthly repayments. By refinancing, you can extend your loan tenure by picking a package with a longer tenure instead (provided you have not maxed out your current home loan tenure. While improving your monthly cash flow, do note that extending the loan tenure will lower the monthly payments but increase the overall cost (due to interest).
Why not get the most out of your refinancing? Enjoy 0.1% cashback* when you refinance through us! We compare our rates across multiple partners ensuring you get the best rates, saving you time and money with additional cashback. You will be in good hands as our mortgage specialist guides you through your process free of charge.
*Terms and Conditions: Credit criteria, fees, charges, eligibility criteria and exclusions apply. Apply from now till 31st Dec 2022. Offer may be varied or withdrawn at any time. Min loan amount $300k. The cashback is capped at $1,000. The promotion is limited to the first 50 successful applicants. Subsequent successful applicants will receive a $100 cashback. The cashback will be paid into a designated account within 90 days of loan disbursement. This account must be in the same name as the home loan account for the applicable loan.
We’re happy to address any doubts you may still have. Let us know in the message box or simply book an appointment with us below.
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