Your home may be your largest financial commitment ever. Whether is it a new loan or refinancing your existing housing loan, you deserve a better deal. Let us offer you a suite of service with the best financial value.
What is a home loan?
A home loan/mortgage is used by you to raise fund to buy your real estate. In Singapore, a home loan is typically borrowed from HDB, a bank or a finance company. The loan is then secured by your property which essentially allows the bank or finance company to take possession should you be unable to fulfil your loan contractual commitment.
Banks We Compare
- Hong Leong Finance
- Bank of China
- Standard Chartered Bank
Make use of our Moneyline.SG web comparison tool to find the most suitable home loan & refinance interest rate base on your needs. Upon your request, a partnered mortgage broker/bank mortgage specialist will contact you based on the information you have communicated. Their service is 100% free.
This Month’s Best Rate!
|Best Fixed Rate||1.50% First Year
1.50% Second Year
|2 years locked in|
|Best Variable Rate||1.2% First Year
1.2% Second Year
|2 years locked in|
What does refinance home loan means?
Refinancing generally means replacing your existing loan package with another. The main reason for you to refinance your existing home loan/mortgage is to take advantage of a lower interest rate offered by the same or a different lender.
You may also free up more cash by refinancing, for example, you can cash out via increasing your existing loan quantum or stretch the loan tenure which thereby reducing the monthly instalment you have to pay thus increasing your monthly cash flow.
Here are a few things you may want to note when you wish to refinance your home loan:
- You may be subjected to a new lock in period
- You may need to bear additional conveyance and valuation cost if you refinance to another financial institution
- Your new home loan package may hinder you even more later when there is a change in its policy (e.g. rising interest rates)
Fixed rate Vs Variable/Floating rate
Before applying or refinancing your home loan, you may have come across these two terms; fixed and variable home loan rate.
A Fixed Rate is a loan package offered by the lender at a fixed interest rate for a specific set of time.
For example, you will get to enjoy paying a fixed monthly instalment for a period of 1, 2, 3 or even 5 years. The main advantage of taking a fixed interest rate is to protect against paying a higher instalment when the market/bank interest rate increases.
Therefore, it is always better to opt for a fixed interest package during a rising interest rate environment.
Due to the stability a fixed interest rate provide, one disadvantage is that financial institutions will usually impose a higher first year interest rate as compared to a variable interest rate package.
In contrast, a variable or floating interest rate package will subject you to a different monthly installment amount regularly depending on the nature of your home loan package.
Variable rates are typically pegged to a reference rate from an international body or a financial institution’s in-house rate.
Here are some reference rates a variable home loan rate will be commonly pegged to and how they are determined.
Bank or financial institutions will commonly use a spread to determine your home loan rate, such as 0.5% spread + 3 months SIBOR. Hence, if 3 months SIBOR is at 1.5%, a 3m SIBOR variable rate with a 0.5% spread will make your total home loan interest rate to be 2% p.a.
A variable rate will be more advantage to you during a decreasing interest rate environment.
When do I choose a fixed rate?
It is always better to opt for a fixed interest package during a rising interest rate environment.
When do I choose a variable rate?
It is always better to opt for a variable interest package during a falling interest rate environment.
What else do I have to look out for when taking a home loan?
On top of the valuation and conveyance fee one has to pay for taking up a home loan from a financial institution, there may be certain drawbacks on a typical home loan package.
- Prepayment penalty during lock-in period
- Claw back on legal subsidies
- Margin calls – When the value of the property falls below your loan amount
- Lock in period – a fixed period; usually 2 to 3 years you are obligated to remain on loan with the bank.
Should You Engage a Mortgage Broker
Engaging an experienced Mortgage broker may help to speed up your home loan application with the bank, a mortgage broker is usually an individual that will do the leg work for you, put in 3 – 5 applications with different banks and highlight potential issues especially if you do not have the time to handle your own home loan application. A home loan applicant will find a mortgage broker particularly useful when they are facing some bad credit situation, not be able to get the desired loan amount or are faced with a complex financing issue such as part purchased or de-coupling.
At Moneyline.SG our partnered mortgage brokers are extremely experience and their service are 100% free as the bank will pay them a referral fee for any successful loan application. Please note that there will be strictly no rebate offerable if a mortgage broker is being engaged to handle your home loan application.
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