Total Debt Servicing Ratio (TDSR) - Pledged Deposit

What is TDSR ?

Total Debt Servicing Ratio ( TDSR ) is a debt servicing measure that Bank/Financial Institution used to determine if the potential borrower is overly geared with debts.

How to compute TDSR?

Based on the newest measure, TDSR should not be more than 60%

Monthly Total Debt Obligations  
_________________________       <      60%

       Gross Monthly Income

Monthly Total Debt Obligation consist of:
1)  Existing Housing Loan Installment
2)  Car loan Installment
3)  Personal Loan Installment
4)  Overdraft Loan Repayment
5)  Credit card etc

How to determine monthly income based if I were to pledge my cash with the bank for 48months?

Deposit Amount X 70%
___________________       =  Monthly Income

        48 months


Example:
Mr Tan ,aged 34 , has $500k in a Local bank but he is not working

Gross monthly income will be compute as:

$500,000 X 70%
______________     =  $7291.66/mth

     48 months


Based on TDSR, Mr Tan's commitment should not be more than:
$7291.66 X 60% = $4,374.99

Car Loan: $850/mth

Mr Tan will only be left with $3,524.99

Stress Test
Newly Purchase Monthly Installment will be computed based on a standard rate of 3.5% (Introduce by MAS) for residential property to access customer debt repayment ability


Although Mr Tan might be paying only $2,700 +per month , across the banking industry, Bank will use $3,520.51 to calculate on Mr Tan's debt repayment ability.

 

Assuming that Mr Tan do not have any other commitment, the maximum loan that he is able to obtain based on 80% loan will be $784,000*, 30 years loan tenor.

*Do take note that  there are some bank which take into consideration of credit card minimum payment as a commitment. The above example is compute purely based on his car loan.


If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg

Total Debt Servicing Ratio (TDSR) - Unpledged Deposit

What is TDSR ?

Total Debt Servicing Ratio ( TDSR ) is a debt servicing measure that Bank/Financial Institution used to determine if the potential borrower is overly geared with debts.

How to compute TDSR?

Based on the newest measure, TDSR should not be more than 60%

Monthly Total Debt Obligations  
_________________________       <      60%

       Gross Monthly Income

Monthly Total Debt Obligation consist of:
1)  Existing Housing Loan Installment
2)  Car loan Installment
3)  Personal Loan Installment
4)  Overdraft Loan Repayment
5)  Credit card etc

How to determine monthly income based on my unpledged cash on hand?

Deposit Amount X 30%
___________________       =  Monthly Income

        48 months


Example:

Mr Tan ,aged 34 , has $500k in a Local bank but he is not working

Gross monthly income will be compute as:
$500,000 X 30%
______________     =  $3,125/mth

     48 months


Based on TDSR, Mr Tan's commitment should not be more than:
$3,125 X 60% = $1,875
Stress Test
Newly Purchase Monthly Installment will be computed based on a standard rate of 3.5% (Introduce by MAS) for residential property to access customer debt repayment ability
Although Mr Tan might be paying only $1,410 +per month , across the banking industry, Bank will use $1,863.54 to calculate on Mr Tan's debt repayment ability.

Assuming that Mr Tan do not have any other commitment, the maximum loan that he is able to obtain based on 80% loan will be $415,000*, 30 years loan tenor.
*Do take note that  there are some bank which take into consideration of credit card minimum payment as a commitment. The above example is compute based on him having no other commitment.


If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg

Total Debt Servicing Ratio (TDSR) - Gross Income

What is TDSR ?

Total Debt Servicing Ratio ( TDSR ) is a debt servicing measure that Bank/Financial Institution used to determine if the potential borrower is overly geared with debts.

How to compute TDSR?

Based on the newest measure, TDSR should not be more than 60%

Monthly Total Debt Obligations  
_________________________       <      60%

       Gross Monthly Income


Monthly Total Debt Obligation consist of:
1)  Existing Housing Loan Installment
2)  Car loan Installment
3)  Personal Loan Installment
4)  Overdraft Loan Repayment
5)  Credit card etc


Gross Monthly Income consist of:
1) Consistent Fixed salary
2) Bonus /commission (30% haircut)
3) Rental Income (30% haircut)
Tenancy period must be still left with at least 6 month from application date


Example:

Mr Tan , age 39  with a declared income 2013

Employment: $100k
Commission: $60k
Rental : $40k (more than 6 month validity)

Gross yearly income will be compute as:
$100k + ($60k X 70%) + ($40k X 70%)
= $100k + $42k + $28k
= $170k

Gross monthly income will be compute as:
$170k / 12 = $14,166

Based on the TDSR, Mr Tan commitment should not exceed

$14,166 X 60% = $8,499.60

Car Loan $2,500/mth
Personal Loan $890/mth

Mr Tan will only be left with $5,109.60

Stress Test

Newly Purchase Monthly Installment will be computed based on a standard rate of 3.5% (Introduce by MAS) for residential property to access customer debt repayment ability

Although Mr Tan might be paying only $4,000+per month , across the banking industry, Bank will use $5,106.36 to calculate on Mr Tan's debt repayment ability.

Assuming that Mr Tan do not have any other commitment, the maximum loan that he is able to obtain based on 80% loan will be $1.02mil*, 25 years loan tenor.

*Do take note that  there are some bank which take into consideration of credit card minimum payment as a commitment. The above example is compute purely based on his car and personal loan.

If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg

Completed Property: Grab your fixed interest rate now before it goes up further

For those who are planning to finance or refinance your property, grab the chance to get low fixed rate now before it start hiking up.

Some banks have removed their fixed package while others increase quietly.

Do drop me a call/sms at 9176 7970 or email me at den@housingmatters.com.sg for a no obligation discussion.


Den Ng
Housing Matters
http://www.housingmatters.com.sg

Don't always get "Cheated" by "Good rates" offered!!

Based on the Proposal, which Bank is offering a better package if there isn't any special clauses involved?

Of course is Bank B!!

Bank A

Bank B

 But Wait!!!

For BUC property if the project complete within 2 year ( which is quite rare ) you are still bound to pay a Cancellation Fee of the undisbursed fund if you were to refinance!!

Bank A
1) Interest paid: $5390.65
2) Principal paid: $12,761.64
3) Principal at end of 2 years: $337,238.36

Bank B 
1) Interest paid: $5019.78
2) Principal paid: $12973.76
3) Principal at end of 2 years: $337,026.24

Difference?
1) Interest : $5390.65 - $5019.78 = $370.87
2) Principal: $12,761.64 - $12,973.76 = $212.12
3) Prinicipal at end of 2 years: $337,238.36 - $337,026.24 = $212.12

Total Difference: $370.87 + $212.12 + $212.12 = $795.11

If you reprice and get a Good rate with Bank B, Congrats!!! You are saving $795.11 but if you were  to switch a bank (as bank B is not giving a good reprice rate)

Cancellation fee involved:
$130,000 * 0.75% = $975

$975 - $795.11 = ($179.89)

So in Fact, Are you actually SAVING?

Wait!!! Normally Uncompleted Project will complete within 3 years...

 What's Bank A and B 3 years rates instead?

Bank A

Bank B

Bank A
1) Interest paid: $11,330.34
2) Principal paid: $27,636.43
3) Principal at end of 3 years: $622,369.57

Bank B 
1) Interest paid: $12,903.11
2) Principal paid: $27,009.91
3) Principal at end of 2 years: $622,990.09

Difference?
1) Interest : $11,330.34 - $12,903.11 = $1,572.77
2) Principal: $27,636,43 - $27,009.91 = $626.52
3) Prinicipal at end of 2 years: $622,369.57 - $622,990.09 = $620.52

Total Difference: $1,572.77 + $626.52 + $620.52 = $2819.81

Getting a Loan from Bank A will save you $2,819.81 after 3 years!!

 So which Bank you prefer now?

This illustration is not to show you how much you can save, but to show you that the attractive figure might not be cost saving in the end.

"Play with the numbers and don't let the number play you out :)"

If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg

Clauses to Look out for when refinancing a newly TOP Property

There are a few clauses to look out for when refinancing a newly TOP Property.

1) Cancellation fee on the undisbursed amount
2) Legal Clawback ( Only Applicable for those who enjoy Legal Subsidy )

1) Cancellation Fee:
Do take note that after your project TOP , there is still  13% of your fund undisbursed until the "Expiry of the defects liability period ended. If you were to switch a bank right after the TOP , you are bound to a cancellation fee of either 0.75% or 1.5% depending on the contract you sign.

Ie:
Right after TOP
PP: $1mil
13% of $1mil is $130,000

Cancellation fee:
a) 0.75% of $130,000  = $975
b) 1.5% of $130,000   = $1,950

Banker always mention that they can give Free Conversion 3month upon TOP, but
1) Can anyone predict what will be the rate like in 2-3 years time?
2) Will the current bank be providing you a competitive rate?
3) Do you know ,if you missed the conversion 3month upon TOP, you will have to pay a fee for the conversion?


2) Legal Clawback:
Based on the older scheme , bank actually subsidize legal fee. If you were to enjoy the legal subsidy and refinance within 3 years , most bank will want you to pay back the Legal subsidy.


If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg

Choose the Best Package for your Property

I have client who is planning to buy or refinance often confused with the various package offered by the bank.

Each Bank have their own specialty package just like each restaurant having their own "Signature dish". If you are planning to eat crab but the restaurant offer you crayfish , think twice before you commit to them coz it might not suit you...

Typically the packages are as follows:
1) SIBOR
2) SOR
3) Combo
4) Variable Rates
5) Fixed


SIBOR (Singapore InterBank Offered Rate) 

Sibor is a daily reference rate based on the interest rates at which bank offer to lend unsecured funds to each other in the Singapore wholesale money market.

Sibor come in terms of 1/3/6/12 months. Terms which Bank often offer are 1/3 month Sibor.

Highest 3M SIBOR was 7.75% which happened in Jan 1998
Lowest 3M SIBOR was 0.25% which happened in Sept 2001

Bank offering SIBOR:

BOC, CIMB, CITIBANK,  DBS , HSBC, MAYBANK, OCBC, SCB, UOB,

SIBOR is transparent and can be view daily via Business Time , Housing Matters and other web sources.



SOR (Swap Offer Rate)

SOR is the cost of borrowing SGD synthetically by borrowing USD for the same tenor and swapping out the USD in return of the SGD and normally implied from the USD/SGD forward prices.

SOR come in terms of 1/3/6/12 months. Term which Bank often offer is 3 month SOR

Bank Offering SOR:

ANZ, BOC

SOR is transparent and can be view daily via Business Time , Housing Matters and other web sources.



COMBO

Combo is the average of both 3 month Singapore Interbank Offered Rate (SIBOR) and Swap Offer Rate (SOR)

Bank offering Combo:
ANZ



Variable Rates:

Variable Rates are pegged to the Bank Internal Board Rate. It means that Bank can review the rates as and when they need to. This causes certain level of uncertainty to what borrower have to pay in the future. The Home Loan interest rate will be adjusted accordingly.

Ie
1st year: ABCMR - 4%
2nd year: ABCMR - 3.5%
3rd year: ABCMR - 2.5%
Current ABC_Mortgage Rate (ABCMR) is 5.00%

You will be paying:

1st year : 1% (floating)
2nd year: 1.5% (floating)
3rd year: 2.5%(floating)

When ABC bank changes their ABC_Mortgage Rate (ABCMR) to 6 %,

You will be paying:

1st year : 2% (floating)
2nd year: 2.5% (floating)
3rd year: 3.5%(floating)

Bankers may often say that their Board Rate have not been changing for the past years but do bear in mind that Variable rates are not Transparent and is subjected to review as and when the Bank needs to.

Bank offering Variable Rates:
CIMB, MAYBANK, OCBC, RHB, UOB




Fixed:

Bank will normally offer client fixed package from 1 year to 5 years. Fixed rates is normally higher than the rest of the package (SIBOR, SOR, Variable, Combo) .Typically the longer the fixed period the higher the interest rate as the bank will have to bear the risk of interest rate going up.

Fixed package are normally meant for Completed Property.

Bank offering Fixed rate:

BOC, CITIBANK,  DBS , MAYBANK, OCBC, RHB, SCB, UOB,


If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg

Comparing Uncompleted Property Rates

Different bank have different ways to attract customer to take up their loan. In terms of the rates below, most of the client will think that Bank B offers a better package, but in actual fact Bank A is offering a better package for an uncompleted project.

                 Bank A                                                                            Bank B
   1st year: 3mth Sibor + 0.90%                                     1st year: 3mth Sibor + 0.85%
   2nd year: 3mth Sibor + 0.90%                                    2nd year: 3mth Sibor + 0.85%
   3rd year: 3mth Sibor + 0.90%                                     3rd year: 3mth Sibor + 0.85%
   4th year: 3mth Sibor + 1.00%                                     Thereafter: 3mth Sibor + 1.25%
   Thereafter: 3mth Sibor + 1.25%

                       Bank A                                                             Bank B

Total Interest
Paid :              $21,446.61                                                     $22,740.18  
Principle at End
of 4th year :   $750,797.49                                                   $751,787.79

Total Interest Saving: $21,446.61 -  $22,740.18 = $1,293.57
Total Principle Saving:  $750,797.49 - $751,787.79 = $990.30

Total Saving : $1,293.57 + $990.30 = $2,283.87

This illustration is not to show you how much you can save, but to show you that the attractive figure might not be cost saving in the end.

"Play with the numbers and don't let the number play you out :)"

*Do take note that for uncompleted project, full fund will only be disbursed  1 year after TOP, any refinancing or full payment done on TOP will be subjected to a cancellation fee.


If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg

Is Your Mortgage Loan More than 3 Years?

CPF Usage for HDB Property

Today, one of my friend ask me how much CPF can they utilized if their client's HDB is only left with 59 years. Found this information which you might need it the next time :)

If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg

How does the New Cooling Measure (wef 12 Jan 2013) affect you as a buyer/seller?

As soon as the cooling measure took place, several clients call me to enquire on the new measure.

After gathering all the information, let me summarize and let you know
How does the New Cooling Measure going to affect you??

1)  Residential Property:  Seller Stamp Duty (SSD) (wef 14012011)

• Within the 1st year: 16% of price or market valuation, whichever is higher
• 1st year - 2nd year : 12% of price or market valuation, whichever is higher
• 2nd year - 3rd year : 8% of price or market valuation, whichever is higher
• 3rd year - 4th year : 4% of price or market valuation, whichever is higher

2) Residential Property: Additional Buyer Stamp Duty (ABSD) before and after Cooling Measure (wef 12012013).

3) Residential Property: How does the Loan To Valuation ( LTV) affect you? (wef 12012013)

4) HDB: Mortgage Servicing Ratio (MSR) (wef 12012013)Bank Loan : MSR capped at 30% of borrower's gross monthly income
HDB loan: MSR lowered from 40% to 35%


5) Industrial Property:  How does  the Seller Stamp Duty (SSD) affect you? (wef 12012013)

• Within 1st year: 15% of price or market valuation, whichever is higher
• 1st - 2nd year: 10% of price or market valuation, whichever is higher
• 2nd - 3rd year: 5% of price or market valuation, whichever is higher

If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg

What's your View on the Bank Mortgage Rate?

Most my clients have asked me on my opinions on the future Mortgage Rates.  Many a time, I replied, how low do you think the Mortgage Rate can go, at most down 0.37% to 0%.

As at 24 Jan 2013, 3 mth Sibor is 0.37667%, the lowest in the whole year of 2012 but do take note that Bank Mortgage Fixed interest rate and the spread (ie 3mth Sibor + 0.85% ) has been hiking since last year.

What does it implies? It’s up to you to analyse.

Most of the seasoned property investor has gone through the below mention few cycle and learn their lesson from there.

4th Quarter of 2000, during Dot-com Bubble, 3mth Sibor is more than 2.5% 
3rd Quarter of 2001, during  S11 Attack,   3mth Sibor is more than 2%,
1st quarter of 2004, during SARS Period,  3mth Sibor  is more than 2% and thereafter peak up to more than 4%,
1st Quarter of 2008, during the Property Bloom period, 3 mth Sibor is more than 3.5%

I have check with a few seasoned property investors on their views on the Mortgage rates in the next few year and most of them think that Sibor will hover around the current rate till end of 2015 but they are cautious and prepared for the hike.

Most importantly is, are you prepared or are you still planning to let your rental merely cover your monthly installment?

Most of the Mortgage Broker will want you to take up no lock in Sibor /SOR package, so that repeat business will come fast when the interest rate hike.

But do you really think that it is worthwhile for you to take that package especially when most bank doesn't give legal subsidy nowadays?

Recently, I got my banker to deviate a Sibor package for my client after he “hear say” from his friend that the rates will stay as it is till end 2015.

                  Deviated Sibor Rate                                          Current Fixed Rate
   1st year: 3mth Sibor + 0.80% = 1.17667%                  1st  year: 1.15%(fixed)
   2nd year: 3mth Sibor + 0.80% = 1.17667%                 2nd year: 1.35%(fixed)
   3rd year: 3mth Sibor + 0.80% = 1.17667%                  3rd year 1.45% (fixed)

My question to you is, are you willing to take the risk.

Based on average of  3 years ,the difference of deviated Sibor rates as compared to the Best fixed rate is just 0.140% apart , if Sibor rate stay at 0.37667% throughout the three year.
Ask yourself this question, do you think that Sibor will stay as it is, till 3 years later?

What are your views on the Mortgage Rate? Will it hike , stay as it is or you think that it will still go down?

Let's Share... :)


If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg

Q & A for Housing Loan

Below are question asked by some of my client and i hope that this will answer your query too...

1) What is Approval In Principle (AIP) or others call it In Principle Approval (IPA)?

It is a verbal agreement by the bank, showing the amount they are potentially prepared to lend to you, based on your financial ability and the credit history. It is not a guarantee, but it do help customer to gauge the range that the bank is able to finance them and to choose a property of that range.


2) Does all bank give the same amount for AIP/IPA?

No, different bank set different criteria. It varies throughout the banks.


3) What is the difference between Repricing and Refinancing?

Repricing mainly is to negotiate a better rate within the same bank while refinancing is to switch a bank for a better rate


4) What is the difference between going straight to the bank and getting a Mortgage Broker to serve me?

There are more than 10 banks / Financial Institute in Singapore, 0.10% - 0.2% makes a difference on the interest you paid yearly. If Bank A only sell Sibor package, Banker A will tell you that Sibor Package is best and others cant fight them .
For Mortgage Broker, we consolidate rates from almost all banks in Singapore , source the best rate for you and tailor it to suits your risk level.
Moreover, we do quarterly / half yearly review on customer package to determine if they require a switch of bank.


5) Do we have to pay Mortgage Broker for their Service?

Most bank remunerate brokers for their service and normally broker service are FREE (unless otherwise stated)


6) Since the bank is paying Mortgage Broker , will Mortgage Broker still source us the Best rate in the Market?

Mortgage Broker are remunerate based on a percentage of the loan, getting you the best package wont affect their commission, so in order to get more repeat customer and referrals, Mortgage Broker will source you the best rates, based on your risk taking level.

7) What are the basic documentation required for Approval In Principle (AIP)?
1) CPF OA account (CPF website –> My Statement -> Section A <print this section>)
2) CPF Contribution History ( CPF website –> My Statement -> Section B )
3) CPF Property Withdrawal Statement (CPF website –> My Statement -> Section C -> Property - > My Private Housing Withdrawal Details)
4) 2 years income tax & 3month payslip (IRAS Website -> Correspondence & Notices -> Individual Income Tax (Letter/Notices) -> Letter/Notices -> Notice of Assessment (Individual)
5) IC copy front n back
6) HDB Declaration  Will need an additional document for processing more than 60% financing for Singaporean and SPR - Please go to HDB's website athttp://www.hdb.gov.sg/MyHDBPageto do a screenshot, to show that you do not own any HDB or have any HDB housing loan currently. (Under 'My Flat > Purchased Flat > Financial)
7) Signed Application Form
8) Credit card/Personal Loan/ Car Loan /Overdraft etc Statement (record under Credit Bureau) (upon banker request)


8) What are the basic documentation required for a financing of property?

For New Purchase,

1) CPF OA account (CPF website –> My Statement -> Section A <print this section>)
2) CPF Contribution History ( CPF website –> My Statement -> Section B )
3) CPF Property Withdrawal Statement (CPF website –> My Statement -> Section C -> Property - > My Private Housing Withdrawal Details)
4) 2 years income tax & 3month payslip (IRAS Website -> Correspondence & Notices -> Individual Income Tax (Letter/Notices) -> Letter/Notices -> Notice of Assessment (Individual)
5) IC copy front n back
6) HDB Declaration  Will need an additional document for processing more than 60% financing for Singaporean and SPR - Please go to HDB's website athttp://www.hdb.gov.sg/MyHDBPageto do a screenshot, to show that you do not own any HDB or have any HDB housing loan currently. (Under 'My Flat > Purchased Flat > Financial)
7) Signed Application Form
8) Option To Purchase / Sale & Purchase Agreement
9) Credit card/Personal Loan/ Car Loan /Overdraft etc Statement (record under Credit Bureau) (upon banker request)


For Refinancing,

1) CPF OA account ( CPF website –> My Statement -> Section A <print this section>)
2) CPF Contribution History ( CPF website –> My Statement -> Section B )
3) CPF Property Withdrawal Statement (CPF website –> My Statement -> Section C -> Property - > My Private Housing Withdrawal Details)
4) 2 years income tax & 3month payslip (IRAS Website -> Correspondence & Notices -> Individual Income Tax (Letter/Notices) -> Letter/Notices -> Notice of Assessment (Individual)
5) IC copy front n back
6) HDB Declaration Will need an additional document for processing more than 60% financing for Singaporean and SPR - Please go to HDB's website athttp://www.hdb.gov.sg/MyHDBPageto do a screenshot, to show that you do not own any HDB or have any HDB housing loan currently. (Under 'My Flat > Purchased Flat > Financial)
7) Signed Application Form
8) Loan Repayment Statement
9) Credit card/Personal Loan/ Car Loan /Overdraft etc Statement (record under Credit Bureau) (upon banker request)
10) Previous Letter of Offer



If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg

Free Advice/Discussion on Bank Housing loan (Singapore)

Many people will be scratching their head to decide on which bank to go to for their financing/refinancing .
There are few groups of people using different method to get their "ideal" bank loan:

1) Group A : Just use the banker, their property agent recommend.
2) Group B : Just listen to their friend on which bank they went to recently.
3) Group C : Spend their time going from bank to bank to search for the Best rate
4) Group D : Just stick with the same bank as a Loyal customer throughout their loan tenure.
5) Group E : Get a Mortgage Broker to source the best rate in the market for them

Let me analyst each group for you and you decide which group you want to be in ...


1) Group A : Just use the banker, their property agent recommend.
Property Agent Core business is to Buy/Rent/Sell their client property. Normally Property Agent will just recommend their client to the banker they know. But are those banker in Bank which gives the Best Rate in the Market?

Is 3 years fixed at 1.35% the Best Rate in the market?
To most People who doesnt do much market research: It is!

But as a Mortgage Broker who does research on rates on every bank updates:
My answer is "There is still better rates"


2) Group B : Just listen to their friend on which bank they went to recently.
Time flies and Rate changes almost every few weeks.
Friend A took up a package last year , he will tell you that his rate is better than yours
Friend B took up a package 4 years back and have yet to refinance, he will tell you that you have the best package in the market. So which friend you go to?

Recently a client told me "My friend told me that he got a good rate, 3mth Sibor + 0.50%, how come you are recommending me 3mth Sibor + 0.80% "
Knowing that the rate he mention is absolutely impossible , I ask him to give me "his friend's banker contact" , so that i can refer all my client over to the "Bank" he mention. After checking , my client mention that his friend took up the package almost 1 year ago. So getting the package is impossible.

In the end, my client took up the package i recommend.3) Group C : Spend their time going from Bank to Bank to search for the Best Rate
There are more than 10 Banks/Financial Institute in the Market. Have you go into each and every Bank/Financial Institute to check on their rate ?? Or you have only enter a few Local bank and already made your decision?

Don't be surprise that at times, Foreign Bank and Financial Institute offer a Better interest rate.

                                                           3 years Fixed
                                      Bank A                                   Bank B
                                1st year : 1.58%         Vs        1st year: 1.15%
                                2nd year: 1.58%                     2nd year: 1.35%
                                3rd year: 1.58%                      3rd year: 1.45%

Based on 30 years loan tenure, $1mil loan size comparison, you will be paying $10,888.65 more within 3 years!!
Rather than paying $10,888.65 extra to the bank, Why dont you use $10,000 for your partial repayment after the 3rd year and $888.65 for a Great Dining with your Mortgage Broker :)


4) Group D : Just stick with the same bank as a Loyal customer throughout their loan tenure.
Loyalty Pay. What  i mean is be Loyal and you shall Pay more. There is no Bank which will call up their client to tell them that their rates have already reach the peak.

Recently I done a refinance for my client who is a Loyal Customer to his bank for more than 5 years.
How much do you think he can save on a small loan size of $233,509??

1) Reduce interest from 3.75% to 1.3167%(average) - Saving of around 2.4%
2) Reduce loan Tenor from 27 years to 15 years
3) Client Increase Monthly Instalment based on his Comfort Level from $1,147.14 - $1428.99 (average) [increase of $281.85]

Client SAVE $44k within 3 years after he made the Switch!!!5) Group E : Get a Mortgage Broker to source the best rate in the market for them
Mortgage Broker update themselves with Bank rates , analyst and source for the Best Mortgage loan in the Market for our client based on their Risk Level.

Bank A offers Fixed Rate and Sibor Package
Bank B offers Fixed Rate and SOR Package

Banker in Bank A will tell their client how good is their Sibor Package and not telling their client how low is SOR rates right now.
Reason  : They do not have SOR package, if they say SOR is low, they might risk losing a customer.

Based on client's needs and Risk Appetite, Mortgage Broker tailor the Best package in the market for them.
Reason: Either bank the brokers go to, Bank will renumerate them based on a percentage of the loan. To secure repeat business and more referral, Mortgage broker will source the Best Rate for their client.


If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg