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
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