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