Archive for the ‘Banking’ Category

How do I find a suitable Bank loan?

Monday, August 3rd, 2009

(Part of “The Almost Complete Goondu’s Guide to Buying a HDB Flat in Singapore” series.)

There are 3 ways basically, to finding a suitable Bank loan:

1) Ask your real estate agent

Agents earn a referral fee for bank loans, so if you like your agent a lot, getting him to refer you a loan would help him get some pocket money from the bank as well. On the downside, they might be incline to recommend loans from banks with higher incentives for them.

2) Approach the banks individually

This can be quite tedious really. Most banks don’t have their home loan packages online, and would require you to contact them personally in order to know about their loan packages. Even then, you might not get the lowest package, as they might push higher ones first.

3) Use a Mortgage Consultant service

Basically, you provide them the details (eg. buying hdb/private, loan amount, loan period) and they’ll contact the banks and source out suitable loan packages for you.

This service is free, as they are compensated by the bank upon a successful referral.

(in alphabetical order)
dollarDEX
Global Creatif Financial
Housing Loan SG
Home Loan Singapore
Money Mind
My Happy House

Personally, I’ve only used HousingLoanSG before, and have not tried the rest. We went with Approach 2, and did get the best available home loan then, and it’s still the lower than those being offered now.

    Approach 1

    We will work exclusively with clients to get the best housing loan package for them. We guarantee the best deal based on the client’s requirements. Beside the obvious interest rates, we also take into account other things such as legal subsidy, lock-in etc – basically the package as a whole. We will act as your single point of contact for all the lenders so that you don’t have to liaise with multiple persons. We require clients to be committed to refinancing through us for this method.

    Approach 2

    Some of our clients prefer to be more hands-on and approach lenders on their own. What we can do here is simply to see whether there is anything better than the lenders they have already approached. There is no commitment but there is also no guarantee on getting the best package for this approach.

    There are no fees that we charge as we are actually engaged by every bank and financial institution in Singapore to provide this service. If you have any queries, please feel free to contact me.
    Best Regards,

Now that I’m married, can we get a top-up grant and refinance to HDB loan?

Friday, July 31st, 2009

[note]In summary:

Eg.
– I bought a hdb flat under singles scheme.
– Not eligible for HDB loan. Took up a bank loan
– I got married after.
– We’re eligible for Top-up Grant and for HDB loan too.
– I can transfer to HDB loan by redeeming my bank loan.
– We now own our existing flat with a HDB loan. [/note]

(Part of “The Almost Complete Goondu’s Guide to Buying a HDB Flat in Singapore” series.)

These days, Singaporeans are spending more time pursuing their careers, and as a result, getting married at a later age. So what would happen if you’ve already bought a flat with a bank loan under the Singles Scheme (35 years or older) and just happen to meet and marry your spouse 2 years later?

You cannot sell off the flat and get another one with your spouse for another 3 more years, since minimum occupation period (MOP) for resale HDB flats bought with grant is 5 years. If you and your spouse’s combined income is still $8k or less, and your spouse has never taken a grant before, you can apply for a Top-up grant. This could mean an addition of $19k-$29k depending on whether your existing flat is near either of your parents. To learn how Top-up grants are calculated, check out the examples on HDB’s website.

If you wish to include your spouse as co-owner of your flat, things get a little complicated. On the legal front, the addition of a name into an existing mortgage lease is the equivalent of redeeming your existing loan, and taking out a new loan under both your names. This involves legal costs, some stamp fees, and your interest rate might change, depending on the prevailing interest rates offered. On HDB side, you would have to fill out a transfer of ownership application too.


Image by martywindle

Why then would you want to go through all this hassle? If you are planning to sell off your flat after 5 years, than maybe it’s not worth going through all the hassle. However, if you plan to keep it for the long term, it saves the legal complication that would be necessary, if something were to happen to you.

But there is another perk really, to adding your spouse to your flat. If you already qualify for a top-up grant, this means that it is likely that you qualify too for a HDB loan. With HDB loan interest rates pegged at 0.1% higher than CPF-OA’s interest rates, this means your interest rate is only 2.6% p.a., and more likely than not, it would remain that for the term of your loan.

For the long term, this is the lowest interest rates you can probably get, and its stable interest rates means you won’t suddenly be forced to fork out cash, which you would when bank variable loan interest rates start rising. Peace of mind.

To find out if you’re eligible for a HDB loan, fill out the HLE application form.

[tip]Fun Fact

Some people are tempted to finance their HDB flats with bank loan, even though they qualify for HDB loans. This is because with most bank loans pegged to SIBOR, and with SIBOR being really low due to the recession, starting loan interest rates are currently lower than HDB’s.

However, when the recession is over and the economy recovers, there is a high chance that SIBOR will rise and all SIBOR pegged home loans will have interest rates higher than that of HDB’s. In this case, even if you earned $8k or less, you cannot go back to HDB and say ‘hey can I refinance with a HDB loan?‘, because HDB does not allow.

In normal situations, you cannot take a HDB loan once you have taken out a Bank loan. The only situation I’ve come to learn of, where taking out a HDB loan to refinance a Bank loan is possible, is in the situation listed at the beginning of this post![/tip]