interest rates to go up or down

Falling Fixed Rates – Who’s Right?

Fixed rate mortgages in Singapore have seen quite a drop in rates since the beginning of the year when most banks offer 2-year fixed at 2.58%.  Of late banks have been trying to match and outdo one another with lower headline rates for fixed rate mortgages – from 2.38% to 2.35% to the latest at 2.28% (deviated basis only available when you speak to us)! That was a steep fall of almost 0.30% within a span of 5 months!


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Isn’t it good news for homeowners when interest rate falls?  Well, not when one just repriced and started a new loan contract on a fixed rate mortgage at 2.48-2.58% with a new lock-in for two more years at those rates, all that barely three months ago.


For one thing I know, writing this article is not going to go down well with everyone.  Those who have chosen to take a bet on floating rates with SIBOR home loans at the start of year as fixed rates were simply too high (that’s our general recommendation this year) will now be thankful; but those who signed on the higher fixed rates earlier on the advice of their own repricing banks or other brokers alike would now be feeling the blues and worry if interest rate would slide down further from here.


This is the problem when one speaks only to existing bank when they seek to refinance their mortgage, believing that it is effortless to just reprice with the existing bank and not shop around to see what else is out there.  Another scenario when one speaks directly to bankers trusting in their advice and wrongly concluding that they will get a better deal when they go directly to banks instead of through a mortgage broker as there must be loading on their package when a third party is involved.


In both of those situations above, what homeowners miss out is the fact that bankers are really sales representatives of their respective financial institutions selling specifically mortgages and charged with sales target to meet where they also earn commissions paid out by the banks.  It is funny how people are generally guarded when they talk to bankers on investment or insurance products like unit trusts, endowment plans, etc but let their guard down when they speak to mortgage specialists from the banks.


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Now don’t get me wrong here.  We are not discrediting mortgage bankers, afterall we do work with them too.  What we simply want to point out is that – though there are many good professional mortgage bankers who give good advice, they are still restricted to selling what is offered by only one bank.  And banks often do not offer the same kind or the full range of mortgage loan pegs in the market ranging from SIBOR, BOARD to FDR (fixed deposit rate).  Some do not even offer fixed rate mortgages.  And when their own bank is not offering what is popular or what homeowners are asking for, being sales-focused, bankers will peddle the next best option from their repertoire.  And for the first quarter of 2019, that next best option seems to be fixed rate mortgages that every repricing bank is peddling and feeding on the fear of runaway interest rates, until suddenly US Fed reversed its stance in March.


Contrast that with the advice one gets when working with brokers, who are independent third-party distributors of mortgage products from all lenders in Singapore.  We take a more objective view as we are not restricted to selling products from just one single lender.  That means we will be able to offer the full range of mortgage solutions in the market or recommend mortgage loan pegs based on what is most suitable at different points in the interest rate cycle – for example we have always said (since we started in 2014) that when the cycle reverses down and interest falls, SIBOR would the most preferred mortgage peg as it is the most elastic and hence the first to fall.  Remember, another significant difference between the advice of a broker versus that from a banker – we are in this for long-haul and we need to make sure we give the right advice, failing which we will have no repeat business every two to three years come renewal.


Finally, back to that all-important question – is it really true one gets a lousier deal when going through a broker for a mortgage as the bank would need to pay a third-party referral fee?  Not true.  The best example I like to give is when one buys an Macbook.  One can buy it from the Apple Store at Orchard and get supposedly better service, or buy it from a third-party distributor like Challenger store. Same item, same controlled-price, but you get more promotional freebies buying from third-party stores.  We have already explained this, bankers are sales representatives who earn commissions on the transactions, on top of basic salary. When there is a third-party broker involved, the banker just earns less commission on the deal, in exchange for bigger volume of business from the broker.  The home loan package and the final interest rate would be the same for homeowners but he or she gets much better information and more impartial advisory from the broker whose business interest is aligned with that of the client’s long-term interest.


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To end, we come back to the question of falling fixed rates: Will 2-year fixed rates continue to slide down below 2.28%?  As I have forewarned at the beginning of the year, 2019 is going to be most difficult year to do interest rate forecast no thanks to the trade war.  All eyes will be on the actions of US Fed.  The market is now expecting up to two rate cuts with one coming as early as July next month.  We will listen for clues on Fed’s FOMC meeting for June coming right up next week so say tuned to this blog. If US Fed indeed cut rates before the end of the year, there will be downward bias for SIBOR and we will not be surprised fixed rates may go all the way back down to 2% or sub-2% level. Still, this is not a done deal.  A lot still depends on the outcome of US-China trade negotiations which has stalled for now.  If we do get some kind of resolutions soon enough, sentiments will change. In this current environment it is all the more important to stay nimble when choosing the right mortgage package and we think free conversion becomes an indispensable mortgage loan feature to this end.


Not convinced yet that it is better to take your loan through a broker?  Refinance with MortgageWise and you will receive a $150 Refinancing Valuation Fee Offset, subject to min loan of $500,000.  New purchase home loans will also enjoy a Special $1,800 Purchase Legal Fee (includes mortgage stamp duty, gst) from our partner law firms.  Other terms and conditions apply.  So, speak to us today.


Since 2014, has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest developments in the industry, providing useful mortgage tips, and making sense of rate movements.  We seek to build trust with clients over the longer term instead of doing product-peddling for quick one-time deals.  That’s why we always present “whole-of-market” perspective including home loan packages that some banks do not pay us.  Read our clients’ testimonials.


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5 Surefire Ways To Reduce Housing Loan Interest

As interest rate continues to run up unabated, it is timely to do a review on your housing loan and in this article we will look at 5 surefire ways you could reduce your borrowing costs.

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1. Lock Down Fixed Rate Today

In this blog, we have been warning of rising home loan fixed rates since two months ago.  And as local banks announced raising their fixed rates further in November to 2.28% (2-year fixed), and HSBC ending their current fixed rate promotion (one of lowest) this week, we are drawing near to the scenario we predicted a while back – there will be no more sub-2% fixed rates in the market soon.  The last remaining banks to offer fixed rates of below 2% for housing loan are Hong Leong Finance (1.88%) for hdb property and Bank Of China (1.95%) for private properties of loan above $500,000.  Every one else is above 2% now with the withdrawal of HSBC fixed rate packages this week.


If US Fed follows through with one more rate hike in December and three more forecasted for 2019, there seems to be no reprieve in sight yet for homeowners, not until when the fed funds rate itches closer to its longer-term neutral rate of 3% by end of 2019.


For those with lock-in ending within the next 6 months (by April 2019), quickly contact us to lock down a fixed rate housing loan package now when it is still at the 2% range.  Yes, unknown to many, we can do that as early as 6 months before with some minor trade-offs in the period of fixed rate term one will enjoy.  Our experienced team of mortgage consultants will explain how it works.  As I put to you that if fed fund rate rises to just 2.50% (if we reduce the forecasted number of hikes going into 2019 due to trade war and undue influence from the White House), 3-month SIBOR here in Singapore is not going to stay at the current levels of 1.64%.  See our correlation chart.  This means that fixed rates for housing loan would most likely rise up by approximately another 50 basis points from where we are today.


2. Reduce The Tenure

This is certainly going against what most bankers and mortgage consultants would preach.  Before we explain this point, let us give one caveat – when this is a 1st loan on a property at the point of purchase, there is some merit in the argument to go for a longer tenure as in subsequent refinancing, certain banks may not allow one to increase the no of years from the original tenure of the loan.  Of course, reducing it is of no concern to any bank as long as one could still meet TDSR (total debt servicing ratio) with a higher monthly repayment that comes with a reduced tenure.


For those who has no concern on cashflow to service a higher repayment every month, and especially for owner-occupied homes where there is no monthly rental to defray interest costs, the best way to reduce interest costs is to shorten the tenure.


Most homeowners focus on reducing the interest rate per se during refinancing, but forgot to look a closer look at tenure as a lever to cut interests.  There are two drivers behind how much of the mortgage repayment you pay every month goes to interests and how much of it goes to reducing the principal loan.  Ceteris paribus, know this:


“The higher the interest rate, the bigger is the interest-component in the monthly repayment and less goes to reducing the loan;


The longer the tenure of the loan, the bigger is the interest-component in the monthly repayment and less goes to reducing the loan.”


We have illustrated this point clearly with a case study in another article which you may want to read here.

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3. Do Partial Repayment – Immediate And During The Lock-In Period

To pay down partially on the outstanding loan when one refinances is an obvious way to reduce interest costs.  The art is in deciding how much to pay down and how much to stash away as emergency funds or funds you could deploy quickly when opportunity arises like during a market crash etc.


Perhaps one good way is to do a combo loan – many in the market are still unaware of this option, which is available today via three banks.  Simply set a target how much one likes to pay down within the next two to three years.  For example, on a $700,000 housing loan, one may reason that with expected bonuses at year-ends and excess funds accumulating in the CPF Ordinary Account (OA) balance, there is a very high chance of paying down a further $100,000 over the next two years.  Simply take $100,000 in a floating rate housing loan with no lock-in or one that allows partial redemption, and the remaining bulk of $600,000 follow what we advocate in our first point – lock down with the lowest fixed rate housing loan as there is no intention to pay down on that portion.


Incidentally, one noteworthy point here – whenever cash flow is not a concern, one should always service the housing loan in cash instead of from CPF.  Until such time mortgage interest rate rises above the CPF OA interest of 2.50%, unlock the CPF funds to reduce the outstanding loan.  Why?  Think of it this way, if CPF Board wants to work hard to achieve a risk-free (to you) return of 2.50% p.a. by investing your money, let them do it.  If one uses his CPF funds to service the home loan instead, not only does he deprive himself of this guaranteed return, he has to make that 2.50% return per annum himself to pay back to his CPF as accrued interest when he sells the property later.  Tough.  Unless of course one is a professional fund manager by training and achieves a much higher annualised rate of return above 2.50%, then by all means service the mortgage from CPF and deploy his cashflow for investment.  But how many of us can do that consistently?


4. De-couple At The Same Time When One Refinances (And Buy A 2nd Property?)

This recommendation helps not only reduce interest costs in the long run, but one’s overall transaction costs for those planning to buy a second property for investment.  But it certainly carries some risk.  So, caveat emptor!


With new cooling measures announced on 6 July 2018, ABSD (additional buyer’s stamp duty) has gone up to 12% on a second property even for a citizen.  We have predicted that the trend for couples to “de-couple title” on their first private property will continue and become even more popular.  As de-coupling of property title involves significantly higher legal fees (market rate $5,000-$6,000), the best time to do it is during a refinancing exercise where there are banks who may still provide partial legal subsidy (most banks do not offer subsidy when there is a purchase component like in de-coupling). Speak to our consultants who can advise you on this.

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How can de-coupling then saves money when one has to spend more on transaction costs and put down more money for downpayment of a second property?  This requires taking a longer-term perspective.  First, a couple who are both citizens would save on paying 12% ABSD when the outgoing spouse (for example the wife) buys a property in her own name.  Next, although collectively they now take on more loan with the husband assuming the full loan on the first property, and the wife taking out a new purchase loan on a second investment property, the difference is – there is now rental income to help pay for interest costs on both housing loans.  We will illustrate this with one quick example below:

buying investment property

Total interest on both properties in 1st month = $1,250 + $833 = $2,083 is less than rental $2,500


The total interest costs is now paid for completely by the tenant.  This is of course an over-simplied example as we are putting in quite a number of assumptions:


  • The Tans have the funds for downpayment of for the 2nd property
  • Both husband and wife have much higher income now to qualify for a bigger loan on their own and they have the cashflow to meet a higher combined monthly repayment of $6,323 (additional $2,529 more every month due to the new purchase loan)
  • The investment property is highly-lettable with no or minimal vacancy periods between leases
  • There is minimal unexpected “holding costs” they will incur which erodes the yield for example repairs, contributon to sinking funds, etc.


(Note: In this example we are ignoring the usual transactions costs like normal 3% buyer’s stamp duty, agent’s commission, legal fees, etc. as we are not calculating net investment yield.  We are not getting into discussion on capital gains from asset appreciation over time hence we ignore the return of investment for deploying funds toward downpayment of 2nd property)


For this strategy to work, the key is the ability to achieve consistent rental income and for mortgage interest not to skyrocket so high like above 5% for long periods which then means they will need to “top up” and pay interests as the rent per se will not be sufficient to cover the interest-portion completely.  Having the  cashflow to sustain through such high-interest periods, if it happens, will be vital failing which they will need to dispose of the asset sometimes at a loss.


Still, you get the idea behind this – we always advocate property investment as a form of disciplined savings where the tenants help to pay for the property over the course of the loan.  Over the long term, investment property may be the best way to reduce interest costs as someone else helps to pay for it.


Incidentally, there are ways to get more loan from the banks based on assets including stocks and bonds instead of just income earned. Speak to our consultants who can calculate the maximum loan for a new purchase loan or AIP (approval in principle) for you or your spouse.


5. Work With A Trusted Mortgage Consultant

Buying a second property for rental income may not work for everyone.  Seeking out a trusted professional mortgage consultant whom one could work with long term is what every homeowner could do and should.


Not only does having a personal mortgage broker saves one time in doing home loan comparison, it actually saves money when there are timely reminder calls to review the mortgage ahead of lock-in expiry date.  A good mortgage consultant would also be able to track developments in the industry including interest rate hikes by the various banks over time to aid clients in making the most informed decision, not to mention navigating the ever-changing regulatory framework on home loans.



We hope the fire ways outlined in this article will benefit you in saving real money, or at the very least let you see mortgage planning and management in a new light. Contact us now to start saving on interest costs from today!



Since 2014, has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest developments in the industry, providing useful mortgage tips, and making sense of rate movements.  We seek to build trust with clients over the longer term instead of doing product-peddling for quick one-time deals.  That’s why we always present “whole-of-market” perspective including home loan packages that some banks do not pay us.  Read our clients’ testimonials.


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Reprice Or Refinance Home Loan?

As interest rate begins to creep up this year, many homeowners are receiving notifications from banks this year on a higher revised monthly repayment, sometimes more than once within six months.  That is when some people realized the importance of not being locked into any loan which then allows them to refinance out for better rates elsewhere if need be, or even partially paying down the home loan using one’s CPF (especially when floating rate goes near to 2.50% where it no longer make sense to leverage).

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Apart from interest rates, home loan packages in Singapore today can come with all sorts of interesting features which many may not be aware of.  Homeowners should therefore take heed and not simply reprice and sign on the dotted line with their existing banks without even checking what else is available in the market.  Remember when repricing, most likely you would need to lock yourself in for another 2 years with the same bank, essentially denying yourself the chance to try out new mortgage features, and new products and services from a new bank who may be hungrier for your business.

Without going into too much details, let us me just list 12 of these new mortgage features:

  1. Full flexibility to reduce the loan anytime during the lock-in
  2. Ability to sell the property without a penalty during lock-in when an offer too good comes up
  3. Free conversion should the bank revises up its loan peg during the lock-in
  4. Free conversion at end of the lock-in period
  5. Interest-offset account where you can offset up to 70% of the outstanding loan
  6. Qualify for high-yielding deposit account via a home loan
  7. Becoming a preferred customer of an international bank via a home loan
  8. Having the best of both worlds by combining fixed and floating rate in the same loan
  9. Legal subsidy to help defray the high costs for de-coupling of property titles
  10. Cash out on a term loan without incurring much admin fees (compared to doing it via repricing)
  11. Cash out to get a higher term loan without being restricted by CPF usage in the property
  12. Refinance at no costs through MortgageWise (compared to repricing where banks might still charge)


I marvel when I read recently advice given by another mortgage broker that for those looking to sell their property, it is best they reprice instead of refinancing now.  This is no longer true when there are more than a few banks offering fixed rate home loans now that come with waiver of penalty due to sale during the lock-in period.  Yes, there is still the legal fee clawback if one redeems in full the mortgage within three years but the $2,000 clawback is easily covered by the savings in interest alone in the first year of a 3-year fixed rate term.  Not to mention if the current bank charges an admin fee for repricing or imposes a fresh 2-year lock-in which means redemption penalty!  In fact, the best option for those who are selling is to refinance out if the current bank does not offer a package with waiver of penalty due to sale.

As you can see from the list above, your current bank definitely will not be able to offer you all of the features above.  You will first need to understand what these features are, and ask yourself what is important to you besides interest rate per se, which can appear low today but many have realized that they do not last.  It will be too much details for me to elaborate on all the features and benefits above in this article.  It is better that you speak to our team of very experienced mortgage consultants operating since 2014 who collectively have helped thousands to refinance successfully and to enjoy not just the lowest interest rate but benefits unknown to them before they start working with a professional mortgage consultant.

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And one of those benefits unknown to most, allow me, is the last one on the list – refinancing out to another bank through MortgageWise now comes with zero “out-of-pocket” costs for min loan of $500,000 (other terms apply), compared to repricing where some repricing banks still charge a small fee.  It is zero cost because we are giving away $250 Tangs voucher to help offset valuation costs up to $450 for most properties.  And this is not one of those “up to” gimmicks where you qualify only if your loan is above $2m.  As long as your outstanding residential home loan to refinance is above $500,000, you will receive $250 Tangs voucher from us.  Period.  MortgageWise has now given the market a genuine no cost option to refinance to the bank who offers the best deal in terms of lowest interest rate and best loan features.

Refinancing may seem daunting to some at first with the need to submit documentations to the new bank for approval.  Most of our clients are quite pleasantly surprised to discover that with the advent of technology these days, all that you need is just 20 min and a SingPass to access 3 government websites and retrieve 5 sets of documents and you are done!  We will show you step-by-step.  And when we also show, by way of our interest simulation model, that the average interest savings based on a $700,000 home loan could add up to $3,000 over a period of 2 years, is it not worth that 20min of your time?  Why make your bank richer when you could use that sum on a nice vacation at the end of the year?

Interest rate is still expected to rise further with Fed projecting two more rate hikes before the year is over, and with one coming in just the next few weeks (September FOMC).  Banks have been moving up both fixed and floating rates over the months.  Take decisive action now and lock down the lowest rate so you can rest easy!


Since 2014, has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest developments in the industry, providing useful mortgage tips, and making sense of rate movements.  We seek to build trust with clients over the longer term instead of doing product-peddling for quick one-time deals.  That’s why we always present “whole-of-market” perspective including home loan packages that some banks do not pay us.  Read our clients’ testimonials.


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Australia Property Loan – Aussie Vs Singapore Banks

Unknown to many, Singapore banks have long been active in providing Australia property loans for purchases in the 3 main cities of Sydney, Melbourne, Perth (plus Brisbane for some lenders) to both Singaporeans as well as foreigners onshore and offshore to Singapore, as long as one is not a resident of Australia.  This applies even to Aussie expats working outside of Australia.

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With the clampdown on mortgages issued to foreigners in Australia since 2016, more Aussie property investors are finding reprieve from lenders in Singapore.  To give a quick understanding, we give a summary on the key differences between borrowing from Aussie banks (for those still eligible) and from Singapore banks below.


Information As At August 2018

Loan FeaturesAustralia Property Loan
From Singapore Banks
Australia Property Loan
From Australian Banks


Non-tax resident of Australia;
Singapore Citizen/PR;
Onshore/offshore foreigners to Singapore
Australian tax residents;
Australia Citizen/PR;
Mainly onshore foreigners to Australia


Must be for investment only;
(both purchase or remortgage from Aussie/Singapore banks)
Both investment and own-use
(both purchase & remortgage)
Base Currency


Choice of AUD or SGDAUD only
Currency Switch


Interest Rate


Variable rate only
(P+I, no interest-servicing loan option)
Fixed and variable
(with interest-only option)
Mortgage Peg


3-month SIBOR (In SGD);
Bank’s AUD COF/3M-BBSW* (In AUD)
Variable rate based on internal BOARD
(usually reference on cash rate from RBA)
Loan-Value-Ratio (LVR)Mostly 60% with max up to 70%
(75% for Singaporeans)
Mostly 80%
(max up to 90% for Aussies)
Minimum Loan


A$200,000 to A$300,000A$100,000
Max Loan Tenure


30 years or up to age 7530 years or up to age 99


Sydney, Melbourne, Perth, Brisbane;
Usually within 25km from City Center;
Approved project list
All cities and projects
Type Of Property


Must be completed in 1 single disbursement, usually apartments/condoAll types completed or under construction
Built-in Area


(internal only exclude balcony/PES)
(internal only exclude balcony/PES)


As our chart above illustrates quite clearly the differences between taking out a mortgage from an Aussie bank versus that from a Singapore lender, we need only to highlight a few other considerations when choosing between the two:


1. Amount of expenses and debt information to be furnished

In an effort to clamp down on excessive lending in recent years, Aussie banks have stepped up their checks on applicants’ expenses and debt level declared by seeking a whole bunch of onerous documents from credit card statements to household bills.  Australian authorties have also announced in Nov 2017 plans to introduce a mandatory centralized credit reporting regime which forces the big four lenders downunder to participate fully from July 2018 by feeding credit rating agencies with detailed credit card and loan payment information.  What this means is a more transparent and holistic view of one’s credit worthiness at a national level which is expected to impact the amount of loan to be granted from Australian lenders.

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In fact, just this month Bloomberg reported that according to UBS Group AG analysts, the new regime which brings about more genuine assessment of spending behaviours (Aussie banks have displayed consistent under-estimate of living expenses) would curtial borrowing power of the A$1.6 trillion by as much as 35%!

This has big implications for property investors in Australia who would do well to start looking elsewhere for leverage.  By and large, it is still a breeze for non-residents to borrow from Singapore banks for their Australia property purchases, who requires just 6 month’s of payslips with matching bank statements showing salary-crediting.


2. Need for AUM (asset under management)

However, for foreigners, most lenders in Singapore would require onboarding of preferred or priority banking which means you need to park around S$200,000 of funds with the bank here in Singapore.

This could be waived in certain situations or you might be asked instead to earmark a much smaller sum equivalent to 36 months of the mortgage instalment payable upfront.  This requirement can actually become an advantage (see next point) if you know how to make full use of currency movements.  You should speak to our dedicated team of mortgage consultants who would guide you step-by-step on how to secure your Australia property loan in Singapore.


3. Currency risk when financing in SGD – boon or bane?

Financing your Australia propery purchase from Singapore banks also present a unique opportunity to profit from currency movements, notwithstanding the risks involved which can be mitigated.

Take for example in recent months due to fears of China’s economic slowdown in the face of tariffs and trade war from the United States, Aussie dollar slips against the Sing dollar dropping to a recent low of $0.997 on 15 Aug.  This makes a good entry point for one to take out a mortgage in SGD for financing Australia property purchase, with a view to profit from a subsequent rise in AUD/SGD which leads to a smaller loan in Aussie dollar terms.

Supposed John who works in Hong Kong buys his Melboure apartment for A$800,000 with a 60% LVR mortgage from a Singapore bank at A$480,000, which he took in S$ financing and converts at AUD/SGD $0.997 to S$478,560 and service the loan with an interest at 3.8% over 30 years tenure.

Imagine Aussie dollar recovers back to FX rate of AUD/SGD at $1.050 in a year’s time, and John decides to switch his loan base currency from SGD back to AUD, he would convert his loan outstanding of S$469,835 to A$447,461.  Had he taken the loan in AUD back then, at the same interest rate of 3.8% over 30 years, his loan outstanding would now be A$471,249 instead after 1 year.  This translates into a savings of A$23,788 for John which is equivalent to a reduction of almost 5% on his original loan amount of A$480,000!

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4. Interest-only servicing option

Another key difference is that Australian banks offer interest-servicing mortgage option where in the initial years of the loan (usually 5 years) borrowers need only pay the interest component without any reduction in principal every month. The central bank RBA (Reserve Bank Of Australia) estimated that up to A$360b (1/5 of the mortgage market) of IO (interest-only) mortgages would roll-over to P+I (principal + interest) over the next 3 years which some has called this ticking time bomb.  The mortgage reset to P+I will place great strain on borrowers struggling to hold on to the property especially at a time when cash rate might be adjusted up.

IO loans might not be such a good idea for long-term investors in Australia property.  Still, it is no doubt for an attractive leverage option available to those who could borrow from Australian banks (new requirements has it now that no more than 30% of new loans issued every month can be IO loans).  The next few years might throw up buying opportunities indeed at firesale prices, but only for residents in Australia who could buy from the resale market which is not still not accessible to foreigners.


For a more indepth understanding of how one can qualify for Australia property loan financing from Singapore banks, speak to our team of mortgage consultants today, obligation-free!


Since 2014, MortgageWise.sghas provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest trends in the industry, providing useful mortgage tips, and making sense of rate movements.  We aim to build trust with clients for longer-term partnership and not just do product-pushing for a one-time deals unlike bankers. That’s why we always present “whole-of-market” perspective including packages that banks do not pay us.  See our clients’ testimonials.


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Zero-Cost Refinancing From MortgageWise

I am excited and happy to announce our latest initative for clients – a “zero-cost” option for refinancing with minimum loan of just $500,000. Terms apply.

Since we started our operations back in 2014, we have scored quite a number of firsts in the market as we continually seek to create value for clients who choose to work with us.  We started with a monthly lucky draw where winners walked away with legal fees fully paid for that ended in mid-2017.  We then launched our unbeatable purchase legal fee of $1,800 all-in (inclusive mortgage stamp duty) for private properties up to a purchase price of $3m.  This translates into an immediate savings of $700 (market rate is $2,500 for purchase legal fee) when clients decide to work with us for the same packages from all the banks.

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The picture is now complete with our latest privilege for the refinancing clients.  For those who refinance a home loan of more than $500,000 through us, we provide you with a “zero-cost” option as follows:

  • Enjoy a $1,800 all-in refinancing legal fee from our partner law firms (for standard refinancing transaction only, see our terms).
  • Receive a $250 Tangs voucher on us. No “up to”, no gimmicks.
  • Refinance to one of 5 banks which form 90% of the market: DBS, OCBC, UOB, HSBC & Maybank
  • If your property is a condo unit with valuation of no more than $1.5m or a size of no more than 1,300 sqft (dependant on the bank’s valuation pricing guidelines), we have worked with our bankers from these 5 banks to keep your valuation fee to no more than $450.
  • With a legal fee at only $1,800 you enjoy a savings of $200 from the cash rebate given by the new bank (usually $2,000 for loan above $500,000), and together with our $250 Tangs voucher which helps to offset your costs, the total value created by working with us is $450 which means there is no out-of-pocket expenses when you refinance through MortgageWise!

(see the full set of our terms & conditions)


Unlike purchase where one needs to apply for an IPA (in-principle approval) before putting down the option fee for that dream home, we understand the efforts involved in researching for a home loan and coming to a refinancing decision.  It is already such a hassle calling up one’s existing bank to ask for a repricing quote, which incidentally, is what we always encourage our clients here to do at MortgageWise.  Not to mention then there are documents to submit to the new bank.

Besides showing you all the best rates out there including “deviated rates” from time to time, and how easy all this paperwork can be done, we like to level the playing field for all clients who choose to work with MortgageWise, by offering you this “no-cost” alternative.

Now, do not get us wrong.  We are not saying that you always need to switch banks, much to the ire of our bank partners really.  Still in a open market economy and in an information age, the onus is really not on us brokers, but on the repricing banks to make sure they have a competitive offer to retain their customers.  Our job is to provide clients who are seeking for the best rates in the market with the most complete and accurate information and make the process a breeze should he decides to move.

By making it a level-playing field now with transaction costs removed, what is left now is a decision based on the loan features itself and who can provide the best offer on the best terms win the day. This is afterall the essence and beauty of free market which we embraced here at MortgageWise.

So speak to our consultants today and lock down the lowest fixed rates with our zero-cost option! Terms apply.  There is no better time than now to do a review on your mortgage interest costs.


Since 2014, has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest trends in the industry, providing useful mortgage tips, and making sense of rate movements. We aim to build trust with clients for longer term partnership and not just do product-pushing for a one-time deal unlike bankers. That’s why we always present “whole-of-market” perspective including packages that banks do not pay us. That’s why many have chosen to work with us in the end notwithstanding the sheer number of brokers and agents out there. See their testimonials.


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10 Considerations Before You Refinance

As interest is on its way up, more people will be paying closer attention to their mortgage costs.  Even if this is not the first time you do remortgaging, it is always good to revisit some key considerations before you signed on the dotted line.

1. How Early Should You Start?

Unknown to many, you can actually start to shop around for lowest home loan rates as early as 6 months before your current lock-in expires, if any.  This is because even after you signed the mortgage contract, the new lender will usually provide you with a 6-month period to draw down on the facility failing which there will be a cancellation fee.  Still, in an environment where rates are going up, it pays to start this process early in order to lock down lower fixed rates.

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2. Refinancing Versus Repricing?

Repricing means staying on with the existing bank but switching to another prevailing home loan package.  Typically, banks will only quote you a package for repricing around 4 months before your lock-in expires. This means if you sense rates are rising too quickly for your liking, you would lean more towards refinancing rather than repricing especially if the cost of changing banks is insignificant compared to how much you could save on locking down a lower interest rate early.

Of course, this would be over-simplication and there are many other things to consider in this decision.  You would need to do a detailed cost-benefit analysis for each option.  Most people can use the help of a professional mortgage broker.

Besides considering the direct cost and benefit involved like legal/valuation fees versus interest savings, don’t forget there could also be indirect cost and benefit.  And one that we often see is how it almost certainly pays to become a new customer to another bank every three years rather than staying on as existing customer where your interest gets adjusted up after the initial years, and your mortgage peg like FDR (fixed deposit rate home loan) is next-in-line to be raised.  Even if you ask for repricing, you would most likely be slapped with an admin fee.  Contrast that with moving to another bank where the red carpet is rolled out to get your business with the thinnest of margin (or profit) for the bank.

3. Need To Cash Out?

If you are keen to cash out on the private property you purchased long ago where the value would have certainly appreciated substantially by now, but without selling it, the solution would be to cash out or take an equity term loan.  A lumpsum cash will be disbursed to you and you can use that for investments or to pay down your other debts with higher interest like car loans for example.

To do cash out, refinancing would most certainly be preferred over repricing as the latter entails out-of-pocket expenses like admin and valuation fees levied by your existing bank.  There will also be no legal subsidy provided.  Unlike in the case of refinancing, the new bank not only gives you more interest rate options but cover your costs through legal subsidy or cash rebate.  And if you work with established brokerage firms, they would probably be able to get their partner law firms to wavie all additional fees associated to the term loan.

4. Selling The Property?

The next big consideration is how likely would you be looking to sell the mortgaged property soon? If you do that within the lock-in period (typically 2 years) of a mortgage contract, you will be liable to pay a 1.5% penalty as you would have to redeem the loan in full.

Again, many are not aware.  There are banks that offer packages with a waiver on this penalty if redemption is due to sale of the property during the lockin period.  You just have to prove the sale to the bank by way of option exercised.

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5. Looking To Pay Down?

Would you want to make lumpsum repayments to reduce your mortgage for example after you get your year-end bonus?  The same 1.5% penalty (on the amount redeemed) applies if you pay down during the lock-in period.  There are banks who offer packages that allow such partial prepayment up to a certain amount of the outstanding loan like 50%.

Before you decide to pay down especially when using cash, consider the option of an interest-offset account which pays you the same deposit interest as your mortgage interest (up to a certain amount based on your outstanding loan).  This has the same effect as reducing your outstanding loan but yet you retain the flexibility to withdraw back the cash when you need to, for example when the stock market crashes, or when you spot the next bargain deal in the property market which leads me to my next point.

6. Buying Another Property?

With property market on an upswing, it is unlikely any past cooling measures will be relaxed in the foreseeable future.  This means more property owners will need to consider de-coupling as the only way to avoid paying the hefty ABSD (Additional Buyer’s Stamp Duty) for a 2nd property purchase in Singapore.

De-coupling is not the same as removing one owner from the loan which is commonly referred to as 2M1B in the industry, or 2 mortgagors but 1 borrower.  That only allows the spouse without any mortgage to get 80% loan-to-value as a 1st mortgage for the next purchase, ABSD is still chargeable.  De-coupling entails transferring of the 50% ownership in the property from A to B by way of a sale.  B assumes 50% of the outstanding loan with the option to pay down the balance or apply for additional new purchase loan for total mortgage to remain the same as before, subject to TDSR and income qualification.  A is no longer an owner and becomes free to buy another property as his first property without incurring ABSD.

The best time to do de-coupling will be during a refinancing exercise, as some banks though few might give legal subsidy for the portion of the loan that is refinanced.  A good mortgage consultant will be able to advise you on the banks who can do that. The subsidy will not be able to cover the legal fees involved for de-coupling which range from $5,000 to $6,500 (for both parties buyer B and seller A), but it helps defray some costs.  More importantly, you should de-couple before you sign onto another home loan package with a new lock-in period as de-coupling is essentially treated like a sale of property and any outstanding loan must be first fully redeemed.

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7. How Long Should The Tenure Be?

We actually go to great length on this topic in another article.  Suffice to say that there are really two drivers for how much interest you pay every month – the interest rate itself, and the tenure of the loan.  And when interest rises to 3% at some point, almost half or 43% of what you pay every month goes to the bank’s coffers.  On tenure, a reduction from 30 years to 20 years brings down the interest component of the monthly repayment from 38% to 27%.

To decide on the optimal tenure, consider how much total interest you like to pay the bank over the long run and how comfortable in terms of monthly cash flow will you be servicing a higher monthly repayment (when tenure is reduced).

8. Fixed vs Floating Rate Home Loan

Again, this is a topic big enough for another article with 6 other factors one should weigh:

– Gap between lowest fixed and floating rate (more than 0.50%?)
– Owner-occupied vs investment property
– Flexibility for paydown
– Size of the outstanding loan
– Stability of one’s income
– Outlook on interest rate and how much one values peace-of-mind

9. Dressing up for TDSR

This point pertains to those with TDSR issues or who might be in-between jobs while seeking refinancing in a bid to bring down interest costs.  It is important that you plan early to give yourself full access to all home loan packages available in the market. To always be in the best position for refinancing, some examples of the things to “get ready” would be:
– Always keep copies of computerized payslips for rolling 12 month-period as that captures recent bonuses paid out unlike tax returns
– Avoid big-ticket spend on credit cards two months before the application (alternatively be prepared to pay down in full)
– Investors with multiple properties need to take note of their various lease renewal dates and apply for refinancing 6-8 months before they expire.

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10. Use A Broker Or Go Direct?

By now I hope you see the complexity involved in mortgage financing which requires careful planning and that is why we have often stressed the need for the service of a full-time mortgage professional.  This is especially so when the service comes free in Singapore, as all brokers are paid a referral fee from the lenders.

In fact, many still do not quite comprehend the function of a mortgage broker and wrongly believe that they will get the short end of the stick as surely the banks would price in this referral fee and they would pay higher interest rate then if they apply directly to the bank.  Not true.  Just think of it as buying a Macbook from Apple Store vs a third-party authorized distributor – the price is controlled and the same, you just get more freebies thrown in if you buy it from Nubox or EpiCentre!  The bank has already built-in the referral fee as part of the distribution costs in the interest rate. There will always be marketing and distribution costs for any product, just that the bank pays its internal sales staff less when there is a broker involved.

Speak to us today for a full mortgage review and start a relationship with your own trusted mortgage consultant.


Since 2014, has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest trends in the industry, providing useful mortgage tips, and making sense of rate movements. We aim to build trust with clients for longer term partnership and not just do product-pushing for a one-time deal unlike bankers. That’s why we always present “whole-of-market” perspective including packages that banks do not pay us. That’s why many have chosen to work with us in the end notwithstanding the sheer number of brokers and agents out there. See their testimonials.


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Uber Grab And Your Home Loan

To be precise, I should say the lesson we draw from Uber versus Grab and how that too can happen to the mortgage industry.

By now most would have heard about the news of the merger – I would rather put it as Uber bowing out of S.E. Asia and ceding market share to Grab. There can be mixed views on this news I feel strongly this is anti-competitive and a negative development for commuters in Singapore. This is drawing from what I see in many industries in past decades that has gone through free market compeition from airlines, telcos, to serviced office rentals just to name a few. There are absurd views I read which argue that service would improve and as Grab dominates the entire market it is better able to match demand and supply leading to greater efficiency in deploying its fleets. First and foremost, understand that Grab is not a social enterprise, and when an entity has absolute pricing power with no viable alternative for the consumers, over time price can only go up but not down.

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The similar sitatuon could also happen in the home loans market, which is pre-dorminantly shared by the three local banks which collectively command an estimated 85% of the market. To draw an analogy, Grab is like local banks which have big presence in South Asia. Uber is like foreign banks with huge global franchise but are dwarfed by their local counterparts when it comes to consumer banking business in Singapore. Local banks naturally have an advantage when competing on their home turf with brand trust & familiarity, greater branch network and access to cheaper funding source like retail deposits. For the same three factors, foreign banks would find it an uphill task taking on the local competitors and some might feel the margin squeeze so much so as to sell out and exit the market totally. This has happened before on more than a few occasions.

Imagine should the day come when foreign banks one by one decide to bow out of the mortgage market from the likes of StanChart, HSBC, Citibank, Bank Of China, and even Maybank, what would happen when the time come for re-financing of your home loan? With only three local banks, you effectively have a choice of only two other lenders and very soon you will realize that the three banks tend to match one another in terms of price offering – it’s only a question of who go first. Is that not absolute pricing power to some extent?

We hope that day would never come as unlike taxi and transport fares, mortgage interest costs forms a huge proportion of our total expenditure. Take a typical loan of $800,000 over a 30-year tenure at the long-term average rate of 3% p.a., that translates into a total interest costs of $414,219 if the mortgage is serviced to the last year. We want to make sure there is always free market competition giving real choices to homeowners every time we do a review of mortgages which should happen once every three years.

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For this reason, we have always advocated the need to support foreign banks especially when there is some savings from remortgaging to another bank, no matter how small that savings could be. Some might call this “churning” behaviour in sales which is frowned upon, but for mortgages I beg to differ and in fact I would argue that it is good for borrowers and the mortgage industry in general. If a hardworking mortgage broker is able to source for and find another home loan package that, aftering factoring in all the interest savings and trnasactions costs involved, would result in a net benefit of only $200 for example, why should you not move? After all, with $200 savings you could easily pamper yourself with a nice rejuvenating massage after all those long hours in the office, plus more importantly, you are contributing your part in keeping the entire mortgage eco-system alive from ensuring there is free market competition, jobs for bankers (so they meet their targets), business for law firms, to the livelihood of mortgage brokers like us (who are paid referral fees only if the banks successfully acquire new customers). Unlike churning in traditional sales for example life insurance, no one loses out in mortgage churning. On the contrary, everyone is a winner as you get a net benefit of $200 just by submitting some forms and making one trip down to the law firm to sign the mortgage documents. You might also sign yourself onto a better set of mortgage contractual terms from lock-in reduction, flexibility to pay down, sale without penalty, etc. and whatever latest features launched by a bank more hungry for your business. The banker meets his monthly mortgage target and keeps his job while other bank jobs are being disrupted. The law firm continues to get re-financing business in the midst of any property market slowdown, hence avoiding retrenchment exercises. We, mortgage brokers, can earn our livelihood and keep all comparison sites up and running. Secretly, even the banks themselves who cry foul that mortgage brokers often churn and take away their customers for repricing are happy. Why? Simply because every management is measured on loans growth and new accounts brought in every year, on top of profitability. If every one stays put and no one is switching, will there be enough new property purchase loans to hit performance targets that justify a year-end bonus?

I have made the case. To avoid an “Uber-exit” in mortgage industry leading to a loss of free market pricing, we all have a part to play.

Finally, let me qualify here – I am a Singaporean and I am not xenocentric. My view in this article has nothing to do with patriotisim but is simply a vote for free market which can only be a good thing for consumers. At the end of the day, whoever offers the best pricing and the best mortgage terms should win the deal be it a local or foreign bank. We support them both. We only advocate the need to support foreign banks as we know many in the market favours local bank to the detriment of foreign players. We need to treat them as equal and favour the one who offers the best overall value, hence a level-playing field.


Since 2014, has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest trends in the industry, providing useful mortgage tips, and making sense of rate movements. We aim to build trust with clients for longer term partnership and not just do product-pushing for a one-time deal unlike bankers. That’s why we always present “whole-of-market” perspective including packages that banks do not pay us. That’s why many have chosen to work with us in the end notwithstanding the sheer number of brokers and agents out there. See their testimonials.


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Importance Of Working With A Mortgage Consultant

I cannot exactly tell you when the mortgage brokerage industry started in Singapore.  But one thing for sure, more and more homeowners and investors are wising up to the huge benefits of working with a mortgage broker and the past few weeks’ experience when 3-month SIBOR suddenly shot up to 1.50 has underscored this point and also reaffirmed our belief in the value of our work.


Let me explain.  It is not just about cost savings in transaction fees when one purchase a property (working with us, our partner law firm offer $1,800 for both completed and under construction properties versus the market average of $2,500 or higher), more importantly it is about securing the best possible rates especially for refinancing.  Over the past couple of weeks, we have started warning clients of impending moves by lenders to adjust their interest rate up fairly soon, not a matter of choice but a result of tightening liquidity in the system.  Towrds end of 2017, we have actually helped clients to lock down 3-year fixed rates at 1.60% to 1.68% way behind their current lock-in ends in 2018.  Had these clients waited till later on this year, the rates would have run.

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At this point, the prevailing 3-year fixed rate has already gone up to 1.80-1.85%, and that for 2-year fixed to 1.75%.  Almost all the banks started adjusting their fixed rates up in December even before the recent spike in SIBOR.  Banks are privy to any movements in the interbank market and will be the first to respond.  Following SIBOR’s aggressive spike, one local bank has also just announced the next round of increase in their fixed rates come next week.  So for those whose lock-in ends soon, take action and speak to our consultants quickly.



In an environment when rates are on its way up which is likely the scenario for the next few years, it is important to forge a close working relationship with a professional mortgage consultant, especially one who has the most accurate rates on hand and who can pre-empt the market.  As I have stated earlier, the benefits of working with us goes beyond just the “volume discount” we negotiated when it comes to legal fees etc, but the savings we bring when one is able to take pre-emptive actions to always lock down the lowest rate possible when the interest rate cycle goes up and likewise when the cycle comes down.  Working on your own, or with a property agent (who is usually only there at the purchase, and unable to present comprehensive updated information any time when you need it), can only get you so far.

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Full-time professional mortgage brokers are able to provide you access to all the latest rates, and privy information when some rates might end.  Not only that, because of the volume of business that we give to certain lenders, we are able to secure slightly better terms on your loan from time to time, even slightly lower deviated rates at times.  We will always try though we cannot promise.  At the very least, when all packages are the same (otherwise we will tell you like some direct-to-bank packages from DBS and UOB right now, other brokers don’t tell you that), why should you go to the bank when you can at least receive a small token of appreciation from us in the form of a $50 or $100 Tangs shopping voucher (min. $500,000).   This is to thank you for taking your loan through us. Try us out today!


Since 2014, has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest trends in the industry, providing useful mortgage tips, and making sense of rate movements.  We aim to build trust with clients for longer term partnership and not just do product-pushing for a one-time deal unlike bankers.  That’s why we always present “whole-of-market” perspective including packages that banks do not pay us.  That’s why many have chosen to work with us in the end notwithstanding the sheer number of brokers and agents out there.  See their testimonials.


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Refinance Home Loan Singapore

8 Things To Find Out Before You Refinance

With interest rate likely on its way up albeit at a gradual pace, it is important to review one’s mortgage costs on a regular basis. Most people do not realize that mortgage interests run up to hundreds of thousands of dollars over the entire tenure of the loan.  Take for example a typical loan size of $700,000 over 25 years at 1.68%.  Even if we assume that interest do not rise for 25 years which is near impossible, even though one services a repayment of only $2,860 a month, the total amount of interest paid at the end of the 25-year period adds up to $157,743.  That is 23% of the original loan of $700,000!  If the interest rate over the period is 3% instead (using a more realistic longer-term average), total interest costs go up to a staggering $295,843!  Or 42% of your principal sum!

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Therein lies the importance of regular mortgage review and refinancing to make sure that one always access the best deal in the market as soon as one is able to.  Here’s eight questions to ask at every review:


1. How Early Should One Start To Review His Mortgage?

Most people come to us late for refinancning.  The best time to start the process is four months before the expiry of your lock-in as one needs to serve a 3-month notice to redeem a loan.  If interest starts to creep up slowly from 2018 onwards, it may even make sense to start the process earlier. Speak to our consultants to find out more how this can be done.


2. How Can One Fulfil TDSR Requirements?

TDSR (Total Debt Servicing Ratio) regulations stipulate that one’s total monthly debt should not be more than 60% of one’s total monthly qualified income, before one could refinance.  However, in recent years there has been more exemptions given by the authorities on refinancing for owner-occupied homes, investment properties with DRP (debt reduction plan), and even equity term loan to help retirees monetize their assets.  The issue is now more on bank’s internal credit policies which would still require TDSR not to go exceedingly higher than 80% to 100%.

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Generally, there are less TDSR issues nowadays, however should there be a need to lower this ratio or to get additional term loan whilst refinancing, there are only two ways to do that – reduce the numerator (monthly debt) or increase the denominator (monthly qualified income).  Make sure one has no other forms of borrowings and also very little credit card usage two months before applying for refinancing.  For income, as most people have their bonuses paid out at the start of the year which is not captured in the latest IRAS Notice Of Assessment (NOA), it is good practice to always keep one’s payslip for up to 12 consecutive months as that can be admitted as income documents.


Beyond that, work with a professional mortgage consultant who knows which lender is more aggressive in approving cases involving TDSR overlimits. Speak to us today.


3. Should One Refinance, Or Simply Reprice?

We encourage all our clients to check with their existing lender for a repricing offer so that we can better evaluate if he should stay or switch out.  The truth is – there is usually another lender out there more eager for new businesses, which is the beauty of free market.  Banks always like to think that brokers are taking out their clients as much as they bring new clients to them.  That is not true.  We live in the digital age and in many aspects of our lives now decisions are made at click of a button. And when information is readily available with expert advice, the onus is on banks to take it upon themselves in giving the best deal to existing clients as much as they acquire new ones.


To this question I would say – it always pay to compare, and may I also add that one should never be resistant to moving just because of the documentations involved. It has become quite a breeze these days with digitalized government services and everything at the click of a button.  It will get even more so with banks integrating with national registry databases.  More importantly, remove the inertia and be always ready to switch mortgages to another lender in order to keep the free market mechanisms alive as less competition will ultimately lead to higher interests for all of us.


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4. Going Direct Or Work With A Broker?

In the last five years, more Singaporeans are becoming familiar with the concept of a mortgage broker, akin to an insurance intermediary.  I put this percentage at less than 10% five years ago and perhaps 40% now.  Initial skeptism of using a middleman where people thought they would end up with a package at higher interest has given way to realization that professional mortgage consultants (advisory role) not only give better advice than talking to bankers (sales role), they do get the same if not better deals from banks plus additional perks from the broker himself due to economies of scale in operations.  For example, MortgageWise clients do enjoy special legal fee privilege every time they refinance through us. Even for purchase now, they enjoy an unbeatable $1800 all-in private property purchase legal fee (usual terms apply).


Occasionally there may be some packages that lenders distribute directly on their website where no brokers are allowed.  Here at MortgageWise, we do inform our clients about these packages but thankfully most of them do see from our analysis how these may not always be the best deal out there.  Remember even though lenders cut out external brokers for certain packages, they end up paying the same distribution costs, just that more of it goes to their internal salesforce.  Worst, they might now end up with lower volume of business.


5. Should One Go For Fixed Or Floating Rate Mortgage?

This has become the classic question of the last few years when we see SIBOR in Singapore roller-coaster up and down from 0.90 to 1.25.  As the answer to this question is dynamic and dependent on economic growth and inflation, global events and developments coming out from US particularly Fed decisions, it is best that one speaks to a professional mortgage consultant who keeps a close watch.

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There are also other salient factors to consider in this question like the gap between fixed and floating, the loan size, owner-occupied versus investment, ease of refinancing, and even the risk appetite which varies from person to person.  There is no one-size-fits-all.


Perhaps one good way out of this is to use our proprietary MortgageWise Interest Simulator which gives the closest estimate of one’s potential interest savings through sensitivity analysis on a set of reasonable assumptions as to how interest will rise up over the next three years.


6. Are There Any Interesting Loan Features Worth Looking At?

Certainly. From combo loans, interest-offset accounts, flexibility to prepay without penalty, waiver of penalty due to sale, to complimentary Priority Banking status upgrade based on loan size instead of AUM (assets under management), lenders in Singapore have been pulling out all stops to attract and retain a mortgage client.  After all, mortgage is still one of the most lucrative business for banks in a property-crazy island country where everyone wants to buy one more property, no one wants to default on a home loan, and where banks can easily dispose of any foreclosed assets through auction, and at good prices.


Like what I have mentioned earlier, rates per se may not be the only factor to look at especially when banks tend to match one another in the first few years of the loan. Speak to our consultants who can tell you much more than bankers what else is there to consider from the broad market.


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7. What Are Some Hidden Costs In Refinancing?

There are two sets of costs in refinancing – legal fees which generally range from $2,000 to $2,300 for private property loans up to $3m, and valuation fees which range from $400 to $600 for private properties up to $2m in value.


Other not-so-upfront costs are things like legal fee clawback where banks ask a borrower to pay back in full the legal fee subsidy or cash rebate given should one refinances out within a 3-year period, even though the lock-in period for the loan can be two years only.  This means that in the third year, even though the borrower could refinance out without any penalty on the loan, he would still prefer to stay for at least one more year to avoid paying back this subsidy of $2,000 (for most cases).  Knowing this, lenders would usually not waive off any repricing admin fee usually $800 or more.


8. Is There Anything Else One Should Look Out For?

Finally, I always touch on the issue of lock-ins when I write on this topic as this is one area overlooked by most borrowers who would gladly signed on the loan contract with a two-year lock-in period in exchange for a low interest without giving due consideration to what it means.


Lock-in means one loses the flexibility to prepay on the outstanding loan be it in partial or in full, refinance the loan to another bank for a lower rate, or even sell the property, without having to incur a hefty penalty of 1.5% of the loan amount.  The typical lock-in period now is two years but there are some banks providing leeway for partial repayment, even total redemption of the loan due to sale during the lock-in.  The latter is especially important as the property market seems to turn the corners with enbloc sales fever raging in recent months.

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At end of the day, the best way to monetize a property is still to sell it for capital appreciation and put the profits into the next bigger play, even for owner-occupied homes.  One will never know when a good offer may come or a decision to sell may suddenly be called upon in order to buy something better without incurring ABSD (additional buyer’s stamp duty).  Reassess the likelihood of a sale, even on an enbloc nature for those staying in older properties, and some may just not want to lock themselves in for too long a period especially if the current craze prove short-lived.


At MortgageWise, we seek to provide thought leadership in the area of mortgage planning in Singapore, taking deep dive into developments and news on mortgages & helping clients track interest rate movements.  We do not just go for one-time business with clients but rather choose to build long trusting relationships by giving truly independent advice to the extent of losing the deal.  We strive to become the first-choice mortgage partner for homeowners and the creditable distributor of mortgage products for banks and financial institutions in Singapore.


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Win In Home Loan

Race With MortgageWise Team

As excitement builds up around Formula One action this weekend in Singpore, how about a different kind of race to bring your interests cost down to rock bottoms and hence paying down your mortgage in the shortest time possible?


Question is: Which team are you on? Or do you try to race on your own and apply all the aerodynamics you know and put all the nuts and bolts, components, gearbox, tyres, engines, etc. together? This is akin to you sourcing for best home loan solutions on your own, thinking you can get the best deal negotiating with bankers (salespersons representing the banks with their own commissions to protect), law firms, etc. And doing all that while navigating through all the regulatory changes like TDSR, periodic MAS exemptions, and the myriad of options in terms of loan features, vital contract terms like lock-in penalties, cancellation fees, breakage fees, free conversion, clawback periods, and so on.

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If you decide to work regularly with a professional mortgage consultancy firm, as many have come to appreciate the benefits of, then which team do you choose? Is it a championship-contending teams like Mercedes, Ferrari or Red Bull? In short, I am asking which mortgage brokerage firm you think can give you the best chance of winning the title (achieve the highest savings in total borrowing costs over your life time)?


Just like in an F1 race, the team that wins not only has the best knowledge of all the technical aspects of the game, they have the best teamwork and strategy for the driver who himself is excellent in his driving. That is why you see drivers like Valtteri Bottas and Max Vestappen catapult to the top of the game in recent years by joining the right team – one with relentless focus to deliver the championship, which in our context means savings and value. That is exactly how you should be choosing the best team to be your mortgage partner:


1. Best Product Domain Knowledge

An average mortgage broker will only be able to share with you the rates based on collation of all market data, sometimes these rates are not even updated. If you speak to a banker directly that’s even worst, as she can only share with you rates from her own bank, without knowledge of what everybody else is offering.


However, a top mortgage broker will not just give you the latest rates, which honestly, you can already see from so many mortgage comparison sites out there (provided they are updated, many are not). She will go beyond that in helping you to zoom into what is most important in your consideration. Sometimes this calls for not just knowledge of TDSR regulations, mortgage structuring, credit policies of respective banks, loan features like interest offset, lock-ins, conversions, etc., it requires knowledge of banking in general and how to plan out the best course of actions to arrive at the appropriate leverage levels. Another example is how most brokers will only show you the interest costs on a static perspective with no relevance at all, assuming interests will not rise at all over the next few years or the entire course of your loan. That is certainly not going to be the case.

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At MortgageWise, we take pride in delivering accurate and indepth analysis of all things mortgage-related from US Fed FOMC decisions, tracking of mortgage FDR (fixed deposit rate home loans) rates in the last three years, pulses on property market in terms of sales and rentals on quarterly basis, even the local banks’ financial performance as we attempt to read and forecast the next trend in interest rates. And to help all our clients make accurate and informed decisions, we use our in-house Interest Simulator to do sensitivity analysis taking in your outlook on interest rate (3-month SIBOR) movements over the next three years, and show you the actual savings based on ammortisation. Many clients have found this to be extremely helpful.


Speak to our consultants today to find out more or for us to show you the savings before you decide.


2. Best Teamwork

As business environments are dynamic and rates changes by the weeks at times, a mortgage consultant who operates on her own or works in silos will find it a struggle to dispense the best information to her clients. We know of many ex-bankers who left the industry to join mortgage brokerage industry thinking that it will be a breeze to tap on their past clientele base.


At MortgageWise, we work closely as one team to serve the needs of our collective clientele base. We do that by leveraging on CRM technology, and we meet weekly to discuss the latest trends affecting interest rates and sentiments, latest packages from lenders, feedback on what is most important to our clients and bring that perspective back to our closest partners – the lenders. So that we have greater options for everyone like more FDR home loans and lower fixed rates now.


When you choose to work with MortgageWise, you access the full suites of our collective experience as we share with you what works and what doesn’t. It has been a great journey for this small team of consultants and chat agents who have been with the company since day one. No one is leaving yet as we love the business and we love how we are doing sales the right way (see next point)! It has been three years since we started but with the passion still going strong as we endeavor to serve our clients to the best of our ability.

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3. Relentless Focus To Deliver Value

Just like how championship F1 teams deliver the trophies consistently throughout the race calendar, we delivered on the trophy of cost savings and value consistently over the last few years.


And the savings can come from all places, not just on mortgage interest per se. With the volume of business we do, we have put together exclusive privileges with our law firm partners since 2015 where you enjoy a special rate that is lower than market every time you refinance your loan with us. And this year the privilege just got bigger as for private property purchases now, you enjoy an all-in special rate of $1,800 nett (including mortgage stamp duty and GST) when you take your loan through MortgageWise, reaping an immediate savings of at least $700 compared to the market fees of $2,500 (you may verify this). Not only that, as our valued client, you always access the latest rates and get rewarded with Tangs vouchers every time you help a friend or family member save on interests by referring them to us. We are the only mortgage company that has an ongoing referral programme since 2015!


Still, the bigger trophy is in the value we bring. And we do that by making sure that we give you that “whole of market” perspective in mortgage solutions, including sharing with you some packages that the banks are not paying us, for example we do have two such packages from DBS and UOB right now which we informed all our clients. Why do we do that when this is contrarion to all sales teachings and methodology? And no other brokers we know of will do that. Simple – we value your trust. One day we might be put out of business by some local banks perhaps, but we believe that as long as we do things the right way, our clients will continue to support us in our journey as we bring the best mortgage solutions to the Singapore market.


We do not yet know who will be the winner in this year’s 10th edition of F1 night race in Singapore this Sunday, but if you choose MortgageWise to be your mortgage team, you will certainly be a winner as that is what we aim to do. So speak to our consultants today!


At MortgageWise, we seek to provide thought leadership in the area of mortgage planning in Singapore, taking deep dive into developments and news on mortgages & helping clients track interest rate movements.  We do not just go for one-time business with clients but rather choose to build long trusting relationships by giving truly independent advice to the extent of losing the deal.  We strive to become the first-choice mortgage partner for homeowners and the creditable distributor of mortgage products for banks and financial institutions in Singapore.


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