[NOTE: This guarantee feature/benefit has ceased by 31-Dec-2021. We will honour all letters of guarantee issued by MortgageWise to clients before this date.]
Why get your BUC home loan from us?
$1,000 Refund Letter Of Guarantee
We cut to the chase. For new launch projects, your property agent at the showflat would likely throw you many bankers in hope of getting paid referral fee from the bank when you apply. You might even be promised cashbacks or some kind of kickbacks. But beware such cashbacks paid upfront at point of purchase are not only frowned upon by CEA & MAS, it’s rightfully to be declared to the bank as per MAS Notice 632 (Clause 6b) with the loan amount reduced accordingly. It’s also income taxable by the way, which you will need to declare in the next assessment year.
Referral fees on home loans are what we earn as professional mortgage consultants from the good work we put in to advise and help our clients compare and choose the best home loan packages — not just at the purchase, but more importantly at T.O.P. where you are “locked in”.
Many are still not properly advised about cancellation fees on undisbursed loans at T.O.P. which acts like a “pseudo lock-in”. It may sound unfair but it’s not exaggeration to say: agents are just opportunists who try and maximise profit for each customer they close; and bankers are just salespersons selling mortgages from their respective banks which they are paid commission (you may be surprised). As such, they can’t advise you comprehensively with longer term time horizon like us — mortgage partners who walk with you through the next 25-30 years of your mortgage journey helping to reduce your interest costs substantially!
We are thought leader in the space of mortgage planning in Singapore. Introducing our latest innovation for BUC home loans exclusively from MortgageWise – a $1,000 Refund Letter of Guarantee for min loan of $800,000. Find out how it works below.
What you need to know
Interest Rate Cycle
Especially for BUC home loan where the bulk of the loan is disbursed later, it’s imperative to know at which point in the interest rate cycle are you most likely to find yourself at T.O.P.?
Few bankers or even mortgage brokers will walk you through this but that makes all the difference. Let us explain to you why it’s not the first loan that matters (you can only sign floating rate), but the 2nd package you choose that will save you the most in interests. Watch out for “BUC trap” where we save you $$ much more than any vouchers or cashback.
Progressive Payment Schedule
Some of you may not have actually read the wordings in Clause 5 of the standard Sales & Purchase agreement use by all developers in Singapore under the Singapore Housing Developers (Control & Licensing) Act. Clause 5 pertains to Payment Schedule which will be progressive based on the stage of completion of the unit purchased (extract below):
Notice how at T.O.P. (temporary occupation permit) ie. collection of keys (sub-clause 5.3 above), the cumulative total paid would be 85% of the purchase price with one big disbursement of 25% at T.O.P. There’s still a last 15% of the purchase price yet to be called for where the payment is most certainly to be coming from the bank loan unless this is full cash purchase (purchaser’s downpayment or all the cash portion of the purchase price must be settled before bank will release any loan for remaining balance).
And when will this final payment be called? Typically by legal completion date of the project or C.S.C. (certificate of statutory completion) which can happen before or after a year from the date of T.O.P. (Final Payment Date) and there are rules governing how much of this 15% will be released to the developer and how much will be stakeheld by SAL (Singapore Academy of Law).
What you need to know is this – up to a year after T.O.P. there will be a loan amount equivalent to 15% of the purchase price that remains unpaid or undisbursed to the developer/SAL. Should you decide to refinance the home loan during this time to another bank, this amount of the loan will be treated as cancelled where a cancellation fee in the range of 0.75-1.50% will be charged to you.
Why the 2nd loan is more important
The “BUC Trap”
Because the bank knows you will be penalised if you refinance out at T.O.P., it does not need to offer you the same rate it would give to a new-to-bank customer. Your hands are tied. Trust us on that. We have been in this business long enough. From what we hear this difference can sometimes be as much as 0.20%.
Being able to choose home loan packages freely at T.O.P. saves you a lot more in interests than your 1st BUC purchase loan where your choice of packages are really limited and similar (there’s no fixed rates). Remember the 2nd loan is where you will be servicing it in full and where you need the best loan features like waiver of penalty due to sale within the lock-in period. Do you really have a choice?
FAQs
1. Why Is This Guarantee Important?
The typical cancellation fee is 0.75% of the undisbursed loan amount at T.O.P. For a purchase price of $1.2m, this works out to around $1,350 (0.75% on last 15% of purchase price or $180,000).
Should you refinance out to another bank who offers you a lower fixed rate for example, you’ll need to pay this cancellation fee to your bank. We call this a “BUC trap” – it deters you from enjoying the lowest interest rate after T.O.P. which is more crucial than at purchase as the bulk of the loan would have been disbursed.
Also, your existing bank is unlikely to offer you the lowest rate for conversion knowing that you can’t leave yet. This difference between the best rate from your bank, and that from the market, can be as much as 0.20%. On a loan of one million, that means you pay $2,000 more per year, or $4,000 over a 2-year lock-in period.
2. How Does It Work In A Nutshell?
With MortgageWise’s Letter of Guarantee , for a min loan of $800,000, we now refund to you at T.O.P. a $1,000 comprising of $850 plus our usual refinancing reward of $150 FairPrice gift card converted into cash for you. This will paid out to you via PayNow with only two simple conditions:
- You apply for both the BUC home loan (min $800,000) and the subsequent refinanced home loan at T.O.P. through MortgageWise.sg and both are home loan packages which the bank is paying us the standard referral fee (otherwise we will tell you).
- You show us proof of this cancellation fee charged, usually by way of redemption statement by the bank.
This refund helps to offset a large part of the cancellation fee reducing out-of-pocket costs to just a few hundred dollars. This becomes insignificant when compared to interest savings on switching to the package with the lowest rate in the market.
3. Can I Trust This Guarantee?
Sure you can. We are thought leader in the mortgage planning space with many innovations throughout the years since we started operating back in 2014 (7 years and counting). See our long list of testimonials.
To give you added assurance, we will issue you with an official serialised Letter of Guarantee from LoanWise Pte Ltd, the legal entity behind our brand MortgageWise.sg. Your name, property address, and PayNow mobile number will be printed on it, along with the full wordings of what we guarantee. You may keep this as your official record to claim against us at T.O.P. if you like. This guarantee is fully backed by us, a Singapore-registered company with zero corporate debt and with our registered office fully-owned by us at International Plaza.
As life is unpredictable, the only thing we cannot guarantee is that our industry will not be disrupted or that we may never cease operations voluntarily or involuntarily. We do have every intention and resource to continue as a going concern. We are growing from strength to strength with a relentless focus on service and giving the best-in-class advisory. Even if the unexpected should happen, you are not any worst off. In other words, this guarantee is a bonus and good to have.
4. Why Are You Offering This?
In essence, what we are really doing is to forgo the referral fee we earn on one deal (out of the two – your BUC loan at purchase and the refinanced loan later at T.O.P.)
And in many ways this is in keeping with our core mission at MortgageWise.sg – giving clients the best advice and helping them access the best home loan options each and every time. By offsetting your cancellation fee at T.O.P. with a $1,000 refund, we effectively “level the playing field” and enable you to choose freely from what’s best out there in the market. And you will be surprised – there are many other banks who may be hungrier for your business and who will not take you for a ride!
By partnering with MortgageWise right from the start in your mortgage journey, you are assured of the best service & advisory when it comes to managing interest costs in the long run. Someone will be watching your back while you get busy with work and other investments.
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