Home Loan Best Deal

Ridiculous Interest At 0.60% p.a.!

Not do not get too excited yet as this is only for Building-Under-Construction (BUC) properties like new launches and apply only during the construction period.

Over the weekend, DBS fired the first salvo to target new launches mortgage this year by launching a limited edition of its popular FHR18 + 0% interest package up to the first 4 years or when the project obtains its T.O.P. (Temporary Occupation Permit) whichever is earlier.  FHR18 is currently at 0.60% which means the effective interest rate during the construction phase will be 0.60%!  After T.O.P., the interest reverts back to a more familiar rate of FHR18 + 1.0% or 1.60% currently.  The DBS promotion is limited by period and those who are keen need to apply by 6 March and accept the loan offer by 10 March.  Obviously the bank has the few upcoming and prominent new launches in mind from Clement Canopy, Grandeur Park and perhaps even Park Place Residences and/or Seaside Residences, albeit the package is made available to all BUC properties in Singapore.

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UOB responded by launching a similar package on its own DMR (deposit mortgage rate) called 36FDPR that has a slightly higher rate at 36FDPR (0.65%) + 0% or 0.65% during the construction phase, but which comes with no requirement for one to purchase a mortgage insurance.  DBS may waive off this requirement otherwise when one factors in the insurance premium costs on the DBS package, the two packages might work out to be more or less the same in terms of cost.  Speak to our consultants on what else you need to consider besides costs.  UOB’s promotion may end after this week (or anytime for that matter without notice), so take action quickly.  Let us now take a look at how the two packages stack up:

BUC home loan

The two banks probably anticipated a strong reception to the first few high-profile launches of 2017 and wanted to start their new financial year with a roar.

How long will these offers last?  We think unlikely to be for too long a stretch.  The margins are so thin during the construction phase that we think only local banks with a lower cost of funds base can afford to offer that. Foreign lenders are unlikely to match and will miss out on the upcoming BUC new loans.  The only way to justify the margins will be from the perspective of building future income for the banks as upon T.O.P. most borrowers will make use of the free conversion to a fixed rate home loan with the existing bank.  It remains to be seen if the banks would extend the promotion period until the end of March to coincide with the soon-to-be-launched Park Place and Seaside Residences.  So take action quickly.

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Still this brief window of opportunity has added much excitement especially for first-time property investors and upgraders, as this is possibly the lowest interest rate we have ever heard of, at least for the period of the construction where there is no rental yield for investors!  And if the launches are priced correctly to sell, the next few weeks will be a bonanza time for property investors in Singapore.

Speak to our experienced consultants today to understand what are some of the unique considerations you should take note when it comes to BUC home loans, and how to choose what works best when signing up for a mortgage at the launch versus that when buying closer to T.O.P.

 

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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About Darren Goh

Darren Goh is the Executive Director of MortgageWise.sg, a thought leader in the Singapore mortgage industry, with frequent interviews and quotes by the press - Business Times, Straits Times, Zaobao and EdgeProperty for his views on the latest mortgage trends. He is an avid property investor with careers in banking & real estate before becoming an entrepreneur.
View all posts by Darren Goh

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