More people are aware of the role mortgage brokers play compared to 10 years ago. But how do you go about choosing which mortgage broker to work with?

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To start with, most homeowners don’t choose whose the right broker to work with, but they compare and choose who can give them the home loan package with the lowest headline rate in the first two or three of the loan.

That’s the single most common mistake homeowners make that we’ve observed after 10 years in this business – you don’t choose based on the difference in rates within a particular dot or point in time on the interest rate cycle, rather you choose based on how to hedge yourself against the next most probable path of the curve! And most of the time, the interest cycle is either going up or coming down. It hardly goes into a protracted horizontal line until it finds some equilibrium at the trough, i.e. hitting the neutral rate where the economy is neither overheating nor contracting. That’s the hard balance to strike.

The more important question to ask is how to choose a trusted mortgage broker to partner with, who can help you make sense of all the packages and help you to position your mortgage to profit from swings in the interest rate cycle over time! So, choosing the right mortgage broker goes beyond merely comparing headline interest rates. 

Often in life, timing is everything.  What you do at different stages of the cycle determines whether you hit the home run or you score only small wins.

Let me submit to you there are three important considerations you should look at when choosing who to work with.

1. Timing is everything

Comparing headline rates often in the first and second year of mortgage packages is somewhat like negotiating for the best price to purchase a property. Which buyer doesn’t drive a hard bargain and try to snatch a good deal with a good and substantive discount from the seller’s asking price?

However, from experience, you know 10 years down the road, that $50,000 less you paid may not be worth as much as you thought if you fail to pick the right location (core central region vs. mass market), the right property (landed vs. condo), and the right unit (premium facing vs. lower-floor).

From what little experience I have marketing luxury real estate properties in my previous career, I’ve learnt from savvy high net worth property investors that it’s almost always more profitable to pay top dollar for the premium units in any development. That’s because when it comes to property prices in a condominium, it follows a bell curve distribution – choice units always command higher prices which go even higher when the entire curve rises in a buoyant property market. This phenomenon is even more pronounced for luxury developments as buyers with deep pockets, especially foreign buyers before the days of ABSD, chase after choice units.

So, what’s the point I’m making here? Getting the right advice on which mortgage package to take is like getting the big decisions right, as opposed to scoring small wins like gloating over the lowest headline number or eking out cashback of a few hundred dollars. When interest cycle moves, it moves much more than 0.1-0.2%, sometimes 10x of that! Already just one single rate cut by Fed is 0.25%, and there’s room for more than a handful of cuts in the span of a 2-year lock-in period.

So, be careful who you get advice from. Choosing which broker to work with, or more accurately to partner with, is more than just about looking at numbers. Any rookie mortgage broker can collate the latest mortgage rates information on a platter for you. But not everyone can track the interest rate cycle so closely and give you a sound basis on the most probable direction of move, and show you how you can position your mortgage accordingly.

Despite all the talk about “higher for longer” rates and how “Fed might even hike with prices reflating due to tariffs”, the interest cycle continues to show remarkable resemblance to past patterns. Only time will tell if “this time it’s different”. Food for thought.

When interest cycle moves, it moves much more than 0.1-0.2%, sometimes 10x of that! Already just one single rate cut by Fed is 0.25%, and there’s room for more than a handful of cuts in the span of a 2-year lock-in period.

2. Interest rate affects almost everything

Imagine if you know how interest cycle will move, even in broad directions, how does that affect what you should be doing financially?

Most people underestimated the outsized impact of interest rates on their investment and financial decisions, everything from deposits, mortgages, unit

Since interest rate is the “price of money” and given the insignificance of that which affects almost all our financial decisions, isn’t it surprising that we find huge droves of people who don’t even look at the interest rate cycle before they make their mortgage decision?

By working with a trusted broker who tracks the interest rate cycle for you, not only will you be able to achieve maximum costs savings on mortgages, it will help you to determine generally when to:

• Quickly lock in your yield when interest drops and as all asset classes get repriced
• Go long or short on fixed deposit placement
• Go into longer duration Treasuries
• Start parking more funds to high-yield deposit interest accounts like DBS Multiplier, OCBC 360 Account, and UOB One Account just to name a few
• Rotate out of banks into REITs and vice versa (the two most interest rate-sensitive sectors in the economy)
• Rotate into bonds to lock in your yield and potential capital gains when interest is set to drop and vice versa
• Start using cash instead of CPF to service your monthly mortgage repayments
• Gear up or cash out on home equity loan (for private properties only) to deploy more leverage for maximum returns
• Invest more capex to expand your business

Perhaps, including even when is the best time to sell your property? Property valuations are determined by demand and supply which is also in turn affected by the state of the economy and interest rates. When interest rate falls, cap rates gets compressed as market chases up asset values leading to lower yield for investors.

“Don’t fight the Fed”. To a large extent, interest rate has a strong correlation to how the economy will perform which then gives you more hint on how much liquidity or dry powder you need to keep on hand and what you should consider for investments.

Of course, we can’t promise that you will get every decision right, but there’s quite a sound basis to fall back on with the highest probability (though not 100%, for example the recession that didn’t follow Fed’s supposed fastest rate hikes on record from 2022-2023).

To give a disclaimer, we are not financial advisors to be able to give you qualified financial advice. Speak to one if you need. But we can certainly track the Fed and interest rate cycle much more closely than anyone else in our business.

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That’s the single most common mistake homeowners make that we’ve observed after 10 years in this business – you don’t choose based on the difference in rates within a particular dot or point in time on the interest rate cycle, rather you choose based on how to hedge yourself against the next most probable path of the curve!

3. The complete solution in property investment

We launched our unique “Mortgage-Free in 6 Years” Startup Course in 2024 as part of our 10th year anniversary (since 2014) celebration, which all MortgageWise clients get to choose as a gift.

Some get confused and thought this is about investment but it’s not. We’re not licensed by MAS to be able to give financial advice. Do seek qualified advice when necessary.

It’s more about understanding how money flows through the economy on a daily basis, like it or not, and how you ought to channel some of them back into your pockets as asset owners.

What we’re sharing is a whole autopilot cash flow system that gives you the complete solution in property investment. Most people don’t understand this – in property investment, you need both leverage as well as cash flow. When you know how to structure your loan to get both with a yield at 10% per annum, you can create that “perfect property portfolio”.

And there’s no better place to achieve that than in Singapore where you get to invest directly in rock solid real properties (residential or commercial), as well as indirect property investment in blue-chip S-REITs listed on the powerhouse exchange for real estate investment trusts in Asia – SGX.

For your property purchase, we can’t show you which property to buy where you need to enlist the help of a licensed realtor, but we can show you how to structure and get you access to the least-cost financing. Similarly, we can’t give you investment advice on what to buy for REITs, but we can show you how to structure it as to maximise leverage and create autopilot cash flow to allow you to become mortgage-free* in 6 years!

So, choosing which mortgage broker to work with is no longer just about comparing rates. We have raised the bar here. It’s now about the very purpose of why you need a mortgage to begin with – building up assets for passive income, financial independence and ultimately generational transfer.

No other broker or repricing bank can show you that in new ways you’ve never imagined possible until now.

Most people don’t understand this – in property investment, you need both leverage as well as cash flow. When you know how to structure your loan to get both with a yield at 10% per annum, you can create that “perfect property portfolio”.

* Subject to ownership of a Singapore private property, meeting of certain loan & seed capital requirements, interest rate not going into anomalies like the Great Inflation of 1965-1982 and other typical investment risks

Need more personalised advice?  Not only do we help clients navigate through the myriad of mortgage rates quick and fuss-free and get you the best Singapore home loan, we show you how to become Mortgage-Free in 6 Years! So, be it for residential or commercial property loan, work with us today and you’ll also be helping to support our social cause!

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Disclaimer: MortgageWise Pte Ltd is not in the business of providing financial advice nor are we licensed or regulated by MAS under the Financial Advisory Act (FAA) in Singapore. All information presented are opinions and any representations given, whether by way of example, illustration or otherwise, are purely portfolio allocation advice and not recommendations or inducements to buy, sell or hold any particular investment product or class of investment product.  All opinions are generic in nature and are not tailored to the particular circumstances of any reader.  Seek advice from a qualified financial advisor before making any investment decision.

Though every effort has been made to ensure the accuracy of the information and figures presented, we make no representations or warranties with respect to the accuracy or completeness of the contents in this blog and specifically disclaim any implied warranties or fitness for a particular purpose.  We shall not be held responsible for any financial loss or any other damages suffered whatsoever, directly or indirectly, if you choose to follow any of the advice or recommendations given in this blog.