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Factors Affecting Refinancing And Repricing

+By Sean Lim

Founder of FindaHomeLoan.coTrusted by clients, Quoted in media

+About Us

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+What Is Refinancing?

Refinancing is moving the mortgage on a property from the existing bank to another bank. Reasons why you would consider refinancing include:

switch to lower floating or fixed interest ratesextend/ reduce mortgage tenureobtain a term loan

If you have term loan secured on the same property, both loans must be refinance together at the same time. You cannot have a term loan with bank A and the mortgage with bank B.

+When Should You Refinance?

The best time to consider refinancing

is when your mortgage is 6 months

to the expiry of lock in or legal claw

back period, whichever is later. If you

had not obtained legal fees subsidy,

then you should just note the lock in

expiration date.

+Are There Expenses Incurred For Refinancing?

The refinancing expenses are legal and valuation fees. After a

period in 2012 with no refinancing subsidy offered by banks,

some have resumed offering legal fees subsidy to refinancing.

Some offer cash rebate instead, which can help to offset the legal

fees. You could be pleased to know that legal fees can be paid by

CPF or cash. Valuation must be conducted on the property, to

ensure its value is in accordance to the mortgage. We are in touch

with the selected banks that offer valuation subsidy too. It's

possible for you to refinance property loan at zero cost with

subsidies covering both expenses.

+Can I Obtain A Term Loan?

Obtaining a term loan throws another variable in the selection

of refinancing banks. Not every bank will provide the same

valuation. They may not support the same loan-to-value ratio.

Deciding between 80% of $2 million valuation, and 70% of $2.2

million could make a big difference to the possible term loan

amount. Note that term loan is only applicable to private

properties, and not HDB flats. The good news is the

term loan will enjoy the subsidies too.

+What Is Repricing?

Repricing is the act of changing the mortgage with the existing bank.The customer should contact the bank directly to find out the prevailing mortgage repricing packages available. We are not in a position to find out these packages or reprice on your behalf.

+Is Repricing Free?

Those who bought new launches in recent years should enjoy a free one-time repricing. However, there are banks who don't offer this freebie. Otherwise, be prepared to pay some repricing fees, possibly in the range of $500 upwards. Refinancing could be a cheaper option with lower mortgage rates.

+Post-TDSR and MSR

The TDSR guidelines have not certainly made financing easier. Whether you are repricing or refinancing, your borrowing limits will be subjected to assessment again. Application and supporting documents are required. We have seen a fair share of customers who found themselves in sticky situations.

The MSR limit of 30% for HDB flats only have also limit the avenues for HDB owners. Imagine your spouse has stopped working to be a full-time mother and your total income could not pass the MSR criteria. Refinancing would not be possible then.

You are welcome toself-compare with our mortgage refinance calculator.

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