CPFIS-OA

[13luetooth]

So overall despite all the hassle to refinance, bank loan is actually better than hdb loan ?

All along I thought hdb loan is the preferred loan as 2.6% is considered low and bank loan may fluctuate too much until it might end up incurred higher interest rate than hdb fixed loan.

 

[henrylbh]

So overall despite all the hassle to refinance, bank loan is actually better than hdb loan ?

All along I thought hdb loan is the preferred loan as 2.6% is considered low and bank loan may fluctuate too much until it might end up incurred higher interest rate than hdb fixed loan.

Since 2008 and even now, bank loan interest rate is cheaper and at times much cheaper than hdb loan interest rate. However bank rate has been rising since Jan this year and it may not be long it may be more than hdb rate.

 

[henrylbh]

$600 is for redemption. Refinancing done so many yrs ago in 2009, after the lock in period so no penalty. Can't remember paying any fee.

Of course after the loan period there should be no penalty. I spoke to a loan broker and according to him, lending bank needs 3 months notice for full repayment or redemption or in lieu 3 months' interest.

 

[antonpoh]

Of course after the loan period there should be no penalty. I spoke to a loan broker and according to him, lending bank needs 3 months notice for full repayment or redemption or in lieu 3 months' interest.

Yup, anyway the process is slow. Bank also take about 2-3mth to process so total may take aro close to 6mths. It actually took me another 3-4 weeks to coordinate the law firm with the right person from the Bank. Previous Banker left and nobody know who is handling my account.

 

[henrylbh]

Yup, anyway the process is slow. Bank also take about 2-3mth to process so total may take aro close to 6mths. It actually took me another 3-4 weeks to coordinate the law firm with the right person from the Bank. Previous Banker left and nobody know who is handling my account.

So HDB loan better?

 

[antonpoh]

So HDB loan better?

Think my sis paid more interest for her HDB loan compare to this condo(If both property are same price). Bank loan still much better. I have this feeling that hdb may not be that easy to refinance to a shorter loan terms.

 

[henrylbh]

Think my sis paid more interest for her HDB loan compare to this condo(If both property are same price). Bank loan still much better. I have this feeling that hdb may not be that easy to refinance to a shorter loan terms.

Sure save a lot of interest for those who took bank loan from 2008 to date as quantum of loan is higher at the beginning. But if take now, the difference may not be much as bank rate is rising and may overtake HDB rate and cannot switch to HDB loan.

 

[kehyi4]

I have this feeling that hdb may not be that easy to refinance to a shorter loan terms.

If you're talking about 'refinancing' with HDB, then it's totally not a problem at all. Anytime you want, can shorten the loan period, pay lump sum, tweak the monthly installment, rebalance between payers, almost whatever you want. No lock-in, no fees, no fuss.

 

[joanie_dan]

Market has been speculating the U.S. Fed rate increase for this entire year, which could be as early as December due to the optimism of data release, if not 2016. In general 07/08 onwards til date, interest rates have hit rock bottom and slowly climbing. Hence the decision whether to take a bank or Hdb loan is quite obvious. With current sibor rates + bank spreads already hovering around effective 2% (fix rates are also around there & max 3yr fix), having a cap of 2.6% with Hdb as a hedge is more risk adverse but more suitable vs say 5yrs ago where interest rates were less than 1%. So all depends on your view. I prefer Hdb loan now and maximizing the total loan I can get & keeping the cpf oa amounts for other purposes.

 

[joanie_dan]

Basically refinance usually means a refinance to another bank, and repricing is a change of loan package within the same bank. (Just industry terminology, ignore whether the use of the words make sense)

In the past years, a refinance of loan is coupled with legal subsidies from the new bank to take over your loan from your existing. With an adequate loan notional outstanding, these legal fees (approx $2.5-$3k) could have been fully subsidized. However in current regulations, banks do not give legal subs anymore, which means to say that every refinance 3years, will incur such a charge. Of course one can choose to reprice with same bank but it then depends whether the existing bank gives an attractive choice for you to do so. Reprice fees generally are just a few hundred.

Lastly yup, approx $600 is for full loan redemption to discharge the mortgage interest. Your title deeds & stuff.

I bought in 2006 loan 30yrs, after 3yrs refinance it to 12yrs. Legal fees is $600. Bank admin fees can't remember.

 

[joanie_dan]

This is affirmative, partial redemption 1 mth notice, full redemption 3 mths.

Of course after the loan period there should be no penalty. I spoke to a loan broker and according to him, lending bank needs 3 months notice for full repayment or redemption or in lieu 3 months' interest.

 

[joanie_dan]

Not so sure about Hdb rules as I'm more familiar with pte & als haven't kept myself updated this past year on latest regulations. However shortening of loan tenor means a faster repayment of debt to Hdb, if the tdsr(debt servicing ratios etc) are ok, I think this should not be a problem.

Think my sis paid more interest for her HDB loan compare to this condo(If both property are same price). Bank loan still much better. I have this feeling that hdb may not be that easy to refinance to a shorter loan terms.

 

[antonpoh]

Basically refinance usually means a refinance to another bank, and repricing is a change of loan package within the same bank. (Just industry terminology, ignore whether the use of the words make sense)

In the past years, a refinance of loan is coupled with legal subsidies from the new bank to take over your loan from your existing. With an adequate loan notional outstanding, these legal fees (approx $2.5-$3k) could have been fully subsidized. However in current regulations, banks do not give legal subs anymore, which means to say that every refinance 3years, will incur such a charge. Of course one can choose to reprice with same bank but it then depends whether the existing bank gives an attractive choice for you to do so. Reprice fees generally are just a few hundred.

Lastly yup, approx $600 is for full loan redemption to discharge the mortgage interest. Your title deeds & stuff.

That's why you can see i only do a repricing once with the same bank and reduce the loan term to 12yrs.

Most people don't understand that first 3-5yrs most of the monthly installment goes into paying for the interest. Base on my loan, only 40+% are use to pay the principal for the first few years. So best is don't refinance too much.

 

[joanie_dan]

Unless the loan package is a very good one with low spreads throughout the loan tenor, otherwise for typical packages with only first 3-4 years preferential rate and a lousy throughout rate, it might still make sense to refinance if the cost savings from interest premiums are higher than legal fees (Use an amortization spreadsheet to calculate). So it's still case by case and not a one size fit all solution (by not refinancing frequently).

As for loan tenor, the shorter the tenor, the less interest is paid(you are right on this, amortization effect). Good for those who have excess cash to pay more monthly installments in addition to cpf servicing.

Again, those who are savvy in investments will probably rather use their cash for equity/fix income/fx etc investments than pay off their loan faster(1-3% loan interest is still relative low vs their potential capital gains elsewhere)

That's why you can see i only do a repricing once with the same bank and reduce the loan term to 12yrs.

Most people don't understand that first 3-5yrs most of the monthly installment goes into paying for the interest. Base on my loan, only 40+% are use to pay the principal for the first few years. So best is don't refinance too much.

 

[MindMatrix]

Legal fee etc on bank loan easily 3x more than hdb loan. But many also not aware that when you sell your property or redeem or settle your bank loan, you also need to get your own lawyer, again incurring a much bigger fee than for hdb loan. Then you need to keep your own title deed compared to free custody by hdb.

Yes, it's true that it's less hassle with HDB though they also have their own procedures to follow. People should get a bank loan only if they're damn sure that they'll save loads of interest, or if they don't qualify for HDB loan.

 

[antonpoh]

Unless the loan package is a very good one with low spreads throughout the loan tenor, otherwise for typical packages with only first 3-4 years preferential rate and a lousy throughout rate, it might still make sense to refinance if the cost savings from interest premiums are higher than legal fees (Use an amortization spreadsheet to calculate). So it's still case by case and not a one size fit all solution (by not refinancing frequently).

As for loan tenor, the shorter the tenor, the less interest is paid(you are right on this, amortization effect). Good for those who have excess cash to pay more monthly installments in addition to cpf servicing.

Again, those who are savvy in investments will probably rather use their cash for equity/fix income/fx etc investments than pay off their loan faster(1-3% loan interest is still relative low vs their potential capital gains elsewhere)

I did invest my OA in stocks, got better return so use it to pay off the property faster.

 

[henrylbh]

I did invest my OA in stocks, got better return so use it to pay off the property faster.

If OA in stocks got better return, then completely makes no sense to use it to pay off property faster, unless you think otherwise.

I got enough OA to settle my loan in full. I don't invest my OA and I don't pay off my property faster. All because the loan interest rate is lower than my OA interest rate.

 

[elviol]

I went down to UOB to open a CPFIS account today. The cso told me that even you don't hold any counters/stocks, there is still a maintenance fee charge ($2) per quarter.

Does anyone know if this is true for DBS and OCBC also?

 

[wts2013]

I went down to UOB to open a CPFIS account today. The cso told me that even you don't hold any counters/stocks, there is still a maintenance fee charge ($2) per quarter.

Does anyone know if this is true for DBS and OCBC also?

dbs no charge

 

[Perisher]

I went down to UOB to open a CPFIS account today. The cso told me that even you don't hold any counters/stocks, there is still a maintenance fee charge ($2) per quarter.

Does anyone know if this is true for DBS and OCBC also?

I have OCBC CPFIS for about a year already, didn't invest a dime and didn't tio any charges.