Refinancing a HDB loan

[bubbasour]

Hi everyone,

I'm getting near end of 2-year lock-in period with OCBC for my HDB, and are looking for the best refinancing deal to lower my monthly costs. I appreciate any gudiance here what bank I should explore.

Current situation:

- Loan amount around $400k.
- OCBC is charging 2.349% interest rate. (it is monthly sibor).

pls advice. thx bubba

 

[BBCWatcher]

Current situation:
- Loan amount around $400k.
- OCBC is charging 2.349% interest rate. (it is monthly sibor).
pls advice. thx bubba

That looks pretty fair, actually. What's the gap to the 1 month SIBOR? About 60 basis points (1 month SIBOR+0.6%)? And what's the loan term?

I'm not fond of board-linked, fixed deposit-linked, or other solo bank-determined rate structures. There's some evidence the banks are playing games with those rates. If you're prepared to pay off such a mortgage within 3 years (at the end of the 3 years, without prepayment penalty) maybe you can play those games, but otherwise I'm nervous about them.

 

[bubbasour]

That looks pretty fair, actually. What's the gap to the 1 month SIBOR? About 60 basis points (1 month SIBOR+0.6%)? And what's the loan term?

I'm not fond of board-linked, fixed deposit-linked, or other solo bank-determined rate structures. There's some evidence the banks are playing games with those rates. If you're prepared to pay off such a mortgage within 3 years (at the end of the 3 years, without prepayment penalty) maybe you can play those games, but otherwise I'm nervous about them.

Hi BBCwatcher.. I think the loan time is 20 or 25 years from what I can remember.

I know that upon finish of this 2 year promo, OCBC will bump the interest by 0.5% or something crazy. So I must re-finance the loan either with another bank if they have good promo, or with ocbc if they have any good offering.

 

[Toni90]

That looks pretty fair, actually. What's the gap to the 1 month SIBOR? About 60 basis points (1 month SIBOR+0.6%)? And what's the loan term?

I'm not fond of board-linked, fixed deposit-linked, or other solo bank-determined rate structures. There's some evidence the banks are playing games with those rates. If you're prepared to pay off such a mortgage within 3 years (at the end of the 3 years, without prepayment penalty) maybe you can play those games, but otherwise I'm nervous about them.

Did u take the Sibor loan?

 

[bubbasour]

Hi toni, yes I think its a monthly Sibor

 

[BBCWatcher]

I know that upon finish of this 2 year promo, OCBC will bump the interest by 0.5% or something crazy.

But that's not crazy. Market interest rates have increased since you locked the rate two years ago for two years. So I'm wondering what the uplift is from the one month SIBOR.

 

[bubbasour]

But that's not crazy. Market interest rates have increased since you locked the rate two years ago for two years. So I'm wondering what the uplift is from the one month SIBOR.

if no action results in a 0.5% increase I would say that's a crazy impact to my monthly funds.. If I can either maintain or better lower the monthly fees I should do the refinancing.

I found this comparision, but not very exhaustive..
https://blog.moneysmart.sg/property/best-home-loans-singapore-review/

pls let me know if have other good bank suggestion which can save on the costs.. thanks

 

[BBCWatcher]

if no action results in a 0.5% increase I would say that's a crazy impact to my monthly funds..

Well, what's the "crazy impact" in terms of your monthly mortgage repayment? How many dollars per month is that?

There are costs to refinancing, and interest rates are higher now than they were two years ago. It appears that you might be able to elongate the term by a couple or more years to get a lower monthly payment that way, once you've paid for the refinancing costs of course. But (so far) I don't have enough information to determine whether you can improve on the rate. So I'll ask again: what's your mortgage interest rate formula on your current mortgage? Your current mortgage will contain a floating rate (after the 2 year fixed rate period) that will be something like "X percentage points plus one month SIBOR," for example X=0.6. What's X in your current one month SIBOR-linked mortgage?

 

[Mecisteus]

Ask a mortgage broker to recommend you a package.

There are some loan packages which are tied to the same banks high interest rates savings accounts. Look out for that. ie DBS Multiplier

 

[bubbasour]

Well, what's the "crazy impact" in terms of your monthly mortgage repayment? How many dollars per month is that?

There are costs to refinancing, and interest rates are higher now than they were two years ago. It appears that you might be able to elongate the term by a couple or more years to get a lower monthly payment that way, once you've paid for the refinancing costs of course. But (so far) I don't have enough information to determine whether you can improve on the rate. So I'll ask again: what's your mortgage interest rate formula on your current mortgage? Your current mortgage will contain a floating rate (after the 2 year fixed rate period) that will be something like "X percentage points plus one month SIBOR," for example X=0.6. What's X in your current one month SIBOR-linked mortgage?

thx bbcwatcher, the crazy impact is around $2000/year, which is too much for me. others may be totally fine with increases..

i don't know what's the current formula and will need to speak to ocbc and try to understand better. i only know i pay 2.349% interest on the loan everymonth now and it is bound to monthly sibor.
will speak to them and see if I can get more detail too.

 

[bubbasour]

Ask a mortgage broker to recommend you a package.

There are some loan packages which are tied to the same banks high interest rates savings accounts. Look out for that. ie DBS Multiplier

thx mike, you mean a mortage broker in ocbc where I have the loan now or should I one by one ask the banks about their best offers? I saw most local banks can do this kinda refinancing, but also maybank and standard chartered. not sure who's most competitive or who to start with first.

i can first ask ocbc if they have new good package and then compare with others.

 

[BBCWatcher]

OK, even before calling anybody, just go dig out your mortgage agreement and see what you have. You'll need to know what you've got, and there are at least two key facts that are quite important: (1) what's your interest rate formula (after the fixed period), and (2) is there any prepayment penalty or other important prepayment term that would affect your ability to refinance?

 

[Mecisteus]

thx mike, you mean a mortage broker in ocbc where I have the loan now or should I one by one ask the banks about their best offers? I saw most local banks can do this kinda refinancing, but also maybank and standard chartered. not sure who's most competitive or who to start with first.

i can first ask ocbc if they have new good package and then compare with others.

https://www.icompareloan.com/resources/mortgage-broker-singapore-best-rate/

 

[deepblueli]

I refinanced my HDB loan two years ago using a mortgage broker, which ended up I didn’t have to pay any extra cost. There are two costs for refinance: 1) lawyer fee, 2) property valuation fee.

The lawyer fee was paid fully by my current bank, $1600. And I got some vouchers from mortgage broker who covered the property valuation fee, forgot how much was it already.

However take note that if the bank sponsors your lawyer fee, you cannot refinance out of the bank within X years (for my case, it is 3 years with 2 years fixed rate). But you can seek for repricing within the same bank. Hope it helps.

 

[OCBC Bank]

thx mike, you mean a mortage broker in ocbc where I have the loan now or should I one by one ask the banks about their best offers? I saw most local banks can do this kinda refinancing, but also maybank and standard chartered. not sure who's most competitive or who to start with first.

i can first ask ocbc if they have new good package and then compare with others.

thx bbcwatcher, the crazy impact is around $2000/year, which is too much for me. others may be totally fine with increases..

i don't know what's the current formula and will need to speak to ocbc and try to understand better. i only know i pay 2.349% interest on the loan everymonth now and it is bound to monthly sibor.
will speak to them and see if I can get more detail too.

Hi there,

If you would like for us to arrange for a mortgage specialist to get in touch with you, do drop us a private message with your contact details.

Alternatively, you may also fill in this Contact Form: https://internet.ocbc.com/internet-banking/PublicOnlineForm/Form?FormId=HLform&Source=Online

^DG

 

[Aaron_soh80]

Hi everyone,

I'm getting near end of 2-year lock-in period with OCBC for my HDB, and are looking for the best refinancing deal to lower my monthly costs. I appreciate any gudiance here what bank I should explore.

Current situation:

- Loan amount around $400k.
- OCBC is charging 2.349% interest rate. (it is monthly sibor).

pls advice. thx bubba

u wana farm ur CPF for more interest?..

 

[bubbasour]

So I'll ask again: what's your mortgage interest rate formula on your current mortgage? Your current mortgage will contain a floating rate (after the 2 year fixed rate period) that will be something like "X percentage points plus one month SIBOR," for example X=0.6. What's X in your current one month SIBOR-linked mortgage?

Hi bbcwatcher, I checked the document and can read

Year3
Type of reference rate = 1M SIBOR.
Spead = 0.7%
Interest rate (value of the reference rate + spread) = 1.33%.

but this was printed long ago, so I'm not sure whether accurate.

I check 1M SIBOR rate here, https://abs.org.sg/rates-sibor#

for december = 1m sibor is 1.64%.

1.64% (dec 1m sibor) +0.7% (spread) = 2.34% which is abt what I pay now..

can pls advice if I can lower this through changing bank or refinancing? apprecite it

 

[BBCWatcher]

Year3
Type of reference rate = 1M SIBOR.
Spead = 0.7%....

I check 1M SIBOR rate here, https://abs.org.sg/rates-sibor#
for december = 1m sibor is 1.64%.
1.64% (dec 1m sibor) +0.7% (spread) = 2.34% which is abt what I pay now..

can pls advice if I can lower this through changing bank or refinancing? apprecite it

One month SIBOR plus 0.7% is pretty good, actually, but you might be able to do slightly better....

First of all, you still need to check whether you're within any prepayment penalty period.

Assuming that's not a problem, I see a couple choices in a quick search, in no particular order:

1. UOB offers a straight up 1 Month SIBOR plus 0.4% floating mortgage, and with a refinancing legal fee incentive. This would drop your interest rate down to about 2.04% (your estimate -- but actually the one month SIBOR looks higher today, so 2.16% is what I'm seeing if calculated today). You could also lengthen the term at the same time, but CAUTION: there is no fixed interest rate period with this particular loan. As the one month SIBOR moves up and/or down, your mortgage will adjust right along with it, starting right away.

2. OCBC itself looks like it offers a 3 Month SIBOR mortgage with a fixed interest rate for 2 years and floating thereafter. Year 1: 3M SIBOR+0.35%, Year 2: 3M SIBOR+0.45%, Year 3: 3M SIBOR+0.5%, Year 4 and after: 3M SIBOR+0.6%. This rate is a little lower for a couple years and about the same as what you've got thereafter, and you should also be able to lengthen the loan term back up to 25 years if you wish. Please note that the 3M SIBOR is consistently a little higher than the 1M SIBOR.

Anybody see any other deals out there?

There are non SIBOR mortgages, but I'm not a fan since the bank itself determines and adjusts the rate, not something more closely linked to market-wide interest rates.

In all of these cases you're going to be in a world of hurt if you haven't prepared for the very real possibility that market interest rates will be higher again after a couple more years of rate lock. If a $167/month higher mortgage payment is a crisis, THAT'S the problem. Get past the problem this time through some combination of refinancing at a slightly lower rate (the best you can do) and/or mortgage term lengthening, but within the couple years of reprieve you need to get to a better, stronger place financially so that this mortgage is genuinely sustainable. A 3% or 4% mortgage interest rate is not crazy; it could happen. Be well prepared for it at least next time.

 

[Stallone]

If cannot fork out 200$ more a mth for interest raise, I wonder how much these property owners save a month in their banks

 

[Unbiasedsg_]

Look for Fixed deposit pegged loans, they are usually FD+0.8% p.a. As of now, I am still seeing 1.9% being offered.

The lowest is from SCB FDR + 1.08%.
However, please take note that their baseline for the package is 36 month fixed deposit which is currently at 0.97%, but if you check the 36 month fixed deposit with other banks....u notice Almost all BANKS is higher than 0.97%. With Maybank 36month at 1.80%, there is a lot of room for SCB to increase their rates to the "market rate".

So there is very high probability that SCB may increase their 36 month fixed deposit to just match DBS which has just risen their rates from 0.97% to 1.30%.

If they do the minimum raise as aforementioned, you took up the SCB package your interest may shoot up to 2.23% or even higher!!!

Even your property is HDB, there's still awesome fixed package around exclusively for HDB starting at 2.18%.