Mortgage Refinancing

The circuit breaker season has seen everyone turning into an aspiring yogi or the next Gordon Ramsey – and that’s great. With movement largely restricted to running from your bedroom to the kitchen, it’s important to find things that help maintain your productivity and in turn, your sanity. Here’s something you’ll want to add to your to-do list: relook into your mortgage plans, because you just might be able to save thousands of dollars.
If you’ve never heard of mortgage refinancing, it basically means switching your home loan to a new loan package or switching banks altogether. This is usually done because of a lower interest rate, which reduces your monthly repayment amount.

Read on to find out four reasons why it’s a good time to do so.

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1. Interest rates are really low

It’s no wonder that interest rates are dropping at a steady pace, with the world facing its greatest health crisis in years. FYI, current float rates are around 1.19%! As banks tend to offer competitive refinancing rates to entice customers to jump ship, you should definitely keep a lookout for the wealth of strong refinancing offers.

Don’t underestimate the power of a small interest rate drop – a seemingly small drop can lead to huge savings! However, you need to consider factors such as your current lock-in period. Although banks might offer you cash rewards to offset any legal/penalty fees, you should definitely do the math to check if refinancing your mortgage now will be worth it.

2. You get an (limited-time) exemption from Total Debt Servicing Ratio (TDSR)

You should be familiar with Total Debt Servicing Ratio (TDSR) if you’ve purchased any kind of property before. The TDSR is a regulation that prevents you from overborrowing. It takes into account factors such as your salary, age and loan obligations. Currently, the maximum percentage of your monthly income that can be used to pay off all your loans (that includes credit and debit, car loans, etc.) is capped at 60%.
If the TDSR stood in the way of you refinancing your mortgage, this is good news for you – the Monetary Authority of Singapore has announced that due to the Covid-19 situation, the TDSR will not apply to refinancing of owner-occupied residential mortgages. So if you need some extra cash on your hands during this period, you’re all set.

Confused about mortgage refinancing? Speak to our experts!

3. You can extend your loan tenure

Our circumstances in life change all the time, and your financial circumstance now might be vastly different from when you first purchased your property. For example, you could have had the addition of a bundle of joy in your family, and more disposable income would definitely be useful. By refinancing your mortgage, you can extend your loan tenor up to age 75, or a loan period of 35 years minus the number of years you have paid off, plus one year. This way, you can reduce your monthly repayments and improve your cash flow.

4. The window of opportunity is narrow

No one knows when the economy will recover from the blow it received due to the Covid-19 situation. Sure, we all want it to blow over as soon as possible. But that also means the time you have to take advantage of the low interest rates and the Monetary Authority of Singapore’s relief measures is short. So seize this opportunity to refinance your mortgage if you can, you wouldn’t want to miss out.

While it’s hard to be optimistic during this period, the benefits of refinancing your mortgage is definitely the silver lining we all need. 

Compare across various banks for the best possible rates!