Refinance Or Conversion?

[chronograph 0]

Hi all,

Need some advices.

My HDB loan with A bank lock in period is due this August. At the moment I'm paying fixed rate at 3.07%. By Aug i will have outstanding loan of about 120k plus and the interest will be adjust to 3.75%

A bank offers(loan >= 80k):

1st year 1.70 % fixed

2nd year 1.78 % (HDBMR -2.72%)

3rd year 2.88% (HDBMR -1.62%)

4th to last 3.75% (HDBMR -0.75%)

Who define HDBMR? (HDB Mortgage rate)

There is a conversion fee of $800. Is this norm? Possible to waive off?

B bank offers(loan >= 100k):

1st year 1.95% (fixed)

2nd to last 1.85% (SIBOR + 1.25%)

What's the cost of refinance?

3rd option: Go back to HDB loan at 2.6%?

I will be making 20k to 30k partial repayment depending on which plan give the best saving. Anyone can advice?

Thanks.

[multisp05 0]

Hi all,

Need some advices.

My HDB loan with A bank lock in period is due this August. At the moment I'm paying fixed rate at 3.07%. By Aug i will have outstanding loan of about 120k plus and the interest will be adjust to 3.75%

A bank offers(loan >= 80k):

1st year 1.70 % fixed

2nd year 1.78 % (HDBMR -2.72%)

3rd year 2.88% (HDBMR -1.62%)

4th to last 3.75% (HDBMR -0.75%)

Who define HDBMR? (HDB Mortgage rate)

There is a conversion fee of $800. Is this norm? Possible to waive off?

B bank offers(loan >= 100k):

1st year 1.95% (fixed)

2nd to last 1.85% (SIBOR + 1.25%)

What's the cost of refinance?

3rd option: Go back to HDB loan at 2.6%?

I will be making 20k to 30k partial repayment depending on which plan give the best saving. Anyone can advice?

Thanks.

Hi

Based on the rates that your are sharing... It's consider high in terms of interest rate.

I'm able to get you rates that is far lower that what your bank is offering you.

are u interested in finding out more?? Please PM me

[chronograph 0]

are u interested in finding out more?? Please PM me

Please reply to my PM with the rates u can offer.

[davidbslee 1]

Hi all,

Need some advices.

My HDB loan with A bank lock in period is due this August. At the moment I'm paying fixed rate at 3.07%. By Aug i will have outstanding loan of about 120k plus and the interest will be adjust to 3.75%

A bank offers(loan >= 80k):

1st year 1.70 % fixed

2nd year 1.78 % (HDBMR -2.72%)

3rd year 2.88% (HDBMR -1.62%)

4th to last 3.75% (HDBMR -0.75%)

Who define HDBMR? (HDB Mortgage rate)

There is a conversion fee of $800. Is this norm? Possible to waive off?

B bank offers(loan >= 100k):

1st year 1.95% (fixed)

2nd to last 1.85% (SIBOR + 1.25%)

What's the cost of refinance?

3rd option: Go back to HDB loan at 2.6%?

I will be making 20k to 30k partial repayment depending on which plan give the best saving. Anyone can advice?

Thanks.

Hi, I think once you choose to take Bank Loan from the start to service HDB, you will not be able to go back to HDB for HDB loan. I read from somewhere. Any shifu can advice of this?

[chronograph 0]

Hi, I think once you choose to take Bank Loan from the start to service HDB, you will not be able to go back to HDB for HDB loan. I read from somewhere. Any shifu can advice of this?

You are right about this, I'm stuck with bank loan.. I have confirmed with HDB, only new transaction then can you apply for HDB loan if u r eligible.

[Matador 0]

Hi all,

Need some advices.

My HDB loan with A bank lock in period is due this August. At the moment I'm paying fixed rate at 3.07%. By Aug i will have outstanding loan of about 120k plus and the interest will be adjust to 3.75%

A bank offers(loan >= 80k):

1st year 1.70 % fixed

2nd year 1.78 % (HDBMR -2.72%)

3rd year 2.88% (HDBMR -1.62%)

4th to last 3.75% (HDBMR -0.75%)

Who define HDBMR? (HDB Mortgage rate)

There is a conversion fee of $800. Is this norm? Possible to waive off?

B bank offers(loan >= 100k):

1st year 1.95% (fixed)

2nd to last 1.85% (SIBOR + 1.25%)

What's the cost of refinance?

3rd option: Go back to HDB loan at 2.6%?

I will be making 20k to 30k partial repayment depending on which plan give the best saving. Anyone can advice?

Thanks.

Hi Chronograph,

The usual cost of refinance are

1) Early redemption penalty, 1.5% of redemption amount

2) Legal fees clawback, base on 0.4% of the loan granted

3) Mortgage discharge fees from bank A, $500

4) Fire insurance clawback. approximate $100

5) Legal fees for refinance of new loan $2500

Read your Letter of Offer from A Bank. Since your lock-in period will end in August, there should be no redemption penalty

Legal fees subsidies clawback is 0.4% of initial loan amount, up to $2500 (check your Letter of offer), usually after three years into the repayment then there will be no clawback, likewise for Fire insurance

Legal fees for refinance = $2500 - ($100,000 x 0.4%) = $2100

Example based on assumption that no redemption penalty

Interest on new loan if you do conversion:

($120,000 - $20,0000) X 3.75% = $100,000 x 3.75% = $3750

LESS

Interest on new loan if refinance $100,000 X 1.7% = $1700

Legal fees clawback: Assume initial loan is $300,000 x 0.4% = $1200

Fire insurance clawback = $100

Mortgage Discharge =$500

Legal fees for refinance = $2500 - ($100,000 x 0.4%) = $2100

$3750 - $1700 -$1200 - $100 - $500 -$2100 = -$1850 (Loss on refinancing)

Refinance will be worthwhile if loan amount is larger because of the high fixed costs like legal fees, mortgage discharge, etc

Another question you should ask if you are selling your house in the near future like within two years.

Assumption:

If you are selling your house on the start of third year,

$1850/24 months = $78 per month (this is to add into your monthly installment)

New installment after refinancing, assuming 20 years loan at 1.7% (for two years) and loan of $100,000

your monthly installment is $491

Add $491 to $78 you get $569 (you have to smoothen out your losses)

If you do conversion:

Assuming $100,000 loan for 20 years at 3.75% your monthly installment is $592

Difference is $23 per month for two years. And you have to pay mortgage discharge fees, legal fees clawback, fire insurance clawback again when you sell your house. hmm you give it a thought....

Disclaimer:

Above scenario is based on assumption and should not be relied on for financial advice. Seek a mortgage banker for proper advice.

[chronograph 0]

Hi all, thanks for all the help and figures provided.

I have done some calculation on my own and really the cost of refinance cannot justified the saving i have on refinancing to other financial institutions. Reason being my loan amount is not big enough, I will be taking only about 90k loan, keeping some in CPF for raining days.

I will be taking the offer from the bank(A bank from my first post) which i serviced my loan. 1.7% fixed for a year, lock in for a year with conversion fee of $500, managed to bargain down from $800, cannot waive and cannot be paid by CPF.