By MoneyBees
Compare staying on your home loan, repricing with your bank or refinancing at 3M SORA plus a spread, after legal fees, mortgage duty, lock-in penalty and clawback, with the months to break even.
Refinancing moves your home loan to a new bank. Repricing, also called conversion, moves you to a new package with the same bank. MoneySense defines them this way. Repricing usually skips legal fees, while refinancing may get you a lower rate.
MoneySense suggests reviewing your loan regularly, especially once the lock-in period is over. Leaving inside the lock-in usually costs a penalty on the amount you repay, so compare the saving with that penalty first.
Legal and valuation fees, which a new bank may subsidise, IRAS mortgage duty of 0.4% of the loan capped at S$500, and any lock-in penalty or subsidy clawback from your current bank. Enter the figures from your offers to see the total.
Not for the home you live in. MAS exempts owner-occupiers who refinance from TDSR and MSR, though the bank still checks your credit. Refinancing an investment property is subject to TDSR unless you commit to repay at least 3% of the balance within 3 years.
Yes, with a bank regulated by MAS. HDB says you cannot later switch back to an HDB loan, and the change takes about 6 to 8 weeks once your lawyer submits the accepted letter of offer.
Yes. IRAS charges mortgage duty of 0.4% of the new loan, capped at S$500, on a refinancing mortgage. Any loan of S$125,000 or more pays the S$500 cap.
The month in which the interest you have saved first covers the cost of switching. If it falls after the new package's lock-in ends, the switch may not be worth it.
The latest 3-month compounded SORA published by MAS plus the spread you enter from the bank's offer. Floating rates move with SORA, so the saving will change over time.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).