If you have a loan approaching the 3-year mark, it's time to review the mortgage options. We look at the factors affecting mortgage refinancing and repricing options in Singapore.

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Factors Affecting Refinancing And Repricing

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By Sean Lim
Founder of FindaHomeLoan.co
Trusted by clients, Quoted in media

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What Is Refinancing?
Refinancing is moving the mortgage on a property from the
existing bank to another bank. Reasons why you would
consider refinancing include:
switch to lower floating or fixed interest rates
extend/ reduce mortgage tenure
obtain a term loan
If you have term loan secured on the same property, both
loans must be refinance together at the same time. You
cannot have a term loan with bank A and the mortgage with
bank B.

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When Should You Refinance?
The best time to consider refinancing
is when your mortgage is 6 months
to the expiry of lock in or legal claw
back period, whichever is later. If
you had not obtained legal fees
subsidy, then you should just note
the lock in expiration date.

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Are There Expenses Incurred
For Refinancing?
The refinancing expenses are legal and valuation fees. After a
period in 2012 with no refinancing subsidy offered by banks,
some have resumed offering legal fees subsidy to refinancing.
Some offer cash rebate instead, which can help to offset the legal
fees. You could be pleased to know that legal fees can be paid by
CPF or cash. Valuation must be conducted on the property, to
ensure its value is in accordance to the mortgage. We are in
touch with the selected banks that offer valuation subsidy too.
It's possible for you to refinance property loan at zero cost with
subsidies covering both expenses.

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Can I Obtain A Term Loan?
Obtaining a term loan throws another variable in the selection
of refinancing banks. Not every bank will provide the same
valuation. They may not support the same loan-to-value ratio.
Deciding between 80% of $2 million valuation, and 70% of
$2.2 million could make a big difference to the possible term
loan amount. Note that term loan is only applicable to private
properties, and not HDB flats. The good news is the term loan
will enjoy the subsidies too.

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What Is Repricing?
Repricing is the act of changing the mortgage with
the existing bank.
The customer should contact the bank directly to
find out the prevailing mortgage repricing packages
available. We are not in a position to find out these
packages or reprice on your behalf.

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Is Repricing Free?
Those who bought new launches in recent years should
enjoy a free one-time repricing. However, there are banks
who don't offer this freebie. Otherwise, be prepared to pay
some repricing fees, possibly in the range of $500 upwards.
Refinancing could be a cheaper option with lower mortgage
rates.

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Post-TDSR and MSR
The TDSR guidelines have not certainly made financing
easier. Whether you are repricing or refinancing, your
borrowing limits will be subjected to assessment again.
Application and supporting documents are required. We have
seen a fair share of customers who found themselves in
sticky situations.
The MSR limit of 30% for HDB flats only have also limit the
avenues for HDB owners. Imagine your spouse has stopped
working to be a full-time mother and your total income could
not pass the MSR criteria. Refinancing would not
be possible then.
You are welcome to
self-compare with our mortgage refinance calculator.

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