Ravi Chandran
Finding cheaper home loans could be that much difficult in the high interest rate mortgage environment that we are in now – but it is not impossible.
If you are a homeowner, chances are that you are on the lookout for home loan refinancing as interest rates rises. No thanks to the return of the high interest rate environment, cheap home loan is now becoming less of norm again as banks’ interest rates for floating home loans rise to their highest in recent years.
If you are thinking about refinancing right now, then you got to check out some of the refinance hack that are out there to help you get the best home loan.
Hack 1 to finding cheaper home loans – REPRICE
Many of you know that home loans come with a lock-in period that prevents you from refinancing your home loan. Some might point out that you can technically still refinance your home loan during the lock-in period.
However, you will incur a penalty that is sometimes much more than what you will be saving when you refinance. As such, those who are still in your lock-in period will have to continue letting the bank charge you the current interest rate. It may very well be lower than the interest rates in the current financial environment.
But still, there’s one refinance hack that you can use to help you save, i.e. you can ask your bank to reprice your home loan. Most home loans come with 1-2 chance for such a repricing, even during the lock-in period. This refinance hack is somewhat lesser known that fly under the radar of most homeowners.
Hack 2 to finding cheaper home loans – ENGAGE MORTGAGE BROKER
One of the most common complaint that we hear from homeowners is that finding the cheapest home loan is difficult. You have to visit 10 different bank websites to scrape the interest rate, put it in an Excel sheet and then compare them. Honestly, nobody has the time and motivation to do that.
Also, be mindful that not everybody qualifies for the same mortgage rates. That’s because lenders use different tools and models for assessing risk, and for pricing loans based on the perceived risk the borrower brings. The interest rates your mortgagee offers you are partly determined by your credit score, your debt to income ratio, and the amount of money you were planning to put down on the loan. These are some of the strongest factors that influence rates (though they’re not the only ones).
The bottom-line is, different mortgage rates for different borrowers is good news for the mortgagor. But you have to be diligent in comparing the different home loans to see which fits you best and gives you better savings in mortgage payments over the long-run.
That’s why good mortgage brokers are are useful for you to find the cheapest home loan. All you need to do is to drop them an email and put in a few refinancing details. Good mortgage brokers have an in-house, tested system whose algorithm will do the rest for you to find the cheapest home loan at the click of your mouse.
Hack 3 to finding cheaper home loans – REDUCE TDSR
The total debt servicing ratio (TDSR) of 55% has been creating problems for homeowners who are looking to refinance. Because of the TDSR, some of you might not be able to refinance to a cheaper home loan package.
Debt servicing burden spirals into something unsustainable as interest rates increase, the only option such mortgagors have is to sell off the property – even if at a loss. To reduce TDSR ratio, either cut the monthly debt at the top, or increase the income at the bottom. Since most have problems reducing the numerator, the only viable way known is through asset-based lending where those that need a home loan have to show or pledge funds or liquid assets to boost the income at the denominator. That normally works for borderline cases just over 60 per cent.
Hack 4 to finding cheaper home loans – DON’T CHASE BRANDS
For most things, the branding matters. But when it comes to home loan, it really doesn’t matter. This refinance hack will change the way you think about searching for a refinancing package for your home loan. Indeed, the most important thing when comparing home loan is to search for the one that comes with the lowest interest rate. The lower the interest rate, the more you can save from your monthly mortgage repayment.
But still, it is a good idea to check out what kind of home loan deals you can find from different banks in Singapore. You can sometimes find cheap deals, especially when they are doing a promotion.
Knowing these hacks to finding a cheaper home loan is just one step towards enjoy savings on your home loan. Still, you need to take the second (and most important) step of turning the hack into action. If you don’t take action today, you will not be able to enjoy savings on your home loan.
If you are looking for good mortgage brokers because you are ensure of funds availability for purchase, trusted mortgage consultants can set you up on a path that can get you a home loan in a quick and seamless manner.
Good mortgage consultants have close links with the best lenders in town and can help you compare Singapore home loans and settle for a package that best suits your home or commercial purchase needs. You should also find out money saving tips.
Whether you are looking for a new home loan or to refinance your existing one, a Mortgage broker can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all their services are free of charge. So it’s all worth it to secure a loan through them.
