If someone has a home loan that is charging more than 2.4% in interest, they may be paying more than needed for it. At this point, it may be a good idea to refinance your housing loans with Dollarback Mortgage.
Refinancing a home loan in Singapore will help to reduce the repayment amount because it will provide a lower interest rate. This may mean changing the loan package with the existing bank or finding a new bank to carry the loan. Keep reading for some helpful information to keep in mind when refinancing a loan in Singapore.
What Does Refinancing Mean?
Home loan refinancing is a chance for homeowners to switch the home loan to another bank to receive a lower interest rate. This will help a person save money over time.
Usually, refinancing occurs when the fourth year of the home loan has arrived. This is because a traditional home loan package will increase interest rates after three years have passed. After this, the interest rate is more likely to go up. This means that this is the best time to find out if there is another bank that can provide a lower interest rate.
Another common reason that homeowners in Singapore refinance their existing home loans is because of changes in SOR or SIBOR rates. This determines the interest rate on many loans. SOR and SIBOR may be going up soon because of economic changes around the globe. If increases are predicted, it is best to find a lower interest rate loan.
What Can Be Saved by Refinancing a Home Loan?
To understand how much may be saved, it is important to take an example. If someone has a current home loan worth $300K and about 20 years left of payments with a 2.6% interest rate, they are paying approximately $1,604.36.
Consider if a bank would be willing to provide a home loan package with an interest rate of 1.8% for the initial three years. If the new loan is accepted, they will only be paying approximately $1,489.40 per month. This is a difference of approximately $115 per month, $1,380 per year, and around $4,140 after three years have passed.
While the example above is simple, there are other factors to consider, as well. This includes the lock-in period for refinancing. It is also necessary to pay some valuation fees and legal charges when refinancing a mortgage. This may cost between $2,000 and $3,000. The amount charged is dependent on the property being refinanced.
While it is possible to save money in the long run, the amount a person saves may not be as significant as it appears in the beginning.
Finding the Right Refinancing Options
When it comes to refinancing a home loan, there are several factors to consider. Be sure to keep the tips and information here in mind to ensure that the desired results are achieved. Refinancing a home loan is a great way to ensure that the best possible rates are received for the homeowner.