View Full Version : Which loan plan to take up?
jonathann80
06-02-12, 20:28
I need some advice from seniors here on which loan package to take up.
Loan is for purchase of BUC and for long term stay. Not for short term investment. Progressive payment and TOP in 3 yrs time. Thanks.
Currently being offered
OCBC plan 1
Variable
1st yr 0.98%
2nd yr 1.08%
3rd yr 1.38%
4th yr 2.65%
OCBC plan 2
1st yr 0.75 + sibor
2nd yr 0.75 + sibor
3rd yr 0.75 + sibor
all above has 1 yr free fire insurance and legal fee up to $2500 and one free conversion and no lock in
SCB
1st yr 0.65 + sibor
2nd yr 0.65 + sibor
3rd yr 0.65 + sibor
thereafter 1.0 + sibor
full legal sub, one free conversion, free 5 yrs fire insurance and no lock in.
CITI
1st yr 0.75 + sibor
2nd yr 0.75 + sibor
3rd yr 0.75 + sibor
thereafter 0.75 + sibor
legal sub till $2500, unlimited conversion. no fire insurance, no lock in.
I am leaning towards CITI. Can anyone advice whether fire insurance is necessary for BUC or only necessary upon TOP?
Thanks for all advice.
There will be a penalty imposed on undisbursed amount of the loan if decide to change to another bank (capital repayment) even thought there is no lock in. CITI seems quite attractive.
I need some advice from seniors here on which loan package to take up.
Loan is for purchase of BUC and for long term stay. Not for short term investment. Progressive payment and TOP in 3 yrs time. Thanks.
Currently being offered
OCBC plan 1
Variable
1st yr 0.98%
2nd yr 1.08%
3rd yr 1.38%
4th yr 2.65%
OCBC plan 2
1st yr 0.75 + sibor
2nd yr 0.75 + sibor
3rd yr 0.75 + sibor
all above has 1 yr free fire insurance and legal fee up to $2500 and one free conversion and no lock in
SCB
1st yr 0.65 + sibor
2nd yr 0.65 + sibor
3rd yr 0.65 + sibor
thereafter 1.0 + sibor
full legal sub, one free conversion, free 5 yrs fire insurance and no lock in.
CITI
1st yr 0.75 + sibor
2nd yr 0.75 + sibor
3rd yr 0.75 + sibor
thereafter 0.75 + sibor
legal sub till $2500, unlimited conversion. no fire insurance, no lock in.
I am leaning towards CITI. Can anyone advice whether fire insurance is necessary for BUC or only necessary upon TOP?
Thanks for all advice.
citibank package is the best overall..
even though no lock-in,there is still legal subsidy clawback within 1st 3yrs if u sell yr property or u do refinancing..:47:
Isn't the variable package by OCBC more attractive?
jonathann80
07-02-12, 15:30
Isn't the variable package by OCBC more attractive?
Pls further explain why would the OCBC variable be more attractive? Thanks
I'd do OCBC var as well.
Do a refi at end of Yr2 if SIBOR is still low else do a conversion to a better loan package at the time since no-lock in. No mention of legal claw-back - so I assume you can go any bank anytime.
Best if you can nego for more than 1 year fire insurance.
Pls further explain why would the OCBC variable be more attractive? Thanks
Do a refi at end of Yr2 if SIBOR is still low... so I assume you can go any bank anytime.
no no no ! u kidding r u ?
this is BUC, most likely brand new, so at end of yr 2 you have like 50% undisbursed, if u refinance then u will be hit a 1.5% cancellation charge.
... and in this time and date, why would any one still want to use "variable" i.e. "board" rate ??? :doh: remember such "board rate" is totally at bank's discretion. it can raise ANY time, for ANY reason. it does not reference to any benchmark. it can go up 150bps at one go, even when market benchmark rate is going down! You know there was a reason when DBS was forced by MAS to offer sibor rates : it's a national service for a temasek company. all thanks to DBS's national service today we have Sibor/Sor/swap mortgage rates (i.e. BENCHMARK rates). and some one still wants to go back to board rate ?? pls dun.
to TS: choose the sibor package from a bank who you are comfortable with. for BUC the 1st 3yrs savings is not so much. the difference is negligible. it's the other service from the bank that matters. For me personally I will choose Citi because of the throughout spread, although I would bargain for 65bps (or at least 70 because of citigold), and/or maybe a mortgage linked credit account.
jonathann80
09-02-12, 07:38
Thanks AMK and guys for your advice.
Actually, OCBC var rate is still better.
1) Board rate doesnt change all the time, moreover u r looking at one yr only. Banks are competitive, they don't do funny things to chase away customers unless something drastic happens
2) You can do a conversion / repricing to another package at the end of Yr 1 with the same bank, thereby no penalty or legal clawback
Actually, OCBC var rate is still better.
1) Board rate doesnt change all the time... they don't do funny things to chase away customers unless something drastic happens
blue I remember you are the only member here still believing in board rates. how old are you ?
just some of the old forum posts. there were plenty of others , many of which also appeared in Straits Times.
##########################################
Is there transparency in bank board rates? How many board rates “do they have”?
I switched my home loan from DBS to OCBC because they offered a lower refinancing package 8 years ago. To my horror today, I find that I have been paying my loan at 5.75% since 2006 when OCBC current board rate is only 4.5%.
Back then, I don't remember being told that the eventual board rate which I am suppose to pay is not the standard bank board rate but at a rate which will be unknown to the customer like me. Is there no transparency in bank board rate? Are we supposed to be at their mercy just because we have signed the bank loan contract with them?
Recently, I asked the bank for explanation of the difference in rates. Wilson Phoon, the head of customer service centre replied "each promotional package will have diffferent board rates depending on the loan structure, the prevailing interest rate environment, market dynamics as well as cost in carrying the loan." Aren't we in very low interest rate environment since last year? When market interest rate is high, bank is quick to adjust their rate upwards, what happen when interest rate come down? Is it justifiable for bank to make the customer high rate even when overall market rate has come down SUBSTANTIALLY.
Another problem I faced with them; they rejected my request to refinance my home loan, I have approached them twice to consider refinancing my loan with the current market rate but they have rejected me until recently.
I have asked them for the reason for rejecting my request.
Wilson Phoon, head of customer service replied with the title to his reply as "WHY REPRICING REQUEST WAS NOT ALLOWED IN MAY 2009"
His reply: " We would like to clarify that loan packages offered by the bank for repricing requests are reviewed from time to time. The bank considers request from existing housing loan customers to convert their loans to the latest packages at lower interest rates on a case to case basis. In May 2009, the bank had reviewed your request for a conversion of your loan package and regret that we were not able to accede to your request then.
read this. This is 2007, before DBS was ordered by MAS to start Sibor rates.
If you still have any doubt (or faith) on "board rate", I'm speechless.
http://www.straitstimes.com/print/Free/Story/STIStory_129427.html
read this. This is 2007, before DBS was ordered by MAS to start Sibor rates.
If you still have any doubt (or faith) on "board rate", I'm speechless.
http://www.straitstimes.com/print/Free/Story/STIStory_129427.html
Hello, what does age has to do with believing in Board Rate or not? So I guess you must be very old by now to challenge my age. It's a pity if you are still financing your house at old age because you didn't know how to take advantage of low interest rates financing with your theory of being safe and pay more interest than others to reduce risk :doh: How long have you stayed in AMK for you to not believe in Board rate?
Read carefully, if there is no-lock in while Board rate package offers lower than any other floating or fixed rate package, then I don't see any risk in taking up Board rate. The moment they raise the rate, the next moment you can reprice or refinance out. Those cases which you cited that could not do refinancing or repricing were probably because they have been bad debtors, either a bad personal credit rating or one who don't service their loans promptly.
Anyway, no need to get personal, to each its own, be contented with what you are paying. :rolleyes:
The reason I ask how old you are is to see whether you have real experience on board rate to even comment on this topic. There were so many complaints in the past on board rate no one would have missed it. Please take a good read on the 2 articles I posted above. Board rate is not what you think it is.
And you are dead wrong to say "u can reprice or refinance when rate changes". TS's requirement is BUC. U dun know about the common 1.5% cancellation charge ?? :tongue3: The refinance cost to another bank is huge. And to reprice within th same bank is subjected to whatever packages the bank decides to offer you, most definitely not the best package available.
No one is getting personal except you. In fact u r the 1st to even getting personal on the nick :cool:
The reason I ask how old you are is to see whether you have real experience on board rate to even comment on this topic. There were so many complaints in the past on board rate no one would have missed it. Please take a good read on the 2 articles I posted above. Board rate is not what you think it is.
And you are dead wrong to say "u can reprice or refinance when rate changes". TS's requirement is BUC. U dun know about the common 1.5% cancellation charge ?? :tongue3: The refinance cost to another bank is huge. And to reprice within th same bank is subjected to whatever packages the bank decides to offer you, most definitely not the best package available.
No one is getting personal except you. In fact u r the 1st to even getting personal on the nick :cool:
I experienced what you meant in 2007 when my interest rate shot to 4.5%. Did a reprice to 2.5% fixed for 2 years but as my lock in wasn't over, the repricing extended my lock in period for legal clawback.
The reason I ask how old you are is to see whether you have real experience on board rate to even comment on this topic. There were so many complaints in the past on board rate no one would have missed it. Please take a good read on the 2 articles I posted above. Board rate is not what you think it is.
And you are dead wrong to say "u can reprice or refinance when rate changes". TS's requirement is BUC. U dun know about the common 1.5% cancellation charge ?? :tongue3: The refinance cost to another bank is huge. And to reprice within th same bank is subjected to whatever packages the bank decides to offer you, most definitely not the best package available.
No one is getting personal except you. In fact u r the 1st to even getting personal on the nick :cool:
Well, I took up the so called Board rate before and it didnt change for me for 2 years and so forth. In fact, I was offered free conversion to floating rate for my BUC unit. The underlying principle is you need to be a good customer to the bank, and the bank will not rip you off. They have a reputation to hold than try to make a quick buck out of your few hunderd bucks a month, and then be slammed down in the press / media.
I am surprised at your age (you sound like you have weathered through decades of housing loan financing) that you believe everything that is reported in the press. People like to tell one side of the story and cover up the shortfalls.
Just like getting personal in questioning people's age when you have not really look at the mirror yourself, and yet try to act noble as if nothing has happened. I've met all sorts of people and some like you whose thinking is stereotyped, never think out of the box, never dare to take risk, and always think that your conclusion is right while others is wrong. If you hate Board Rate so much, then don't take it, but you don't need to condemn those who like it. There is always a reason for anyone to do/choose anything, and the person only needs to be responsible for his own decision.
Just like you drive on the road where the expressway speed limit is 90km/h, you are the type who would stick to it because you heard bad stories of drivers getting speed fines. There are also others who drive above the limit as they take the risk of being caught, in return, they get to the destination faster.
The fact is, the Board Rate gives the lowest interest rate out of other packages, and there are people who buy it. There may be some who got burnt by it, there are also some who benefited from it. Take risk and you will be rewarded if you are right, it's simple logic.
you got it all wrong.
sibor packages give you transparency and fairness. board rate is at the mercy of the bank. it's got nothing to do with whether you are a risk taker or not, or what you prefer.
it's merely a question of "are you leaving your position entirely at the whim of the bank ?", or "are you leaving your position entirely with yourself ? "
There's a big assumption by blue that there will be a better Repricing package made avail to u.. Not every Repricing package avail at the moment may be offered to u.
Buc repayments before Top is quite minimal considering hoe's ability to buy at today's prices. Better to focus On the thereafter spread.
Well, I took up the so called Board rate before and it didnt change for me for 2 years and so forth. In fact, I was offered free conversion to floating rate for my BUC unit. The underlying principle is you need to be a good customer to the bank, and the bank will not rip you off. They have a reputation to hold than try to make a quick buck out of your few hunderd bucks a month, and then be slammed down in the press / media.
I am surprised at your age (you sound like you have weathered through decades of housing loan financing) that you believe everything that is reported in the press. People like to tell one side of the story and cover up the shortfalls.
Just like getting personal in questioning people's age when you have not really look at the mirror yourself, and yet try to act noble as if nothing has happened. I've met all sorts of people and some like you whose thinking is stereotyped, never think out of the box, never dare to take risk, and always think that your conclusion is right while others is wrong. If you hate Board Rate so much, then don't take it, but you don't need to condemn those who like it. There is always a reason for anyone to do/choose anything, and the person only needs to be responsible for his own decision.
Just like you drive on the road where the expressway speed limit is 90km/h, you are the type who would stick to it because you heard bad stories of drivers getting speed fines. There are also others who drive above the limit as they take the risk of being caught, in return, they get to the destination faster.
The fact is, the Board Rate gives the lowest interest rate out of other packages, and there are people who buy it. There may be some who got burnt by it, there are also some who benefited from it. Take risk and you will be rewarded if you are right, it's simple logic.
Being on board rate to me is like a cow that is fed and waiting to be milked or slaughtered when the owner is hungry. The board rates I seen are quite high, maybe you can share which bank offered you the low board rate.
Being on board rate to me is like a cow that is fed and waiting to be milked or slaughtered when the owner is hungry. The board rates I seen are quite high, maybe you can share which bank offered you the low board rate.
At any one time, board rate is offered together with a fixed discounted spread so that the overall rate is lower than floating rate with spread. It is always lowest so that pple will take up the board rate package as it involves higher risk of being non-transparent. Likewise, fixed rate package are always the highest bec it involves lowest risk.
As I said, if you are not tied down or lock-in and can refinance anytime if you not happy with the board rate increase, board rate package can be attractive for the short term bearing in mind most loan packages nowadays cater for 2 years attractive rates. The 3rd year onwards rate sucks as there are many uncertainties how the market interest rate will be doing then. Most banks expect borrowers to refinance after 2 yrs.
Seeking advice from gurus here. I just bought a new 2bedder BUC. Looking at taking up OCBC/UOB loans as I have outstanding mortgage with DBS. Not too keen in foreign banks package. I am more inclined towards OCBC as they have 1 time free conversion anytime before TOP whereas UOB only allows conversion 3 months after TOP.
I was told by OCBC loan officers that 7 out of 10 took up their variable package. But hearing horror stories on OCBC years back that their rates is not competitive even when interest rates trending down makes me having second thoughts. Should I go for variable or SIBOR package?
UOB/OCBC Variable
1st yr 0.98% (MR-3.52%)
2nd yr 1.08% (MR-3.42%)
3rd yr 1.38% (MR-2.12%)
4th yr+ 2.65% (MR-1.85%)
MR 4.5%
OCBC SIBOR
1st yr 0.65 + sibor
2nd yr 0.65 + sibor
3rd yr 0.75 + sibor
4th yr 0.75 + sibor
UOB SIBOR
1st yr 0.70 + sibor
2nd yr 0.70 + sibor
3rd yr 0.75 + sibor
4th yr 0.75 + sibor
SCB has
y1-3: 1M SIBOR + 0.7%
TH: 1M SIBOR + 1%
It's true that more people are taking up board rate loans, which have been stable for last few years.
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