Home Loan

Printable View

18-02-09, 00:21
rusty28

Home Loan

Hi guys,

I need some kind advice. I'm getting a home loan from OCBC for my new property, a 1+1 freehold in district 15, TOP in about 2 years time. However, I'm not sure if I should stretch the loan tenure to the max of 40 years. After calculating the total interest I have to pay for a 40 years tenure, I felt that it was too high.

I'm planning to rent/sell the place if it fetches a good price after TOP, else I will move in.

Being a 1st time buyer, what should I consider when taking up a home loan and how should I decided on the tenure other than how much I'm willing to pay per month? What are the other pros (less interest paid) and cons (higher monthly payment) for a shorter tenure?

I do apologise if I sound ignorant but I just don't want to take my banker's words for words.

Thank you.
18-02-09, 07:08
Tony Blair

Quote:

Originally Posted by rusty28

Hi guys,

I need some kind advice. I'm getting a home loan from OCBC for my new property, a 1+1 freehold in district 15, TOP in about 2 years time. However, I'm not sure if I should stretch the loan tenure to the max of 40 years. After calculating the total interest I have to pay for a 40 years tenure, I felt that it was too high.

I'm planning to rent/sell the place if it fetches a good price after TOP, else I will move in.

Being a 1st time buyer, what should I consider when taking up a home loan and how should I decided on the tenure other than how much I'm willing to pay per month? What are the other pros (less interest paid) and cons (higher monthly payment) for a shorter tenure?

I do apologise if I sound ignorant but I just don't want to take my banker's words for words.

Thank you.

Just sign on for the lowest interest package.It does not matter if your loan is 20 or 40 years since you want to sell it after 2 to 3 years.
18-02-09, 07:23
kgchong

Quote:

Originally Posted by Tony Blair

Just sign on for the lowest interest package.It does not matter if your loan is 20 or 40 years since you want to sell it after 2 to 3 years.

my advise is... get the home loan installment to the $$ that you comfortable in case you didn't get tenant or get pay-cut or some emergency... then at least you can still service it...

then along the way, if you have enough $$, just top up or partial re-payment.
18-02-09, 12:08
rusty28

Quote:

Originally Posted by Tony Blair

Just sign on for the lowest interest package.It does not matter if your loan is 20 or 40 years since you want to sell it after 2 to 3 years.

Thanks for your reply. Not much option as I can only take up the loan from OCBC and they are offering the variable rate package.

1 year - 3.25%
2 year - 3.5%
Thereafter - 3.75%
18-02-09, 12:09
rusty28

Quote:

Originally Posted by kgchong

my advise is... get the home loan installment to the $$ that you comfortable in case you didn't get tenant or get pay-cut or some emergency... then at least you can still service it...

then along the way, if you have enough $$, just top up or partial re-payment.

Thanks too. So I guess it is a common practice for most people to max up the tenure.
18-02-09, 13:24
isaaclim

Quote:

Originally Posted by rusty28

Thanks for your reply. Not much option as I can only take up the loan from OCBC and they are offering the variable rate package.

1 year - 3.25%
2 year - 3.5%
Thereafter - 3.75%

Oh... Your loan package is not very attractive.

Please call up more banks to get better rate. Why just stick with OCBC?

Your property is for own stay or investment?

If this property is for investment, tenure is not a factor of consideration. As other member has stated.

In general, it is installment that decide tenure. Not tenure deciding installment. And installment is determined by your financial capability or the level of commitment for this property. Don't be nose pulling by those financial loser! The reason why tenure is a first question that banker ask when you seeking for loan is simply because they are being teach to ask that and it is a question that can solicit simple answer.
19-02-09, 07:48
acidburnz

it'll more adviseable to go for max tenure 1st. Reducing tenure along the way is usually no problem as it's a sign of financial strengthening to the Bank.

But the other way will be a problem..
19-02-09, 07:58
isaaclim

Quote:

Originally Posted by acidburnz

it'll more adviseable to go for max tenure 1st. Reducing tenure along the way is usually no problem as it's a sign of financial strengthening to the Bank.

But the other way will be a problem..

Do remember to tell the bank, if you don't waive all the charges, i will move it to other bank.

I always feel so happy when i saw them shaking when i tell them this. :)
19-02-09, 12:15
AAA

Quote:

Originally Posted by isaaclim

Oh... Your loan package is not very attractive.

Please call up more banks to get better rate. Why just stick with OCBC?

Your property is for own stay or investment?

If this property is for investment, tenure is not a factor of consideration. As other member has stated.

In general, it is installment that decide tenure. Not tenure deciding installment. And installment is determined by your financial capability or the level of commitment for this property. Don't be nose pulling by those financial loser! The reason why tenure is a first question that banker ask when you seeking for loan is simply because they are being teach to ask that and it is a question that can solicit simple answer.

I agreed too your rate does not look very attractive. I think you can get mid 2% (2 yr fix rate) with other banks. For me, I just got refinance and looking at 3M sibor ++ which is around high 1%. With today low interest rate environment, it is going to stay low for a while. If sibor stays weak for one year plus, I already "make" the different.
19-02-09, 12:31
dtrax

Quote:

Originally Posted by AAA

I agreed too your rate does not look very attractive. I think you can get mid 2% (2 yr fix rate) with other banks. For me, I just got refinance and looking at 3M sibor ++ which is around high 1%. With today low interest rate environment, it is going to stay low for a while. If sibor stays weak for one year plus, I already "make" the different.

Which bank did you go with for your refinancing?
19-02-09, 12:39
isaaclim

If u need help on your loan, you can email me at [email protected]. I can share with u some banker contacts that i have.

Sorry for not able to release their numbers in public forum.
19-02-09, 12:54
AAA

Quote:

Originally Posted by dtrax

Which bank did you go with for your refinancing?

SCB, 3m Sibor + 0.95%. It has up the spread a bit to 1.35%. I know their 2 years fixed are at 2.48%.

U can also try HSBC with sibor link package, the spread is around 1%+. (if U have no issue with top up (I don't know if HSBC will ask for top up).

DBS will be the most "secure" but the spread is a bit high if u want to borrow 80%. If I am not wrong, the spread is lower if you ask for LTV < than 70% and owner occupied.
20-02-09, 06:46
rusty28

Quote:

Originally Posted by isaaclim

Oh... Your loan package is not very attractive.

Please call up more banks to get better rate. Why just stick with OCBC?

Your property is for own stay or investment?

If this property is for investment, tenure is not a factor of consideration. As other member has stated.

In general, it is installment that decide tenure. Not tenure deciding installment. And installment is determined by your financial capability or the level of commitment for this property. Don't be nose pulling by those financial loser! The reason why tenure is a first question that banker ask when you seeking for loan is simply because they are being teach to ask that and it is a question that can solicit simple answer.

Thanks isaac for your reply. If the market is good, I hope to sell it or rent the property, else I will move in. I have to stick with OCBC because it is a tie up with the development. They offer IAS for the new property. I guess I have no choice.
20-02-09, 10:44
isaaclim

Quote:

Originally Posted by rusty28

Thanks isaac for your reply. If the market is good, I hope to sell it or rent the property, else I will move in. I have to stick with OCBC because it is a tie up with the development. They offer IAS for the new property. I guess I have no choice.

Oh, your property is still in construction. Then the chargeable quantum is not to much to worry as of now.
20-02-09, 14:07
rusty28

Quote:

Originally Posted by isaaclim

Oh, your property is still in construction. Then the chargeable quantum is not to much to worry as of now.

Yes it is, sorry should have mentioned it earlier. I will have to proceed with OCBC then.
23-02-09, 01:52
Melvin_Lim

You may want to check with OCBC whether do they have any interest servicing package which mean you are only paying interest. Normally OCBC is agressive with tying up with new projects & rate is very high.

Do they have any other choice for you? Can you ask OCBC whether can they offer you SOR package? SOR will be better then this prime rates.
26-02-09, 10:18
rusty28

Quote:

Originally Posted by Melvin_Lim

You may want to check with OCBC whether do they have any interest servicing package which mean you are only paying interest. Normally OCBC is agressive with tying up with new projects & rate is very high.

Do they have any other choice for you? Can you ask OCBC whether can they offer you SOR package? SOR will be better then this prime rates.

Thanks Melvin, actually OCBC is throwing in a 1 time FOC change of package within 3 months from TOP. Since, it is IAS now and the developer is paying the interest, it does not matter which package I pick now. I can decided later after TOP. Hopefully, 2 years later there will be a package which is better for me.
26-02-09, 11:54
Melvin_Lim

Quote:

Originally Posted by rusty28

Thanks Melvin, actually OCBC is throwing in a 1 time FOC change of package within 3 months from TOP. Since, it is IAS now and the developer is paying the interest, it does not matter which package I pick now. I can decided later after TOP. Hopefully, 2 years later there will be a package which is better for me.

Since they're tie up with OCBC & interest free with 1 time free conversion then go ahead. But i've to remind to you. for BUC package the lock in period starts after project has TOP & OCBC always peg most of their rates to board rate. Hopefully 2 years down, they will look for a market rate to peg to.
23-04-09, 18:07
wmwa

Quote:

Originally Posted by rusty28

Thanks Melvin, actually OCBC is throwing in a 1 time FOC change of package within 3 months from TOP. Since, it is IAS now and the developer is paying the interest, it does not matter which package I pick now. I can decided later after TOP. Hopefully, 2 years later there will be a package which is better for me.

I would question if free repricing within 3 months of TOP is regardless of the valuation of property at TOP even if it has fallen. I recently was out of my loan lock in period... so I thought repricing would be free right? Correct . But since valuation of my property has fallen, unless I top up the difference, I can't take advantage of the attractive re-priced package within the same bank. So for those who can't afford to top up, then they are stuck with the unfavourable 3rd or 4th year rate by the time their property TOP. If I switch bank, the new bank actually gave me a higher valuation. Fortunately, I have that choice as I am out of the lock-in period for my current bank.

From my own experience, I gauged.. when you are seeking financing with a new bank, they give you the best rates and valuation to lure you over. Once you are their existing customer, they have the upper hand and may give you a lower rate or valuation for the same property compared to new financing cases. I felt the officer of my current bank is also less prompt and helpful to respond to keep me when I seeked repricing. Either his hands are tied or I gather they would rather focus their energy on new cases where perhaps the commision lies?