Which is the best bank loan package for project under construction??

[noblebaby]

Too many packages out there, 3- or 12-Months Sibor selection, very confusing, pls. advice.

Studying loan for project still under construction.

[rusty28]

correct me if I'm wrong. Most of the newly launch projects have tie up with the bank and u dont have much option to choose.

[isaaclim]

Too many packages out there, 3- or 12-Months Sibor selection, very confusing, pls. advice.

Studying loan for project still under construction.

Loan package for 3 months SIBOR means your interest rate change every 3 months. Same apply to 12 months SIBOR.

Some bank use SOR instead of SIBOR. In general, SOR is slightly higher then SIBOR. Of course, this is not always true.

The key selling of this package is "Transparency". It is only advisable to take this kind of package if the spread is low. Such as SIBOR+X. X is the spread.

Due to the losses in recent investment, banks have raised the spread to increase the costs of lending (generating more profit to cover previous losses). It was really a shame that our no.1 local giant, DBS is the first bank that raise the spread to 1.75%, which cause all the banks to follow. With this kind of spread, it have make this kind of package completely not interesting.

[noblebaby]

Loan package for 3 months SIBOR means your interest rate change every 3 months. Same apply to 12 months SIBOR.

Some bank use SOR instead of SIBOR. In general, SOR is slightly higher then SIBOR. Of course, this is not always true.

The key selling of this package is "Transparency". It is only advisable to take this kind of package if the spread is low. Such as SIBOR+X. X is the spread.

Due to the losses in recent investment, banks have raised the spread to increase the costs of lending (generating more profit to cover previous losses). It was really a shame that our no.1 local giant, DBS is the first bank that raise the spread to 1.75%, which cause all the banks to follow. With this kind of spread, it have make this kind of package completely not interesting.

thanks for advice... then what is the better package? since most of the banks increased the spread... Knew a lot of people using Stand Chart package... but when I look at the package, no different from DBS package...

[noblebaby]

correct me if I'm wrong. Most of the newly launch projects have tie up with the bank and u dont have much option to choose.

i think this is only applied to thos interest absorption scheme right? any guru can comment?

Some local banks already asked their client to top-up the loan...

[x11]

please do check with citibank - as i understand, their rates are sibor + 0.X only and this will be held at this level to the end of march 2009. don't quote me on this, better to give them a call to verify.

[Bishan Kid]

Loan package for 3 months SIBOR means your interest rate change every 3 months. Same apply to 12 months SIBOR.

Some bank use SOR instead of SIBOR. In general, SOR is slightly higher then SIBOR. Of course, this is not always true.

The key selling of this package is "Transparency". It is only advisable to take this kind of package if the spread is low. Such as SIBOR+X. X is the spread.

Due to the losses in recent investment, banks have raised the spread to increase the costs of lending (generating more profit to cover previous losses). It was really a shame that our no.1 local giant, DBS is the first bank that raise the spread to 1.75%, which cause all the banks to follow. With this kind of spread, it have make this kind of package completely not interesting.

Sibor or SOR plus X is for the general public who has no prior banking records with the bank.
As for their regular customers , they easily trim 0.5 to 1% off the baord rate or spread and that's apply to me.

My banker always tell me : Mr. Kid , if other banks can do it , we can do better.

[noblebaby]

Sibor or SOR plus X is for the general public who has no prior banking records with the bank.
As for their regular customers , they easily trim 0.5 to 1% off the baord rate or spread and that's apply to me.

My banker always tell me : Mr. Kid , if other banks can do it , we can do better.

what kind of banking records? A million dollar of high net worth account with the bank?

[isaaclim]

what kind of banking records? A million dollar of high net worth account with the bank?

SIBOR + 1.75 is a rate that a normal banker can quote.

Their manager can have the authority to give slight lower rate.
To get special rate, you need to have good relationship with bank + approval from top management.

[noblebaby]

SIBOR + 1.75 is a rate that a normal banker can quote.

Their manager can have the authority to give slight lower rate.
To get special rate, you need to have good relationship with bank + approval from top management.

1.75 is normal rate for completed project, right? for project under con, think normal spread is 1.8-1.95, depends on lock in period.

[Bishan Kid]

what kind of banking records? A million dollar of high net worth account with the bank?

Check with your banker.

Any comments from banker here to justify my statements.

[gfoo]

most privilege or private banking customers will get slightly better terms than common account holders. you just have to ask and nego with your pte banker

[Bishan Kid]

Always has 2 sets of accounts, one for the tax department and another for the banker.......I am just joking.

[noblebaby]

most privilege or private banking customers will get slightly better terms than common account holders. you just have to ask and nego with your pte banker

gfoo, which one is better? 3-month or 12-month Sibor? Pls advice.

[gfoo]

none. i wouldn't touch sibor with a barge pole. go for 3 - 5 year fixed rate and pay slightly more for that security. else, go for the traditional bank rate that is determined annually

[Bishan Kid]

gfoo, which one is better? 3-month or 12-month Sibor? Pls advice.

To take a Sibor loan is to take advantage of the low prevailing housing rate.
Personally, I will choose 1year Sibor to flush out short term fluctuation of rates. Though u may pay higher for 1 year Sibor as compared to 3month
but u get to sleep well for one full year.
Anyway , expect rates to stay low for next 2 years but again insured yourself against rate change for 1 year and worry what happen next year.

[isaaclim]

All my package is SIBOR pledged. Easy to negotiate the spread which is purely bank profit.

For fixed package, they usually have lesser room to negotiate. But if you are getting loan now, don't go for SIBOR pledged package unless you know how to negotiate.

Currently, most of the bank offer SIBOR+1.75%. Butter+kaya+honey+Jam?!! Not healthy leh.

[noblebaby]

All my package is SIBOR pledged. Easy to negotiate the spread which is purely bank profit.

For fixed package, they usually have lesser room to negotiate. But if you are getting loan now, don't go for SIBOR pledged package unless you know how to negotiate.

Currently, most of the bank offer SIBOR+1.75%. Butter+kaya+honey+Jam?!! Not healthy leh.

Butter+kaya+honey+jam is for low income group mah... sigh... only rich people has the luxury to eat abalone at cheaper price.

[teddybear]

By the way, can the bank change the value of "X" (i.e. the "spread") anytime unilaterally or once you take up a say 30 years loan and the "X" is fixed already for next 30 years?

Sibor or SOR plus X is for the general public who has no prior banking records with the bank.
As for their regular customers , they easily trim 0.5 to 1% off the baord rate or spread and that's apply to me.

My banker always tell me : Mr. Kid , if other banks can do it , we can do better.

[isaaclim]

By the way, can the bank change the value of "X" (i.e. the "spread") anytime unilaterally or once you take up a say 30 years loan and the "X" is fixed already for next 30 years?

Yeap. X is fixed but SIBOR is the variable component. That mean, bank profit is always fixed at X throughout your loan.

[Bishan Kid]

By the way, can the bank change the value of "X" (i.e. the "spread") anytime unilaterally or once you take up a say 30 years loan and the "X" is fixed already for next 30 years?

Once you have taken a loan regardless of tenure, the spread will only change after "X" period is expired.In other words , 1 year Sibor spread is fixed for 1 year and rate will be adjusted to a new spread"X", variable or fixed rates and that depends on the term and conditions with the bank prior to signing of the agreement.

[Bishan Kid]

The bank will always ask the standard documents when one apply for housing loans.
Once u have fulfilled the basic requirements and approved, the bank will offer the standard types of board rate to the applicant.

Rates can be negotiated with the banker on the followings:

1) If the applicant is recommended by someone who has a good standing with the bank or banker (0.1 to 0.15%) off the board rate.

2)If the loan quantum is less than 60% of the valuation and the loan amount is sizeable e.g. more than 1 million (0.25 to 0.35%) off the board rate.

3)Show proof with very active transactions and healthy cash flow with other banks. (0.1 to 0.15 %) off the board rate.

4)Spouse and/or applicant proof of additional source of steady income(0.05 to 0.1 ) off the board rate.

If none of above , the applicant has little room to negotiate for rates.

[teddybear]

Just to clarify, say I take up a housing loan with interest rate pegged to Y-mth SIBOR + X. So, the bank can change the spread "X" after the "Y" period expired (even if Y-mth SIBOR remains the same)?

Once you have taken a loan regardless of tenure, the spread will only change after "X" period is expired.In other words , 1 year Sibor spread is fixed for 1 year and rate will be adjusted to a new spread"X", variable or fixed rates and that depends on the term and conditions with the bank prior to signing of the agreement.

[Bishan Kid]

Just to clarify, say I take up a housing loan with interest rate pegged to Y-mth SIBOR + X. So, the bank can change the spread "X" after the "Y" period expired (even if Y-mth SIBOR remains the same)?

Yes . X cannot be changed if Y month is pegged.

When expired , X will be determined by the prevailing rate at that time when new Y-month is re-pegged.

Sibor is a short term interest rate that normally do not extend more than 1 year.

[gohll]

I'm intending to buy a new condo at its soft launch - a first time for me. Can someone please advise me what happens if I sign the purchase agreement at the soft launch and then later find out that the bank refuse to give me a home loan, or much lesser than required? Or will the bank reps be present at the soft launch to give an evaluation/pre-approval on the spot? What is the standard process?

[isaaclim]

I'm intending to buy a new condo at its soft launch - a first time for me. Can someone please advise me what happens if I sign the purchase agreement at the soft launch and then later find out that the bank refuse to give me a home loan, or much lesser than required? Or will the bank reps be present at the soft launch to give an evaluation/pre-approval on the spot? What is the standard process?

Say bye bye to 25% of your 5% deposit!

[noblebaby]

I'm intending to buy a new condo at its soft launch - a first time for me. Can someone please advise me what happens if I sign the purchase agreement at the soft launch and then later find out that the bank refuse to give me a home loan, or much lesser than required? Or will the bank reps be present at the soft launch to give an evaluation/pre-approval on the spot? What is the standard process?

Bro, atleast make sure you can afford the 20% down payment.... even you may want to lend 85%.... now a lot of young couple dare dare to buy condo even over commited... If really cant afford, go for HDB first... Life will then b so much easier...

[gfoo]

It doesnt matter how large your loan % is as long as its 80% or below - some want the liquidity for safety or to make the cash work harder. In this environment, the very least you should have is 60 months in monthly repayments in either cpf or cash - if u do not, u camnot afford a condo

[PN]

Yes . X cannot be changed if Y month is pegged.

When expired , X will be determined by the prevailing rate at that time when new Y-month is re-pegged.

Sibor is a short term interest rate that normally do not extend more than 1 year.

My bank loans are from Citibank. For Y mth Sibor + X, the X is always fixed within the year.

Example:
Yr 1 Interest rate : Sibor + 0.6
Yr 2 Interest rate : Sibor + 0.7
Yr 3 Interest rate : Sibor + 0.8
Yr 4 Interest rate : Sibor + 1

If you opt for 3mths Sibor. In year1, the Sibor portion will change every 3mths but 0.6% is fixed. The same computation applies for yr2 & yr3.

There are options for 1/3/6/12 mth SIBOR. The higher the number, the higher the X value. You can also change from 1mth to 6 mths by written in to the bank one month before the the expire of the interest period.

[noblebaby]

It doesnt matter how large your loan % is as long as its 80% or below - some want the liquidity for safety or to make the cash work harder. In this environment, the very least you should have is 60 months in monthly repayments in either cpf or cash - if u do not, u camnot afford a condo

Gfoo, not every one know the risks of investment... Many young ppl take 90% loan with a 30++ years tenure... Dump large part of salary into installment every month.....