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Most housing loans granted charge lower interest rates for first 2 years and thereafter higher interest rates. Thus, you might be able to save substantially by refinancing your housing loan. 

Here are a few considerations to take into account when refinancing your mortgage :-
 
1.  Interest rates after the promotion

Borrowers should particularly note the bank’s interest rate after the “promotional” years. This is especially relevant if the property owner does not expect to sell his property within 10 years of buying it. Most banks peg the rates at a discount off their housing rate or at a markup from their prime rate. Almost no bank will fix the interest rate for a loan beyond the first 5 years.
 
2.  Early redemption penalty on current loan

Ensure current mortgage is not under the lock-in period as stated in the current loan’s T&C.  To a bank, committing to a housing loan means setting aside a large sum of money for a long period of time and much paperwork. As such, almost all banks will impose a penalty for borrowers repaying the loan and redeeming their mortgage within the first few years. Typically, the penalty is set at 1% of the housing loan amount. However, it is common practice that banks impose a longer/higher penalty if their promotional package is especially attractive.  
 
3.  Cash top-up

The current outstanding loan amount must not be greater then the valuation of the property.  If your property has lost a lot in value since you took your existing loan you may find the new loan quantum substantially lower than the original amount. It may not be enough to pay off your current loan, which means you may need to come up with cash to bridge the difference. Generally, bank will refinance about 80% to 90% of the current valuation of the property.

Document Require for assessment of Mortgage Refinance :-

1.  Photocopy ICs

2.  CPF statements – last 6 months CPF contribution history, OA balance and property withdrawals

3.  Income document – latest tax assessment (for self-employed, will be latest 2 years)

4.  Existing Financier – ex-Letter of Offer, last 12 months loan repayment statements, latest outstanding loan statement 

Despite all these, refinancing is an attractive proposition for many homeowners. If you need help/advice with regard to mortgage refinance, call 8118 3456 or email vince@sghousing.com to find out your total saving.