To get the best deal on your HDB loan refinancing, start the process at least four months before your lock-in period is up. You must also give your current bank a three-month notice before you refinance. Getting started earlier allows you to address any issues that might arise, and prepare yourself for any possible delays. It is also advisable to read refinancing beginner guides.
Refinancing to Get a Lower Interest Rate
A good reason to refinance your HDB loan to a bank loan is to get a lower interest rate. Currently, the interest rate for 3-month SIBOR is hovering around 0.4%. While this is low, you should consider your remaining tenure to find the best deal. However, the amount of money you have to pay every month will be affected by the refinancing process.
It used to be more expensive to refinance a HDB loan than a bank loan, but this has changed in the last few years. Interest rates have stayed low over the past decade, but have increased slightly in the last two years. However, they are expected to drop again as Central Banks relax their monetary policy. For example, a home loan at 2.6 per cent per annum with a 25-year tenure would have repayments of $1,588 per month, of which $758 would be interest only. At the end of the loan, this would cost $126,353 in interest alone.
Getting a Top Up of Your HDB Loan from Another Lender
Getting a top-up of your existing HDB loan from another lender is a convenient way to obtain additional funds. While you may have already paid off your original loan, you may need to submit updated documents to the new lender. If the top-up is over two or three years old, your new lender may request updated documents to verify your income. In any case, top-up loans are usually approved on the same terms as your original loan. In some cases, a top-up loan is approved on a different basis, or may waive certain charges altogether.
The process is easy and requires minimal documentation. The disbursement of your loan is instant. You can also choose a top-up loan that has lower interest rates than your original loan. If you are in need of more money for a special purpose, a top-up loan can be a great option. With these top-up loans, you can increase the equity on your HDB property without paying additional interest. If you’re concerned about your ability to repay your existing loan, you can ask your lender to extend your top-up loan at a lower rate.
Charges for Pre Closing a HDB Loan
A HDB personal HDB Loan has several benefits. Aside from being flexible, it allows the borrower to make part payments after the loan has been in place for at least six months. Prepayment is a viable option as it will improve the borrower’s CIBIL score, making them more credit worthy in the future. To prepay, the borrower must submit an official foreclosure request statement and provide other important documents. Then, the borrower can pay off the loan completely online.
In most cases, pre-closing a HDB home loan will result in an additional penalty charge, so it is best to do so when the borrower has paid only a portion of the loan. If the borrower has not yet paid the entire amount, pre-closing the account is not a good option. A financial institution may reject the application if the borrower has defaulted on payments.
Costs Involved in Refinancing a Home HDB Loan
There are several costs involved in refinancing a HD-B loan. These closing costs can range anywhere from two to five percent of the new loan amount. Closing costs will vary by lender and region, but the average is about 3%-6%. Before refinancing, you should speak with a lender about the costs and whether they’re negotiable. Some costs are set in stone, such as application and credit check fees, but others can be negotiated.
Applicable property taxes can range anywhere from $250 to over $1,000, depending on location and home value. Another major expense associated with refinancing a home HDB Loan is an application fee, which covers administration costs. Some lenders also include the cost of valuation. Mortgage application fees vary from lender to lender, but the average is around $250 and the highest is around $1,500. There are a few HDB refinancing options that require no upfront fee.