Thursday, 3 December 2009

Refinancing My Home Loan

After 5 years of being a loyal paymaster to an international bank, I finally decided to refinance my home loan.

This time I'm choosing a local bank simply because they have offered me a fantastic interest rate. So far their service has been nothing but fast and efficient. So I've got no complains.

And from a 30-year loan with the international bank, I'm reducing it to 6 years with the local bank. I'm extremely motivated to do so after calculating the total amount of interest I would have to pay if I had chosen the 30-year loan. I could buy another property with that kind of money. So I'm not gonna let the bank earn a single cent more from me !

I might have to make some sacrifices for the next 6 years because when I reduce the loan tenure, the monthly payments increases. But I think it's an effort that's well worth it. I can already imagine the feeling of having a fully-paid-up property in my name in 6 years time !

4 comments:

juphelia said...

One way of paying off mortgage faster is to pay more amount rather than the minimum sum whenever you can afford it. This is something my mum taught me - she said if can pay more, do so, as once the property has been paid, financial liabilities won't be so heavy anymore!

Looking at things long-term, it is better to have one's own property. A bit of sacrifice in the earlier months is worth it.

A pity the system here does not allow singles to buy their own property unless they reach the age of 35 and above. Or else we have to get private property, and unless one is a millionaire at a young age, otherwise that is not that possible too.

Julie Lim said...

Juphelia,

Totally agree with your mum!

I always encourage people to get their own house or apartment, because it is extremely important to own your own place; a place that you can call your own.

If you rent, the landlord can kick you out anytime or refuse to extend the tenancy agreement. And you'll have to look for another place. So much hassle!

But no one can kick you out of your own house!

Didn't know the system is such in Spore that only 35 year olds and above are allowed to buy property. Does this mean that you guys have to pay a higher downpayment with longer loan tenures?

juphelia said...

Singles 35 years and above owning a home only refers to government flats. The government here is family-friendly, so gives those intending to start a family or getting married more priviledges in house-owning. Hence many singles here still have to stay with the parents even if they so much want to own their own place, as they cannot buy a flat on their own, and if their parents already own a flat, they cannot buy using their parents' names too, since each couple can only own one flat to their name if I'm not mistaken.

For private property, can be any age and can buy on your own, irregardless of status as long as you can afford, but the cost of just a normal studio apartment is close to a million, or at least more expensive than normal government flats.

So unless one is filthy rich, otherwise the majority can only afford a normal government flat. Even then the downpayment is quite a bit (think my friend spent about five figure on downpayment alone) and the tenure can be 20 - 30 years, which means one can spend the whole lives paying off the flat. Definitely it is even more expensive for landed property.

In short, living here, unless one earns a minimum of five-figure monthly, otherwise it is hard to own a home and a car as a single, because these are the two big ticket items which takes up majority of the monthly income, which we end up paying off for our lives.

That's also why we need dual incomes, even though many ladies I know would like to stay home and take care of the kids, but their husbands do not bring in enough to support the whole family, with property and car payments too, hence they have to continue working.

Julie Lim said...

Juphelia,

Thanks for the lenghty explanation!

Now I understand better the rules of owning a property in Singapore, and the struggles towards owning one!

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