SINGAPORE - For many home owners, refinancing their mortgages is likely to be near the top of their to-do lists amid fears of a rise in interest rates. The Government last month also made it easier for many home owners to refinance their home loans by widening exemptions from its total debt servicing ratio (TDSR) requirements.
Still, experts say that borrowers should do their sums and assess all available options before picking a new loan package. "A home loan is a long-term commitment," said OCBC Bank's consumer lending head Phang Lah Hwa. "We advise customers to take a holistic view that goes beyond pricing, taking into consideration the overall package, including service and terms of the package." Ms Lui Su Kian, managing director and head of deposits and secured lending at DBS Bank, said: "Customers should consider their plans for the current home as well as factors that can impact their repayment ability." Refinancing is when borrowers switch to another bank to get a cheaper home loan, as opposed to repricing which means they change their loan package but stick with their current bank. The central bank said last month that borrowers who are refinancing the loan for the home they live in are exempt from TDSR even if they own other properties and are servicing other property loans. TDSR, imposed in June last year, stops borrowers from taking or refinancing home loans that will bring their total monthly debt repayments to over 60 per cent of their gross monthly pay. Home owners who bought their units as investments before TDSR kicked in last year were also given until the end of June 2017 to refinance without needing to meet TDSR, though when they refinance they have to commit to a debt reduction plan with their bank. Banks in Singapore usually offer mortgages at a fixed rate, floating rate or variable rate, though some also offer hybrid bundles. The Sunday Times looks at the different types of home loans and what borrowers can consider when refinancing.
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