Making an important financial decision takes lots of time, planning, and information, and one of the most pivotal financial decisions you can make is the act of refinancing your home loan. While this can be a great move for certain people, it all depends on your financial portfolio, the stage you’re at in your life, and what you’re hoping to gain from the shift.
If you’re someone living in Singapore who is interested in acquiring more properties or an investor interested in investing in Singaporean real estate, today may be the best time to do just that. Right now, the real estate market in Singapore is fluctuating more than ever, having leveled off to yield more desirable conditions for borrowers than last year. However, you need to keep your own needs and budget in mind.
Here are four actions you’ll want to take before you sign on the dotted line for a mortgage refinance deal.
1. Consult with a Financial Advisor
If you’re considering refinancing your home loan, one of the most important first steps you need to take is consulting with a financial advisor. If you log onto Property Guru for refinancing news, you’ll notice that there are both general market trends, but also what’s happening with different developers. In other words, depending on your situation, you’ll need to pay attention to a variety of factors that may be confusing, and you’ll need the advice of expert.
Refinancing is a complicated process that requires careful planning and insight, and it’s worth your while to invest in services that will make the process easier and clearer.
2. Research What’s Out There
The fact of the matter is that there are always banks out there competing with each other, and if you strike while the iron is hot, you may get the best rate imaginable. The Straits Times recommends either bargaining for a better rate from your lender or switching banks altogether that will give you a better deal. However, they also warn to be careful about bank fees that might be involved. Knowledge is power, and one of the best way to get ahead of the crowd is to know what’s potentially available to you.
Don’t forget that some borrowers also may have superior perks than others. Not everyone is equal when it comes to credit, so make sure you know what your potential strong points are. That goes the same for the weak points, though, and that may include a variety of things. This is where an analysis by an expert comes in who can tell you exactly where you’re strong or lacking in your financial portfolio and history.
3. Determine Your Preferred Type of Loan Rate
One of the most important parts of refinancing is understanding how different interest rates work. There are two different types of home loan rate: fixed and floating. A fixed rate means that the percentage doesn’t fluctuate during the lock-in period, and remain the same regardless of what the economy or real estate market is doing. These rates are usually higher because they guarantee a particular rate. Floating rates mean that the rates are variable, and dictated by the SIBOR indexes, which are dependent on the conditions of the market.
4. Consider the Future
One useful tactic is figuring out exactly what refinancing plan is right for you and when is predicting what the future will bring. If you’re already a homeowner, chances are that you chose to buy for a reason, rather than renting. Whether you’re planning for a family, found a long-term job nearby, or are simply an expat looking to purchase real estate in Singapore where available, you should always consider future plans.
If you’re singing on for a mortgage refinancing agreement that extends 30 years into the future, then you should definitely think about what lies down the road in ten years. If you lock into a particular rate, assume you’ll be paying it for a while. The same goes for new property purchases, whether you’re living there or renting it out. Refinancing is a commitment, just like signing for a mortgage in the first place, and you should understand what type of long-term expectation is required. More importantly, you should understand the financial ins and outs.
Takeaway
Refinancing your mortgage is an important financial decision, and you should make every choice carefully. Don’t cut corners and assume you know what you’re doing, and make sure you talk to a financial advisor about your plans.
Consult different banks and see what they have to offer. Be aware of potential transfer fees or other hidden costs you may not be expecting. Watch the market and monitor what the SIBOR is doing as you’re looking to refinance.
The most important thing to keep in mind is the fact that the real estate market changes, and there are certain times that you’ll find better deals than others. At the end of the day, the most useful approach you can use to get an optimal deal at the best time is preparation and research. This is what will net you financial success.