To save money, take another $300,000 loan
For those of you that own a house, and especially those that have gotten a mortgage loan in the past 2 years, this recession may just bring you some good news Oh, this applies if you’re thinking of buying a new house, too.
(This is Tip #5 in the Surviving The Recession Financially series)
The 3-month SIBOR, or Singapore Interbank Offered Rate, has dropped significantly in the past 2 years, from more than 3% to less than 1% today. This generally means that you may stand to save quite a significant amount if you refinance your mortgage today.
Why your mortgage? Simply because, in terms of size, it’s probably the biggest loan you’re on hand and any savings you rack up could be significant.
Considering the reduction in interest rates and the recession we’re already in (which may mean interest rates will probably stay low for a while more - for 2009 and maybe even for 2010) moving to a mortgage loan pegged to a variable rate interest like the 3-month SIBOR could net you quite a bit in terms of cost-savings.
Of course, there are some considerations you should keep in mind before doing anything this major. A major one is the lock in period - some packages have long lock-in periods of 4 years or more. This can mean that you will not be able to refinance your mortgage during this period, do any sort of partial repayment or even sell your house.
If in doubt, ask a professional. Dennis Ng from HousingLoanSG.com provides an independent loan advisory service that you can use to compare and contrast between all the available offerings across the banks. No harm trying!
Good luck and let me know if this helps you save any money!
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