Have you looked at your housing loan agreement recently?

By The Folks @PropTalk - February 24, 2015 1 Comment

The wife and I decided to take another peek into the loan agreement for our apartment today. We have been receiving calls from mortgage brokers over the past months asking if we wish to refinance our mortgage. And since our existing mortgage was taken back in 2011, neither of us can recall exactly what we had signed up for.

Flipping through the agreement (again), we realized that certain terms are quite different from what we remembered/assumed it to be:

1. We were under the impression that our interest rate was on "reducing" basis. But we realized that it was actually a perpetual "fixed premium" (0.75%) over the 3-month SIBOR rate.

2. We thought that there was a "lock-in" period (3 years) as per our previous mortgages. However, our current loan actually does not have a lock-in.

And since our loan is tied to SIBOR - similar to many mortgages taken by homeowners in recent years - the next question on our minds was what the current 3-month SIBOR rate is. This comes up to be 0.6786%, which is up some 40% from when we first took the loan. However, the actual interest rate that we are currently paying at 1.43% is still lower than the 1.49% fixed-rate (fixed for 2 years) that the mortgage brokers are offering. Having said that, the wife and I will have to pay closer attention to the SIBOR rate movements from now onward, and probably should start exploring refinancing options.

We are sharing this story because there are probably quite a few homeowners out there that are like us - seldom/never revisit the loan agreement after you signed it, relying purely on memory when comes to the terms of the loan (rather than double-checking), and not bothering to monitor the movement of interest rates or proactively managing your loan options. Such "inertia" may result in you paying substantially more interests on your home loan than you necessarily have to.

So... have you looked at your housing loan agreement recently?






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1 comment to ''Have you looked at your housing loan agreement recently?"

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  1. Thanks for sharing and nice blog! I have a 0.9% + 3 month sibor/sor package signed last year so I think you have a relatively good deal.

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