Monday, March 10, 2008
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Low mortgage rate - beware of being lured into a mortgage trap. The following is a firsthand experience.
By: Anonymous
Posted: 09-03-2008
Let me just remind you people out there, I've fallen into this trap before I was offered a low housing loan for the first 3 years, when it expired the bank will start to increase the interest rate what started off a low of 2.5 % it went as high as 6 %. Imagine paying 6 % for $ 1million dollar loan. You will be working like a dog just to pay off the interest.
It's very true the housing loan rate follow SIBOR rate, when the rate drop do you think the Bank will offer you the same rate, the answer is NO. The rate they they offer new customers is definitely lower than existing customer just to attract new customers.
When SIBOR drop the Bank will not reduce your interest rate in tandem or immediately, rather you will have to approach the bank and bang thier table before they review your housing loan. At this very moment the Bank only offer me 3.8% down from 6 %.
But on the other hand when the SIBOR start to climb the Bank will automatically increase your loan interest.
Just to share real life experience......
Smart Buyers Collection: Low mortgage rate - beware of being lured into a mortgage trap
Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers.Low mortgage rate - beware of being lured into a mortgage trap. The following is a firsthand experience.
By: Anonymous
Posted: 09-03-2008
Let me just remind you people out there, I've fallen into this trap before I was offered a low housing loan for the first 3 years, when it expired the bank will start to increase the interest rate what started off a low of 2.5 % it went as high as 6 %. Imagine paying 6 % for $ 1million dollar loan. You will be working like a dog just to pay off the interest.
It's very true the housing loan rate follow SIBOR rate, when the rate drop do you think the Bank will offer you the same rate, the answer is NO. The rate they they offer new customers is definitely lower than existing customer just to attract new customers.
When SIBOR drop the Bank will not reduce your interest rate in tandem or immediately, rather you will have to approach the bank and bang thier table before they review your housing loan. At this very moment the Bank only offer me 3.8% down from 6 %.
But on the other hand when the SIBOR start to climb the Bank will automatically increase your loan interest.
Just to share real life experience......
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3 comments:
I have just taken up a sibor pegged housing loan, how do you think the rate is heading
Dear Desmond,
I must confess that I'm quite ignorant about housing loans but I've got a friend who's a mortgage consultant. Let's see if he could write some articles on the topic. I should have them posted quickly. Do visit the site often.
Best wishes
Dear Desmond,
This is what the mortgage consultant friend said in an email, "There is likelihood that interest rates may stay low (same as 2002 to 2005), but this time, there is some marked differences, the M1 money supply is much higher. There is also some risks that US bail-out of private enterprises and banks to the tune of almost 1 trillion (1000 Billion USD), plus US deficit of over 500 Billion, the USA cannot afford to find that money. If they expand money supply (aka print more money) there may be elevated inflation risks and therefore interest rate hikes possibilities. Right now, it's anybody's guess. "
Hope it helps.
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The blogger here has been affectionately named by close allies as "Smart Buyer" but really, he's not smart. Smart Buyer just believes that being prudent is smart. That's the essence of the message of this blog and Smart Buyer hopes it'll benefit other property buyers.
Smart Buyer :)