Lower Mortgage Interests – In ONE Simple Step!

Lower Mortgage Interests – In ONE Simple Step!

If the mortgage package is already enjoying very low rates, it seems there is nothing anyone can do to lower mortgage interests. Right? Actually, this is NOT the case. In terms of mortgage interest rates, the interest rates in Singapore are among the lowest in the world. The indicative 3-month SIBOR rate is currently at about 0.404%.  Together with mark-ups of 1% to 1.25%, the mortgage rates still end up below 2%. Even with such low rates, there are strategies to bring your mortgage interests down further, with a little ingenuity and planning.   Mortgage Interests Reduction – A Simple but Powerful Example Name of Owner Richard Loan Size S$1,000,000 Annual Interest Rate 1.50% Total Mortgage Interest Payable S$242,432.55              So, what can one do to lower the Mortgage Interests Costs? This may seem to be rather obvious, but the one simple step I am sharing with you is this – Do regular prepayments on your mortgage! I am sharing this simply because almost all the people I speak with do not do this.   Partial Prepayments – An Under-Utilised Tool Mortgage loans in Singapore have a minimum repayment amount of S$10,000. Let us see what happens when Richard makes a repayment of S$10,000 once every 2 years for the first 10 years; that is, he makes total repayments totalling S$50,000 over a period of 10 years (S$10,000 x 5 times). The Mortgage Interest would then look like this: Total Mortgage Interest = S$232,855.41, representing a S$9,577.14 or 3.95% saving. Over the life of the loan, the savings do not look very substantial. At this...
 

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