Refinancing ABC

(1) When to refinance
- (a) When savings is greater than the costs of refinancing.
- (b) When not selling your property within next 12mths, as you may have to pay redemption fees, refund legal subsidies or cashbacks.

(2) Costs of refinancing
- (a) Within lock-in period: Penalty is usually 1- 1.5% of the outstanding loan amount.
- (b) Refinance with the SAME bank, known as re-pricing or conversion, a conversion fee of $500 - $1,000 may apply. Some banks may offer 1 or 2 free conversions.
- (c) Other costs: Refund legal subsidies, freebies, etc; and incur another legal fees again when sign up with another bank.

(3) Which loan to take
- (a) Fixed rates. Rates are locked-in for 1 - 3yrs, thus any fluctuation in interest rates will not affect the loan interest.
- (b) Pegged rates. Banks rates are pegged to either in-house rates, Sibor or SOR. Sibor and SOR offer greater transparency in rates movement.
- (c) Penalties and refunds for switching.

(4) Budget for expenses
- (a) Do not over-expose to debt repayment as interest rates may rise later.
- (b) Set aside cash to cover at least 6 - 12mths of all necessary expenses such as utilities.

(5) Incentives
- (a) Partial loan repayment. Choose one with no penalty for partial repayment.
- (b) Ask for free conversion.
- (c) Rebates. Check if the cash rebate is refundable or is there any penalty within the lock-in period.
- (d) Free fire insurance.

* ST-Refinance , AsiaOne-HomeEquityLoan *