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By: Zeng Han Jun, CPCG, Singapore

For most people, a home purchase can be the largest ticket item of their life. As such, it is important to be particular about it, especially now. Do not be tricked into taking up a home loan product because a mortgage banker said: “Do not worry, you can always refinance later.” TheJustify Full issue here is, when the home loan payment becomes unbearable for you, the market conditions may not be favorable to do a refinance at all.

Why do I say that it is especially important now when choosing between different kinds of mortgage products? Look, the benchmark interest rates are very low now, with Sibor rate hitting below 0.8% for most of this period. Even though costs of doing business for the banks are higher now, the home loan products are still priced at a competitive rate. All these translate to better lending opportunities for the real estate investors. However, what is happening concurrently is that there are many new home loan packages that are underwritten in a substandard manner, which I feel can cause un necessary monetary pressure on real estate investors in the future.

One big hint that you are on the verge of accepting this kind of package is when the person selling you this kind of product says: “Do not worry, you can always refinance later.” What if benchmark interest rates rose to a high of 7% when you decided to refinance? What if you lost your job when you decided to refinance? What if the bank suddenly recalls on your home loan forcing you to take un necessary actions?

Buying a property is an investment, because such purchase affects you financially. Do not bank too much on refinancing later. Get it right the first time and things will be much easier along the way.


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Unfortunately, Singapore still does not engage in fixed rates over the full life of the loan packages. So even if you got for fixed rates, you have to re-finance every 3 years at least.

For those who buys HDB, it would be best to stick to HDB loan, but for the rest, it would be difficult, unless the POSB Ideal Life plan realli allows you to borrow at current HDb rates forever then it would be diff story ba.