Low Interest Home Loans in Singapore Now

The house is already built in the head, in reality; you are still busy with the search for the appropriate mortgage lending. You will often hear a word: special repayment. This means allowable unscheduled repayments. They help you become debt free in less time.

Special repayments reduce costs and shorten the term

In the case of construction financing, the amount of the installments usually remains the same over the selected debit interest commitment. In the beginning, you pay most of the interest, but the repayment installment in the installments grows over time. That’s because you only pay interest on the remaining debt and you reduce that debt at any rate. With special repayments you reinforce this effect: the remaining debt shrinks faster, and you pay less interest on your loan. The singapore lowest interest refinance home loan options are now here.

Special repayment rights are also helpful if you need to exit your mortgage – for example, when selling your property. Because then the bank demands a prepayment penalty. She escapes interest with which she had expected. But she wants compensation.

When calculating this compensation, the banks must take into account not only completed but also possible special repayments. In the case of a contract with special repayment rights, you therefore pay less compensation to the bank than if you were to finance a mortgage without these rights.

Special repayment is worth more than saving

Almost all mortgage lenders now allow such extra payments, without having to charge a premium on the loan. In most cases, it’s about 5 percent of the initial loan amount that you can pay off once a year.

Surely you could also invest the money for the special repayments on a fixed or overnight money account. It’s not worth it. Because the interest on investments is lower than the loan interest. In addition, you may have to pay taxes on the capital gain. Therefore, the repayment of debt is always the better investment.

Carefully consider extended special repayment rights

The special repayment rights can often be extended, for example to 10 percent per year. In part, the providers offer this for free. So if you want to pay even more out of turn, you should ask for such offers and compare the interest rate with the offers without the extension.

This also applies if you buy the extended special redemption rights at a premium. Be sure to be sure that you can actually pay special repayments of this amount on a regular basis.

Anyone who chooses extended special redemption rights only because he expects larger inflows of money such as a legacy should prefer to agree on a shorter interest rate commitment and to coordinate mortgage lending on this payout. Shorter loans are currently cheaper, so you save interest.

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