Mortgage is usually the biggest ticket liability you will commit to in your lifetime. If you think the lender will keep an eye on interest rates on your behalf, you could be very wrong. Refinancing is your responsibility (really). To help you consider if this option is viable, you should understand the associated refinancing costs.
Legal Fees
To refinance to another lender, a conveyancing lawyer will be engaged to handle the process. Well, this is not pro bono work. Their charges are usually more than $2000 depending on type of property and loan quantum. The good news is this legal fees can be paid by cash or funds in the CPF OA. The better news is there are selected banks who offer subsidy to cover this fees. Some may offer a subsidy with a capped amount at $2500, while we know one or two banks that will pay the fees fully on your behalf.
Valuation Fees
As part of the process, the new lender will appoint a valuer to appraise your property. Among many things, the appraisal will make sure the loan amount is within the allowed loan-to-value (LTV) ratio. The valuation fees start from couple of hundreds dollars to thousands. Obviously, landed homes owners should expect bigger charges. Similar to the above positive news, there are also exclusive lenders who provide valuation fees subsidy. The not-so-good information is these lenders are merely a handful.
Refinancing Comparison
These legal and valuation fees are the common refinancing costs you should look out for. You can also read our views on refinancing vs repricing. By now, you probably should review the existing mortgage interest rates. Then quickly punch in the rates to our mortgage refinancing calculator and compare the savings. Look out for banks that offer legal and valuation subsidies. We will also ascertain if you are within the TDSR guidelines.
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