Clients want the cheapest home loans. So what makes them to accept other mortgages eventually? We share some customers stories and their thought processes.
Case Study 1
Mr David, a foreigner, bought a completed condominium recently with his Singaporean wife. This is their first property purchase in Singapore. To avoid the ABSD, his Singaporean wife was named as the mortgagor or owner. The loan amount is more than 2 million dollars and his wife’s income is not sufficient. When we ascertain his situation, we knew what he need is a bank that support guarantor as the borrower. The bank he chose initially, while having low rates, does not support this structure. He further revealed he is an investor too, hence any additional cash flow are opportunities to invest.
We narrowed down to 2 banks, Bank A and Bank B. Bank A offers 1M SIBOR-based package. (You can view the latest Sibor Rates and compare the Singapore Sibor history trend.) The spreads are on par with those offering 3M SIBOR, but 1M SIBOR has been consistently lower. Bank B has a product that’s unique. It allows partial payment of principal for a fixed number of years compared to the normal repayment scheme. This means lower monthly installments at 30% lesser! Instead of paying $10,000 per month, this mortgage product reduces it to $7,000. He is very happy with this product, that meets their needs of guarantor-based financing and his personal investment goals. The last we spoke is the $3,000 will be put into good use in the equity market. Please note that this is not an interest-only product. Click here for information on this Mortgage Choice product which has been discontinued.
Case Study 2
Ms Joanne recently retires from her work. Her property is fully paid and she likes to obtain financing for the shoebox apartment in district 19, Singapore. She used the calculator for new property loans and the 3M SOR package caught her eye. She proceeded to enquire about it. During the conversation, our consultant quickly ascertained her current financial situation and needs.
Retired. No income. Yet to purchase. Invest in bonds. We advised her that she requires a bank that supports asset based lending. Simply put, it’s to obtain financing on her fully paid asset/ property. In-principle approval is what she needs now. With her investment profile and employment status, we explained to her with charts, trends on SIBOR and SOR. We were glad that she concurred with our advise to select the bank that offer Asset Based Lending (ABL) home loans and SIBOR packages. Note that ABL is no longer available and pledging of assets is the new alternative.
All names are changed to protect their identities. Case studies are based on real-life applications.
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