Documents Require For Applying A Housing Loan & Refinancing An Existing Mortgage Loan

Below are the documents required for buyers applying a Housing Loan

1. Attached application form duly signed
2. CPF statement of account
3. CPF 15th month contribution history and latest computerised payslip
4. Latest income tax notice of assessment (2005)/2 yrs income tax assessment for self employed
5. Copy of NRIC (Valid Passport, for foreigners)

If there is an existing property that is currently for sale/sold or if bridging loan is required:

1. CPF property withdrawal statement
2. HDB 18 months mortgage loan statement or last 6 months housing loan statement
3. Option To Purchase if property is already sold



Refinancing Mortgage Loan

Most housing loans granted charge lower interest rates for first 2 years and thereafter higher interest rates. Thus, you might be able to save substantially by refinancing your housing loan.

Here are a few considerations to take into account when refinancing your mortgage :-

1. Interest rates after the promotion

Borrowers should particularly note the bank’s interest rate after the “promotional” years. This is especially relevant if the property owner does not expect to sell his property within 10 years of buying it. Most banks peg the rates at a discount off their housing rate or at a markup from their prime rate. Almost no bank will fix the interest rate for a loan beyond the first 5 years.

2. Early redemption penalty on current loan

Ensure current mortgage is not under the lock-in period as stated in the current loan’s T&C. To a bank, committing to a housing loan means setting aside a large sum of money for a long period of time and much paperwork. As such, almost all banks will impose a penalty for borrowers repaying the loan and redeeming their mortgage within the first few years. Typically, the penalty is set at 1% of the housing loan amount. However, it is common practice that banks impose a longer/higher penalty if their promotional package is especially attractive.

3. Cash Top-Up

The current outstanding loan amount must not be greater then the valuation of the property. If your property has lost a lot in value since you took your existing loan you may find the new loan quantum substantially lower than the original amount. It may not be enough to pay off your current loan, which means you may need to come up with cash to bridge the difference. Generally, bank will refinance about 80% to 90% of the current valuation of the property.

P.S : If you need any help in finding a Bank, do give me a ring or drop me an email.