Home Loans

Not something I'm looking actively into now but happened to spend some time reading the Sunday article on invest on "Finding the best way to pay off a home loan"

For sharing :P
Before I go on, some points picked up from my colleagues: pt 2 wasnt even highlighted to them when they sign the contract!
1. Always go for HDB loan - its the best rate. (should apply only for first time I think..)
2. For resale - if your tenure is for 25 years (or 20 or any number), you cannot use your CPF to finance for the last 5 years. (I think this is NOT highlighted to most borrowers..especially impt if you're dependent on ur Cpf to pay off)
I'll update if there's any more news. ^^

With interest rates falling over the past few months, our banks have come up with attractive packages for refinancing (for existing loan customers who reapply to enjoy significant interest savings - so much loans to pay off, really a big burden.. need to knw how to allocate the $$). The one that caught my eye is on "Interest-only Loans".

Sounds like a good deal but BEWARE! Lots of hidden clauses..Bascially
- pay only the interest for the entire duration*of their home loan
- If property prices correct by over 20%, it'll plunge the borrower into negative equity as he might not be able to sell his property at a price where he can pay up the loan. (still trying to figure out what this means.)

*Your tenure may be 25yrs, but the interest** payment may be shorter, say 10 yrs. So for the first 10 yrs u pay interest only. For the remaining term, you pay interest + outstanding loan. Meaning to say, after 10yrs, you'll see a balloon in the amt you'll need to repay.
**Interest may not be fixed as Interest-only loans are normally extended with an adjustable rate mortgage (ARM). Say the interest payable is for 10yrs (this could be made up of fixed & adjustable), fixed for 5yrs. After the 5yrs, the interest you pay will adjust accordingly.

Find out more at http://www.housingloansg.com/web/

P.S i also hafnt got my own house yet..hopefully will find out more then & share with you guys!