fbpx
Helping You To Realise Your Home Dreams

Refinance, Reprice? Which Should I Choose?

With the drop in SIBOR rates, a lot of home-owners are getting calls on refinancing? But there are also bankers that advise on repricing. So what should owners do? And what’s the difference?

Both refinance and repricing are to revise your interest rates package, the main difference : with your current bank for repricing and with another bank for refinancing.

“If interest rates are dropping in general, it doesn’t really matter if i revise it with the same bank or not as long as whichever is able to give me the lowest rates?” While this may be the first thoughts of home owners, it might not be that straight forward.

Firstly, you may want to check if your current loan package is within lock in period. If so, there is a penalty involved for refinancing/repricing the loan. Penalty is usually about 1.5% and you may want to work out the sums to see if the savings from a lower interest package may be worth paying the hefty penalty.

Secondly, if you are lucky to be out of the lock in period, other than the interest rates offered, you may want to check out the legal, fire insurance, valuation fees involved for refinancing. As you be changing over from one bank to another, there will be a whole lot of paperwork to be redone, and the fees can come up to a few thousand dollars. If the potential savings from the lower rate package is worth it, you can still consider to refinance. And you may check if there may be subsidies available.

Thirdly, repricing with the same bank is usually simpler and may come with an admin fee of usually about $500-$1K. But you can try to seek for waiver with the same bank. Sometimes they do agree! Especially now there are some packages that come with one free conversion during lock in. If you are still within lock in, you may want to check if your loan offer comes with this free conversion.

Finally, remember to check out what the actual mortgage repayment is for the different interest rate packages. Do check on what the repayment amount is for a higher rate especially for floating rate packages. Be sure if you are comfortable with that rate too!

Leave a comment

Your email address will not be published. Required fields are marked *