Money Talks Podcast: MT Explains - What to know before refinancing your mortgage loan
A common misconception among homeowners is that they cannot use their CPF funds to pay off their bank mortgage loan. But there are conditions attached.
.jpg?itok=LP2Du2XI "Money Talks Podcast: MT Explains - What to know before refinancing your mortgage loan")
Here's an excerpt from the conversation:
Andrea Heng, host:
Going back to some of the considerations you talked about, let's get into the details of that. What about considerations like tenure affordability?
Clive Chng, Redbrick Mortgage Advisory:
When you purchase a property, the requirements are usually a little bit more stringent. So in terms of your loan tenure for example, the maximum loan tenure you can get from HDB - if you qualify for it - it's going to be 25 years when you start.
When you refinance the mortgage, there’s an ability for you to actually lengthen the loan tenure … And people would be interested in doing that, because when you lengthen your loan tenure, generally your monthly installment comes down.
So for example, business owners, where cash flow is really quite important, you want to lengthen the loan tenure just so that your housing loans, your mortgage burdens aren't as high.
Andrea:
Just more manageable.
Clive:
Exactly. So you manage the mortgage that way.
Of course, is there a downside to that? There is because you're stretching your mortgage over a longer period of time. You end up paying a little bit more interest.
You do, but is it really a lot more?
Clive:
It's always based on individual circumstances. For example, if a business owner knows that they need cash flow in the shorter term, they may lengthen the loan tenure first. And then maybe a couple of years later they can still shorten it (so it's) something that you can still move around, quite flexible.
