It wasn’t too long ago when I realised, to my horror, that my home loan agreement had expired, and I’ve been paying a ridiculous heightened amount for several months!
At a time when interest rates are lower than ever, how could this possibly be?
Here’s what happened
I got a letter from my bank announcing their latest updates to home loan packages.
There was no mention within the letter that my home loan was up for renewal.
A couple of weeks later, I got another letter to say that the monthly deduction from my account towards my home loan will be increased in the following month by x%.
The implications of that x% increase towards the broader picture were absent.
Wouldn’t it be more helpful to a customer to update the remaining loan amount and how the monthly mortgage would contribute towards a fully-paid property?
Thus, I went to the nearby bank branch to get more information.
The customer service officer calmly offered the perfunctory “I’ll get our mortgage department to contact you.” For two weeks, there was no reply.
Not knowing what to do, I went around asking for advice from friends who were property agents, financial advisers. I got a whole heap of referrals to speak to enthusiastic bank representatives who were eager for me to sign up for a home loan from the banks they represented.
I spent an additional 2 weeks trying to figure it all out on my own.
When I decided that home loans’ comparison process was not all that straightforward, I gave up and just went with the regrettable option that came with the most shopping vouchers.
Were the shopping vouchers an emotional gratification I needed to tide me over the unnerving state of helplessness? Totally.
Was there a simpler and more effective way I could have managed this? Definitely.
Determined that no one else should ever have to go through the shock, the frenzy and the unnecessary expense, I have decided to put this article together for 1) homeowners who have some time before your home loan is due for renewal, and 2) those whose home loans will soon be due for renewal.
I still cannot believe how I had to incur almost a thousand dollars because of a forgotten contract end date.
What I wish I did
Shopping for something as varied and confusing as home loans is predicated on two fundamental considerations: time and access to the right options.
There’s always too much to do and never enough time, but no matter how stacked your schedule is, as a homeowner, you might want to consider:
- Setting a calendar reminder to review options for a home loan 4 months before your current agreement expires
- Taking 20 minutes for a Home Loan Health Check
- Getting a mortgage advisor to support you through the process
Providing for a 4-month lead time
While 4 months might seem like forever for something “so administrative”, the shopping experience for a home loan in Singapore is not quite as succinct as buying an oven toaster.
The banks’ processing time takes approximately 4 business weeks, and that excludes wading through the maze of options, shortlisting them and making a decision.
Home loan health check
Taking 20 minutes for this review exercise is useful as it gives you a chance to review your financials alongside your current requirements.
For instance, how would your financial situation within a 12 month period change? Whether you’re planning to start a family soon, or looking to make a major purchase in the near future, your priorities will shift.
Spending time to go through all the possible implications is valuable, especially because your home loan decision will determine your flexibility during the lock-in period.
Read more about why you should do a home loan health check here.
Getting the right help
The adage “be careful of what you asked for” could not be more apt. My arbitrary question “do you have any contacts with banks for home loans” to my friends who are bankers and property agents would’ve naturally suggested a specific source to a solution I was looking for.
Had I been more familiar with the make-up of the mortgage market, I would’ve been aware of the benefits of a mortgage broker and widened my question for a mortgage specialist.
For first-time home loan seekers, you’re probably hesitant to add another person in the team of property agents and bankers you’re already working with.
But the reality is: just because my mother is a great cook, she would not be my first choice if we had to appoint a Chief Procurement Officer for the household groceries. My mother is the perfect example of someone who values convenience over anything else. To drive to a specific store to get fish that promises supple yet flakey, juicy melt-in-your-mouth tenderness is something my dad would do.
Likewise, when it comes to mortgages, mortgage brokers have all the extensive knowledge of their field. They’re qualified professionals trained specifically in the mortgage area. They have the vast experience and are best placed to help you in your mortgage buying decision.
Your property agent should not be expected to stand in for a mortgage specialist. Like a property agent is trained to help you in your purchase or sale of a property, a mortgage broker understands the technicalities and implications of a home loan. They’re trained to balance the implications with your financial needs.
Why you should consider engaging a mortgage broker in Singapore too
To help you make the most informed decision possible, consider engaging a mortgage advisor. Not only do their services come at no cost to you, but a mortgage advisor will also:
- save you time by comparing the market for you
- provide an unbiased consultation and offer independent recommendations
- probably save you money as their access to many lenders would be able to get you a good deal and/or better rate
- help you with the necessary paperwork
My experience with FinanceGuru
You might like to check out FinanceGuru, a leading mortgage advisory firm with partnerships with all major banks in Singapore. I used them recently when I looked into home loan refinancing for my parent’s house.
Apart from the no service fee feature for dependable professional advice, the team of experienced mortgage specialists provided advisory support right from the start. This includes taking care of cumbersome paperwork, loan submission and the appointment of a law firm.
The after-sales service was superb. My parents were suitably impressed that FinanceGuru had assigned a relationship manager throughout their mortgage life cycle. The relationship manage conducts constant home loan reviews and track rates so that my parents never have to worry about overpaying for their loan.
My top marks go to how prompt and easily contactable the mortgage advisor had been for us. Yes, we’re still reeling from all these useful benefits and not having to pay anything for it.
When the time comes for renewing your mortgage, go for the easy option. Get a mortgage advisor. The relief from frustration and potential savings are great incentives to start.
Learn more about how you can optimise your home loan, and uncover potential ways to save you money and time. Get a non-obligatory assessment and loan product recommendations with FinanceGuru today.