What your mortgage bankers 'forgot' to tell you about home loans

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Things to be aware of include freebies that might have to be returned and interest rates that won't stay low for very long.

Most of the time, our eyes are glazed over when the mortgage banker is talking. There are so many financial terms and so much blather that we just give up and ask, “Look, how much per month?" and willingly get slaughtered. Here’s what they’re not telling you, though.Most home loan rates follow a pattern that looks like this:Year 4 and thereafter: 3 Month Sibor + 1.2 per centThe keyword is “thereafter”. That’s the real rate you’ll be paying, all the way to the end of your home loan.

Here’s the kicker: It’s possible to pass the first time around, but fail on the refinancing attempt. That can happen if your income changes, if new loan policies are passed or if the bank just doesn’t like your age.A conveyancing firm needs to look over your home loan. And because they apparently need S$100,000 and several years of law school to do this, the fee is between S$2,500 to S$3,000.

If this happens, you have an additional impediment to refinancing. If you want to switch to a different bank, you could end up having to pay conveyancing fees all over again, as another law firm has to take over.4. There’s no reason for you to pay this much.Well, there is none. Zero. Nada. Zilch. You just pay for for no reason whatsoever. To give you a simplified explanation, each bank has a certain quota of loans it wants to give out.

 

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