How refinancing your HDB loan can help you save thousands of dollars?

Savings from Refinancing your HDB Loan

Scenario 1: Refinancing of HDB Loan to Bank Loan

Mr Chong owns a HDB flat at Woodlands. His flat is currently financed by HDB Board paying an interest of 2.6% on his mortgage with an outstanding loan of about $280,000.

Bank A have recently launched a new promotional HDB home loan refinancing package at only 3 months Sibor + 0.9% with an additional flat cash rebate of $1800 to help customer offset the legal cost in transferring the mortgage.

The total effective interest rate of 3months Sibor + 0.9% is equivalent to ~1.30% based on current interbank Sibor rates. The one time flat cash rebate offered by the bank helps Mr Chong to offset his legal cost with only remaining minimal cost to bear (eg. Valuation report cost).

The new interest rates are about 50% less than what Mr Chong is currently paying on his mortgage of 2.6% with HDB.

Let’s take a look at Mr Chong’s savings in absolute dollar terms for a typical loan tenure of over 25 years:

 

  • Existing HDB loan monthly repayments: $1270.27 / month

Principal: $663.60

Interest: $606.67

 

  • New HDB bank loan monthly repayments: $1093.70 / month

Principal: $790.36

Interest: $303.34

1) Reduction in monthly repayment by $176.57.
2) Monthly principal savings of $126.76.
3) Monthly interest savings of $303.33.
4) Total monthly savings of $430.09.
5) Yearly savings of $5161.08
6) Savings of over $15,483.24 in the first 3 years.
7) Permanent perpetual interest savings thereafter with low interest rate of only 1.65% (3mths Sibor + 1.25% thereafter).

 

Scenario 2: Refinancing of Bank X HDB Loan to Bank Y HDB Loan.

Mr and Mrs Lim own a HDB flat at Parkway, currently financed by Bank X, paying an interest rate of 3.75% on their mortgage. The outstanding loan on their mortgage is about $370,000.

With the launch of the new promotional HDB home loan refinancing package by Bank Y at an attractive interest rate of only 3 months Sibor + 0.90% (EIR ~1.30%) with an additional flat cash rebate of $1800 to help Mr and Mrs Lim offset their legal cost, let’s take a look at their new monthly repayment and savings over a typical 25 years loan tenure.

 

  • Existing Bank X monthly repayments: $1902.28 / month

Principal: $746.03

Interest: $1156.25

 

  • New Bank Y monthly repayments: $1445.24 / month

Principal: $1044.41

Interest: $400.83

1) Reduction in monthly repayment by $457.04
2) Monthly principal savings of $298.38.
3) Monthly interest savings of $755.42.
4) Total monthly savings of $1053.80
5) Yearly savings of $12,645.60.
6) Savings of over $37,936.80 in the first 3 years.
7) Permanent perpetual interest savings thereafter with low interest rate of only 1.65% (3mths Sibor + 1.25% thereafter).

Similar savings are applicable with the refinancing of your private property housing loan, commercial property loans, overseas property loans and company business term loans. Start saving today, loan brokerage solutions to bring you Savings and Smiles.