James, a UK citizen, living and working in London, travel frequently to Singapore for both work and leisure. He has intentions to buy a London property in zone 1. The estimated purchase price of the property is about $500,000 pounds and he intends to take up a mortgage of up to 75% loan-to-value ratio financing.
Let’s compare an offer between Singapore’s London Home Loan vs a leading bank offer in UK for buy-to-let mortgages.
London Home Loans
(Lenders in Singapore)
London Home Loans
(Lenders in London)
|Types of Mortgage||Buy to Let Tracker Rate Mortgage||Buy to Let Tracker Rate Mortgage|
|Tracker Rate Reference:||Singapore Interbank Borrowing Offer Rate||Bank of England Base Rate|
|Interest Rate Year 1:||3 months Sibor + 2.25% = ~2.9%||BOEBR + 2.69% = ~3.19%|
|Interest Rate Year 2:||3 months Sibor + 2.25% = ~2.9%||BOEBR + 2.69% = ~3.19%|
|Interest Rate Thereafter:||3 months Sibor + 2.25% = ~2.9% throughout||BOEBR + 4.49% = ~4.99% thereafter|
|Fixed Rate Options:||No||Yes|
|Max Quantum of Financing||75%||75%|
|Currency Exchange Risk:||Yes||No|
|Lender's Establishment Fee:||Nil||$999 GBP|
|Interest Only Option:||No||Yes|
|Financing Location:||London zone 1 - 4||Countrywide|
|Minimum Loan:||$300,000 SGD equalivalent||$50,000 GBP|
|Purpose:||New purchase / Remortgaging / Cash out Equity Term Loan||New purchase / Remortgaging|
|Loan Tenure||Up to 30 years or max age 70||Up to 25 years or max age 75|
|Bank Repayment:||Bank account in Singapore||Bank account in London|
Advantages of Singapore’s London Home Loans
- Lower interest rates.
- Rates offered are throughout the entire tenor of the loan. Perpetual long term interest savings thereafter.
- Significant savings from lender’s set up cost, legal and valuation without having to remortgage your loan every couple of years once your promotional rate ends.
- Traced to publicly publish interbank rate SIBOR.
- Savings from no establishment fee for SGD finance.
- Applicable for additional cash out equity term loan for remortgaging offers.
Disadvantage of Singapore’s London Home Loans
- No fixed rate options
- Borrower may be subjected to foreign exchange risk as base currency of lending is in SGD. A strong depreciation of GBP/SGD (eg. 2.07 to 1.98) may result in a margin call event. Likewise, a rise in GBP/SGD (eg. 2.07 to 2.17) may allow a borrower to accumulate unrealised profit from the increase in FX rate.
- Financing locations are restricted to London zone 1 - 4.
- Quantum of financing may be lower than 75%, subject to property location and borrower’s profile.
- Higher minimum loan amount required of at least $300,000 SGD equivalent.
- Singapore Citizens
- Singapore Permanent Residents
- UK applicants / foreigners on employment pass living and working in Singapore
- UK applicants / International applicants not living and working in Singapore subject to lender’s review & approval.