Why Singapore’s buy-to-let London mortgages can shrink your home loan bills?

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.

Features	London Home Loans (Lenders in Singapore)	vs	London Home Loans (Lenders in London)
Types of Mortgage	Buy to Let Tracker Rate Mortgage		Buy to Let Tracker Rate Mortgage
Base Currency:	SGD		GBP
Tracker Rate Reference:	Singapore Interbank Borrowing Offer Rate		Bank of England Base Rate
Interest Rate Year 1:	3 months Sibor + 2.25% = ~2.65%		BOEBR + 2.75% = >3.25%
Interest Rate Year 2:	3 months Sibor + 2.25% = ~2.65%		BOEBR + 2.75% = >3.25%
Interest Rate Thereafter:	3 months Sibor + 2.25% = ~2.65%		BOEBR + 4.00% = >4.50%
Tracker Rate:	Prevailing @ ~0.4%		Prevailing @ ~0.5%
Max Quantum of Financing	75%		75%
Currency Exchange Risk:	Yes		No
Borrower:	Individual Names only		Individual Names and Investment Holding Companies
Interest Only Option:	No		Yes
Financing Location:	London zone 1 - 3		Countrywide - 69 Cities across London, England, Scoland, Wales, Northern Ireland.
Minimum Loan:	$300,000 SGD equalivalent		$200,000 GBP
Purpose:	New purchase / Remortgaging / Cash out Equity Term Loan		New purchase / Remortgaging / Cash out Equity Term Loan
Loan Tenure	Up to 30 years or max age 70		No age limit capped
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 - 3.
• 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.

Eligibility

• Singapore Citizens
• Singapore Permanent Residents
• Expats and resident foreigners
• Non-resident foreigners 

 

Related Links:

>> UK Property Finance 2018/19 (*Updated)