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