Queries after reading 'Secrets of Singapore Property Gurus'

[plim2]

Hello,

Regarding 'Smart Property Financing' part by Dennis Ng in the book 'Secrets of Singapore Property Gurus', I am curious about the following:

1) Pg. 89: Illustrated example "You buy a $1million property and borrow 70% of the purchase price, or $700K. Suppose you choose a loan period of 25 years, and the average housing loan interest rate is 3%, the monthly housing loan repayment is $2,655."
How do we arrive at $2,655 for the monthly housing loan repayment? The home loan calculators from the internet give me $3,319.48.

2) Pg. 92: "The good news is that the additional loan of $500K comes at a low interest rate of about 2%, ...." Does it mean that subsequent housing loans with Singapore banks come at a lower interest rate when compared to the first housing loan?

3) Pg. 94: "You typically do not have to pay for the service of a mortgage broker as banks pay them a fee." My understanding of this statement is that banks do not act as mortgage brokers. Are there any particular reasons as to why banks are not acting as mortgage brokers? Or correct me if I misinterpret the statement.

Please enlighten. Thanks!

[sereneloong]

Hello plim2,

This is pertaining to point #3.

Banks are not mortgage brokers. Mortgage brokers are independent agents not affiliated to any banks/financial instituitions who help their customers shop for the best home loan at that time, depending on the customers' needs. One example is Dennis' company housingloan.sg. I have used this service for free because the bank that I eventually choose to take up the loan with pays housingloan.sg a commission.

Hope this clarifies,
Serene

[Dennis Ng]

Hello,

Regarding 'Smart Property Financing' part by Dennis Ng in the book 'Secrets of Singapore Property Gurus', I am curious about the following:

1) Pg. 89: Illustrated example "You buy a $1million property and borrow 70% of the purchase price, or $700K. Suppose you choose a loan period of 25 years, and the average housing loan interest rate is 3%, the monthly housing loan repayment is $2,655."
How do we arrive at $2,655 for the monthly housing loan repayment? The home loan calculators from the internet give me $3,319.47.

2) Pg. 92: "The good news is that the additional loan of $500K comes at a low interest rate of about 2%, ...." Does it mean that subsequent housing loans with Singapore banks come at a lower interest rate when compared to the first housing loan?

3) Pg. 94: "You typically do not have to pay for the service of a mortgage broker as banks pay them a fee." My understanding of this statement is that banks do not act as mortgage brokers. Are there any particular reasons as to why banks are not acting as mortgage brokers? Or correct me if I misinterpret the statement.

Please enlighten. Thanks!

1. there might be a typo. I also get S$3,319.48.

2. currently, interest rate on Housing Loan is only 1.2%, so I'm talking about current Housing Loan interest rate, which is the same for additional loan, so 2% is already higher than what one can easily get now, actual interest rate currently may be just 1.2%.

3% is assumed as an average interest rate for Housing Loan over a longer time period such as 25 years as interest rates move up and down, not constant.

3. Mortgage Brokers are independent 3rd party, not employed by banks. Staff of bank can only offer loans from their own bank, which might not be the best deal since a better deal may be offered by another bank.

On the other hand, a TRUE Independent Mortgage Broker works with ALL banks (some of them do NOT work with all banks, so NOT truly independent) and thus can help you compare and choose the most suitable Housing Loan package for you.