Home Buyers still prefer 30 years loan to 50 year loans...

[Dennis Ng]

As usual, I gave them so much more information yet they only published a fraction of what I provided.

The lady (home loan customer) in Channel News Asia yesterday is our customer and seminar graduate Serene Loong, ironically, her time on TV is much more than me...and they only telecast 1 sentence of the many things I said...my worry is that what I want to warn the public was not given chance to be aired...and home buyers might take up 50 years loan without much thinking of the possible consequences.

http://www.todayonline.com/Business/EDC ... term-loans

a longer report on Channelnewsasia.com
http://www.channelnewsasia.com/stories/ ... 58/1/.html

S'pore homebuyers likely to opt for shorter term mortgage
By Millet Enriquez | Posted: 23 July 2012 2343 hrs

SINGAPORE: Homebuyers in Singapore will likely opt for mortgage loans with shorter repayment periods.

That's despite the availability of new home loans that offer up to 50-year tenors.

Experts said more are taking into account their retirement age and interest costs when servicing their loans.

Serene Loong and her husband took a S$760,000 home loan when they upgraded to a two-storey, three-room private apartment at Upper Serangoon in 2005.

With a 35-year home loan they got from DBS Bank, the couple was paying S$2,000 in monthly repayments.

That loan has since been refinanced to 28 years with another bank, and monthly payments have come down to S$1,800 at a lower interest rate of 1.88 per cent.

"I definitely was taking into account the affordability, as well as when I would retire," said Loong, who is the founder of website www.reallifetheory.com.

She added: "I wouldn't want to be servicing a home loan after retirement because I think there will be other expenses that I might have to take care of like medical expenses, etc."

So far, Singapore banks are offering home loans with a maximum term of 35 to 40 years with age capped at 70 to 75.

UOB has come up with a first by offering home loans that stretches repayment to 50 years and a maximum age of 80.

UOB said that for the maximum tenor of 50 years, the requirement is to have at least 35 years remaining on the lease for leasehold property and no more than 80 years of age at end of loan tenor.

Still, some market players said such loans may be more suited for investors.

Dennis Ng, who is the founder of mortgage consulting firm HousingLoansSG.com, said: "A longer loan repayment period may make sense for investors because the investor is always looking for return on investment. So the less capital they put into the property, the higher their return."

For ordinary home buyers, experts said they should tailor their loan repayment period to the age they want to retire.

DBS Bank's head of deposits and secured lending, Ms Lui Su Kian, said: "The average loan period we are seeing now for customers is about 30 years. In general, I think, especially in Asia, we do see that our customers are prudent when it comes to managing their mortgage, so most of them do not stretch out to the maximum period."

While a 50-year tenor may reduce monthly repayments, experts said interest could push the loan's amount by up by 15 to 20 per cent.

For example, a S$1 million loan at 50 year tenor will total to S$1.45 million by the end of its term - much higher compared to the S$1.3 million principal and interest if the loan was taken up at a 35-year tenor, according to DBS.

And comments from Channel NewsAsia's Facebook page show most buyers are averse to half a decade loans, with some saying 25 to 30 years is their threshold.

HousingLoansSG.com, which sees 20 to 30 enquiries a day, said around 70 per cent of its clients opt for 25 to 30-year loans, while 15 per cent go for the 30 to 35 year loans. The rest prefer terms of less than 25 years.

"If you have problems paying the installment right now when you are much younger and your income is much higher, I think you will have a bigger problem as you age," said Mr Ng.

Ms Lui said: "In this current interest rate environment, where interest rate is relatively low, we actually encourage our customers to try to shorten the loan period based on their affordability. Because rates are low, you can actually pay down as much as you can."

Ms Phang Lah Hwa, Head of Consumer Secured Lending at OCBC Bank said customers generally take up to the maximum loan tenor as they can repay or make capital repayment along the loan tenor.

"Shorter loan tenors are typically taken up due to the age of borrowers or by those who have the funds to service a higher monthly commitment," she added.

Mr Harmander Mahal, Head of Customer Value Management at HSBC Singapore, said: "We observe that customers who take up housing loans with longer tenor (30 to 35 years) tend to be younger in the age group of 35 years old and below.

"They are usually financing the purchase of their first homes and therefore, prefer to stretch their repayments over a longer period so that they can pay lower and more affordable monthly instalments."

HSBC said its housing loan portfolio has seen double-digit growth over the last five years with an increase in market share.

In its 2011 annual results, residential mortgages have increased 21 per cent in value year-on-year for 2011 compared to 2010.

- CNA/fa

[candy_chia]

Probably you could consider displaying the full text of your original recommendations on facebook or the forum, at least it would not be censored and will benefit more people.

As usual, I gave them so much more information yet they only published a fraction of what I provided.

The lady (home loan customer) in Channel News Asia yesterday is our customer and seminar graduate Serene Loong, ironically, her time on TV is much more than me...and they only telecast 1 sentence of the many things I said...my worry is that what I want to warn the public was not given chance to be aired...and home buyers might take up 50 years loan without much thinking of the possible consequences.

[sereneloong]

I was also puzzled when I saw the story...in addition, the facts abt my home loan in the article are also incorrect. I have contacted the reporter to rectify...
serene

[Dennis Ng]

I guess NOT. If the media thinks they should NOT be published, then if I want to continue to share through media, I better don't do something like this...

Probably you could consider displaying the full text of your original recommendations on facebook or the forum, at least it would not be censored and will benefit more people.

As usual, I gave them so much more information yet they only published a fraction of what I provided.

The lady (home loan customer) in Channel News Asia yesterday is our customer and seminar graduate Serene Loong, ironically, her time on TV is much more than me...and they only telecast 1 sentence of the many things I said...my worry is that what I want to warn the public was not given chance to be aired...and home buyers might take up 50 years loan without much thinking of the possible consequences.

[candy_chia]

I find it amazing that Serene pays a lower monthly instalment of $1,800 at interest rate of 1.88 per cent for 28 years loan via refinancing as reported in the news.

With my outstanding loan of $470k pegged to interest rate of 2 per cent, my monthly mortgage loan repayment is $2,066.65 with remaining tenure of 24 years.

[sereneloong]

Hi Candy,

This is the perfect example of why we should NOT believe what's published in the news!

If you scroll up, I posted that the numbers in the article are wrong, and I have called the reporter up to rectify. That's why the numbers don't add up.

The refinancing was done a couple of years ago which was why the interest rate then was 1.88%. Also the loan amount is also wrong. It is not 760K. That's actually how much my home cost me and my hubby in 2005! I was so annoyed when I read that! So u can imagine how much lower the loan amount actually is...For the record, we pay $1861 a month.

BTW Candy, given that your interest rate is at 2%. Did u get the loan a few years ago like me? Are you eligible to refinance? Think interest rates are around 1% now. I'm also in the process of exploring refinancing once more.

Cheers,
Serene

[candy_chia]

Hi Serene,

I believe your loan should have lower to $500k plus by the time you refinance, that is why it is published as $1.8k (actual figure of monthly instalment should be $1,861 as you stated).

Would love to enjoy the rock-bottom interest rate, but too bad took a 5-years fixed rate loan with Maybank, so will be liable for 1.5% penalty if refinance now since only in 2nd year of financing!

Hi Candy,

This is the perfect example of why we should NOT believe what's published in the news!

If you scroll up, I posted that the numbers in the article are wrong, and I have called the reporter up to rectify. That's why the numbers don't add up.

The refinancing was done a couple of years ago which was why the interest rate then was 1.88%. Also the loan amount is also wrong. It is not 760K. That's actually how much my home cost me and my hubby in 2005! I was so annoyed when I read that! So u can imagine how much lower the loan amount actually is...For the record, we pay $1861 a month.

BTW Candy, given that your interest rate is at 2%. Did u get the loan a few years ago like me? Are you eligible to refinance? Think interest rates are around 1% now. I'm also in the process of exploring refinancing once more.

Cheers,
Serene

[sereneloong]

Hi Candy,

Yes, you're right abt the loan amount. That's why my mthly repayment is as such.

As for refinancing, that is a shame. I supposed you were looking at affordability and stability and so chose a longer-term fixed rate. For me, I was looking for the same so I took a fixed rate, however my locked-in period is 2 years...I wonder if nowadays, one may not want to go for lengthy lock-in periods as things do change very quickly these days, and it's hard to predict where interest rates may go in the longer term...Dennis, do you have a point of view on this? Fixed rate but max 3 years? Unless the fixed rate is super attractive like under 1% LOL?

Actually, through this experience, I can understand why Dennis is sometimes annoyed with the media....in fact I asked the reporter to send me the article/script before airing/publishing to check but she said this is not possible as it was going out that very day itself.

Anybody on the forum who is a journalist? Can you share is there anyway we can ensure accuracy before airing/publishing?

Thanks,
Serene

[Dennis Ng]

Hi sereneloong,

imagine my average media appearance (newspaper, radio, TV) is at least 100 times a year. So I faced this 100 times a year.

SiBOR is very dependent on U.S. Fed rate. U.S. Fed wants to keep interest rates low till year 2014...but things can go haywire very fast, just look at Spain. How long it took them for 10 year bond yield to spike up from below 5% to over 7%...

U.S. Fed might not get their wish granted. (interest rates to remain low).

One must always know one's reasons for choosing a package. If one can predict what happens 2 to 3 years down the road, then one must be very, very rich. On hindsight is also 100% perfect, foresight is NOT.

Thus, to refinance now, either you choose NO Lock In (Zero Penalty Period) package or may be safe to lock in 3 years...as 3 years is up to 2015...who knows where interest rates would be then? But in year 2007, Singapore Bank Home Loan interest rate was 4% to 5%. Each of us needs to do our own thinking and consideration and make our own decision, don't ask me what I choose, don't blindly follow me.

I am teaching you HOW to Think and Analyse (HOW to Fish), asking me for Answers is asking for Fish.

Hi Candy,

Yes, you're right abt the loan amount. That's why my mthly repayment is as such.

As for refinancing, that is a shame. I supposed you were looking at affordability and stability and so chose a longer-term fixed rate. For me, I was looking for the same so I took a fixed rate, however my locked-in period is 2 years...I wonder if nowadays, one may not want to go for lengthy lock-in periods as things do change very quickly these days, and it's hard to predict where interest rates may go in the longer term...Dennis, do you have a point of view on this? Fixed rate but max 3 years? Unless the fixed rate is super attractive like under 1% LOL?

Actually, through this experience, I can understand why Dennis is sometimes annoyed with the media....in fact I asked the reporter to send me the article/script before airing/publishing to check but she said this is not possible as it was going out that very day itself.

Anybody on the forum who is a journalist? Can you share is there anyway we can ensure accuracy before airing/publishing?

Thanks,
Serene

[candy_chia]

Hi Serene,

Thank you for suggesting about refinance.

Called up Maybank to enquire whether it is cost effective to refinance my remaining $466k housing loan. Surprisingly, after deducting the 1% penalty ($4,647.90) and conversion fee ($500), there is a substantial saving of $8,600 by converting to their 3 years fixed rate loans. (1st year - 1.25%, 2nd year - 1.35% and 3rd year - 1.45%)

Not keen in their floating rate package as there is still 2 years lock-in period involved (1st year - 0.98%, 2nd year - 1.48%).

Cheers!

Hi Serene,

I believe your loan should have lower to $500k plus by the time you refinance, that is why it is published as $1.8k (actual figure of monthly instalment should be $1,861 as you stated).

Would love to enjoy the rock-bottom interest rate, but too bad took a 5-years fixed rate loan with Maybank, so will be liable for 1.5% penalty if refinance now since only in 2nd year of financing!

The refinancing was done a couple of years ago which was why the interest rate then was 1.88%. Also the loan amount is also wrong. It is not 760K. That's actually how much my home cost me and my hubby in 2005! I was so annoyed when I read that! So u can imagine how much lower the loan amount actually is...For the record, we pay $1861 a month.

BTW Candy, given that your interest rate is at 2%. Did u get the loan a few years ago like me? Are you eligible to refinance? Think interest rates are around 1% now. I'm also in the process of exploring refinancing once more.

Cheers,
Serene

[sereneloong]

Dear Candy,

I write this post with tears in my eyes.

But in order to continue what Dennis has selflessly started, I am carrying on to respond in this forum as how we have been doing all along. Each giving our points of view from a go-giving perspective. That is what he would want.

I'm so glad that u can save as much as $8600! Kudos to you for taking action and finding out the actual savings!

You may already have thought of this but I shall mention it, nonetheless. Why not use the services of an independent mortgage broker like Dennis' housingloansg.com to shop for the most attractive new loan for you? You can tell them your criteria like no lock-in etc. After all at any one point, Dennis has estimated that there are some 130 loan packages in the markets if you add up all the permutations of loans by each bank/financial institution. Hard for u to research all but easy for a specialist like housingloansg.com Plus the service is free to you. They will take their commission from whichever bank you end up choosing.

Let's keep sharing as our Sifu would have wanted!
Serene
P.S. I will continue to make useful Real Life Theory videos as inspired by Dennis and put them at http://www.reallifetheory.com

[sereneloong]

I was re-reading your post, Candy. And I now know why you just called your existing bank, Maybank as there is still a 1.5% penalty...got it.

[candy_chia]

Hi Serene,

Have been a loyal customer of Dennis' housingloan.sg for my current and earlier flat's bank loans.

Like you, my heart is filled with immeasurable grief, let's turn the tide of grief into an IMMENSE FORCE (化 悲 伤 为 力量) to repay our extraordinary mentor's selfless contributions.

Dear Candy,

I write this post with tears in my eyes.

But in order to continue what Dennis has selflessly started, I am carrying on to respond in this forum as how we have been doing all along. Each giving our points of view from a go-giving perspective. That is what he would want.

I'm so glad that u can save as much as $8600! Kudos to you for taking action and finding out the actual savings!

You may already have thought of this but I shall mention it, nonetheless. Why not use the services of an independent mortgage broker like Dennis' housingloansg.com to shop for the most attractive new loan for you? You can tell them your criteria like no lock-in etc. After all at any one point, Dennis has estimated that there are some 130 loan packages in the markets if you add up all the permutations of loans by each bank/financial institution. Hard for u to research all but easy for a specialist like housingloansg.com Plus the service is free to you. They will take their commission from whichever bank you end up choosing.

Let's keep sharing as our Sifu would have wanted!
Serene
P.S. I will continue to make useful Real Life Theory videos as inspired by Dennis and put them at http://www.reallifetheory.com

[LKY(LimKaYew)]

Dear Candy,

I write this post with tears in my eyes.

But in order to continue what Dennis has selflessly started, I am carrying on to respond in this forum as how we have been doing all along. Each giving our points of view from a go-giving perspective. That is what he would want.

Dennis 师父， 一路走好了！谢谢您的无私教导！您那可贵的奉献精神将永存在我心​中。。。唉哉！痛哉啊！

[candy_chia]

Applause to kklok for the effort to share the last recording on Dennis view over feasibility of undertaking home loans with 50 years tenure.

Tomorrow, Channel News Asia is interviewing me on my comments on 50 years loan period for Home Loans. Not sure when they will telecast, maybe for tomorrow News.

Tonight on Channel News Asia Singapore News 10 pm to 10.30 pm, I'll be sharing my comments whether a 50 year loan period makes sense or not? Why it may make sense for investors but NOT for home buyer...watch out for it.

Hi All,

This is the last recording that I have done for Dennis on 230712 (CNA news).

http://dl.dropbox.com/u/34170769/CNA_230712.avi

Cheers
KK