35-year limit set on home loans

[Temperament]

If you have too much spare cash, it's a good idea to buy a property or 2. Besides LHL have said we can further expand our population to 6 million. Where are we now? 5.5 million? Anyway where are you going to park your spare $$$? And don't forget US has said going to QE "forever" until the sky falls. i think the "BRIC" will do something soon.
That's exactly why FT's with a lot of spare $$$ is doing to our property market. Don't forget little RED DOT is one of the few countries still with "AAA" rating.

[toiletsiao]

I spoke to several friends about this topic yesterday.

The problems may not be apparent now, but will affect those who need to refinance.

So if you need to refinance next year (if not you may end up paying 3% when the whole Singapore is paying 1%, which makes you look dumb), then the new rules kick in and you either have to cough up a larger amount upfront or higher installment payments as the loan tenure gets reduced.

There is a possibility of avoiding that though. Article says LTV ratio - so if VALUE of property goes up enough to offset the lower LTV, then it may balance out for the purchaser.

Existing home loan(before oct 6th 2012) ppl will not be affected as long as they dont refinance with another bank or put in a request to adjust their loan tenor. Let say your fren took up a 40yr loan 1yr ago.. lock in period expires nxt yr...he can simply reprice his home loan with the bank..if the loan rates nxt yr is still at 1% (likely to stay this way) .. your fren's loan package will be repriced to 1% (with new lock in period) with the loan tenor at 38yrs left and counting down...he will not be affected in anyway by this measure..because the original loan agreement dates before oct 6th 2012.

Refinancing and Repricing are 2 different things when it comes to home loans... Refinancing simply means Switching out to a new bank, Repricing simply means getting a new package from your existing bank.

[yeokiwi]

Existing home loan(before oct 6th 2012) ppl will not be affected as long as they dont refinance with another bank or put in a request to adjust their loan tenor. Let say your fren took up a 40yr loan 1yr ago.. lock in period expires nxt yr...he can simply reprice his home loan with the bank..if the loan rates nxt yr is still at 1% (likely to stay this way) .. your fren's loan package will be repriced to 1% (with new lock in period) with the loan tenor at 38yrs left and counting down...he will not be affected in anyway by this measure..because the original loan agreement dates before oct 6th 2012.

Refinancing and Repricing are 2 different things when it comes to home loans... Refinancing simply means Switching out to a new bank, Repricing simply means getting a new package from your existing bank.

Basically, if I am the bank, I will be quite happy to increase the loan interest rate since the borrower is stuck.
So shiok, now the banks have a group of customers to exploit.

[corydorus]

The Banks can skin you when you are cornered less self-interests.
You are not going to go there.

[CityFarmer]

I spoke to several friends about this topic yesterday.

The problems may not be apparent now, but will affect those who need to refinance.

So if you need to refinance next year (if not you may end up paying 3% when the whole Singapore is paying 1%, which makes you look dumb), then the new rules kick in and you either have to cough up a larger amount upfront or higher installment payments as the loan tenure gets reduced.

There is a possibility of avoiding that though. Article says LTV ratio - so if VALUE of property goes up enough to offset the lower LTV, then it may balance out for the purchaser.

Existing home loan(before oct 6th 2012) ppl will not be affected as long as they dont refinance with another bank or put in a request to adjust their loan tenor. Let say your fren took up a 40yr loan 1yr ago.. lock in period expires nxt yr...he can simply reprice his home loan with the bank..if the loan rates nxt yr is still at 1% (likely to stay this way) .. your fren's loan package will be repriced to 1% (with new lock in period) with the loan tenor at 38yrs left and counting down...he will not be affected in anyway by this measure..because the original loan agreement dates before oct 6th 2012.

Refinancing and Repricing are 2 different things when it comes to home loans... Refinancing simply means Switching out to a new bank, Repricing simply means getting a new package from your existing bank.

If bank aware that refinancing is not an option, repricing is out of question, isn't it?

It is not the bank interest to repricing, unless it may lose a customer to other banks

[Temperament]

We are not in your age group but we don't own one HDB and one investment property (condo) or even two. We are not pretty common.

You're not alone. Technically I don't own my HDB (as I am still paying my mortgage loan) and I also do not have any investment property.

Frankly, I admire people who are prudent and do not over-extend. I kinda feel Singaporeans are stretching it in most cases. What we see is only the illusion of affordability - dig deeper and many people are bleeding from multiple commitments and liabilities. I'd rather be free of all that worry.....

i always think the same. One can make it in life without using "leverage". Even some people in businesses don't use leverage to expand. They only expand their businesses when they have made enough money. They plough their earned profit to open new outlets. And by the way it may not be a "slower" way to expand because the businesses do not have to pay interests on the loan if leverage is used. And it is a also a safer way to expand as you may not experience "cash flow" problem. Not enough business ($$$), no expansion.

Sorry, theory only.
But some businesses really go this way.
But in practice, i have done this for my personal's financial life.
Amen.

[toiletsiao]

I spoke to several friends about this topic yesterday.

The problems may not be apparent now, but will affect those who need to refinance.

So if you need to refinance next year (if not you may end up paying 3% when the whole Singapore is paying 1%, which makes you look dumb), then the new rules kick in and you either have to cough up a larger amount upfront or higher installment payments as the loan tenure gets reduced.

There is a possibility of avoiding that though. Article says LTV ratio - so if VALUE of property goes up enough to offset the lower LTV, then it may balance out for the purchaser.

Existing home loan(before oct 6th 2012) ppl will not be affected as long as they dont refinance with another bank or put in a request to adjust their loan tenor. Let say your fren took up a 40yr loan 1yr ago.. lock in period expires nxt yr...he can simply reprice his home loan with the bank..if the loan rates nxt yr is still at 1% (likely to stay this way) .. your fren's loan package will be repriced to 1% (with new lock in period) with the loan tenor at 38yrs left and counting down...he will not be affected in anyway by this measure..because the original loan agreement dates before oct 6th 2012.

Refinancing and Repricing are 2 different things when it comes to home loans... Refinancing simply means Switching out to a new bank, Repricing simply means getting a new package from your existing bank.

If bank aware that refinancing is not an option, repricing is out of question, isn't it?

It is not the bank interest to repricing, unless it may lose a customer to other banks

ppl will still switch lah if another bank can offer a much better term and savings than what he is currently on....its still a very competitive market..

[RBM]

I was interested to note that CIMB Bank had the courage to place/identify City Developments Limited as a Conviction Underperform with a S$ 10.25 target price, citing QUOTE potential mass-market sales-volume slowdown on Singapore Government policy intervention and further supply UNQUOTE. Not often I hear of a Bank/Broker being so bold, or at least publicly so, regarding "sell" or "conviction underperform" picks.

City Developments closed at S$ 11.70 this evening - the counter has risen ~ 18% over the last four months.

Not vested (in City Developments)

[hyom]

Anyone have friends who belong to this group?

Hi hyom,

I can relate what I know from my personal experience and my own social circle.

Currently, I have three friends who own an investment property (incidentally, they are all married with at least 2 kids). I do not know what is their refinancing schedule like but from what I understand it may be time for some of them to refinance in the next 1-2 years as they entered the market some time in 2010-2011. Assuming a three-year fixed rate loan (which is the common thing nowadays), it will begin to switch to floating rates probably some time in 2013-2014.

Sad to say I don't have much details about the location of properties, tenure, amount paid and other details; but I do recall one of them bought a condo for $1.2 million, and probably is on a 30-year mortgage.

What I can conclude is that it's pretty common nowadays for couples with kids in their 30s (my age group) to own one HDB and one investment property (condo), some even two! These are professionals who are holding good jobs (both husband and wife probably combined salary of $10,000 and more), educated and have to invest their money somewhere and have all chosen real estate.

Not sure if they will be affected, but I always assume people do their homework and ensure margin of safety.

Hi Musicwhiz,

Like you, I have never given a thought to buying a second property. The reason is the same. I do not want to take on debt. The price of heavy debt is the loss of freedom and slavery to one's salary job. Having a bully as a boss and not being able to quit the job will lead to mental depression. I would rather keep some f**k you money just in case I go through burnt-out conditions again.

When I lost my job last year, I toyed with the idea of starting my own company. One big problem was finding the right partners to complement my many weaknesses because people who know me expect me to be the last person on earth to start a company.

The love of property among Singaporeans in their 30s compound the problem of finding right partners to start a company. If a friend owns a 30-year mortgage with heavy monthly interest payment, he is a madman if he is willing to go without income for the next 2 years to pursue a dream with high chance of failure. Even if he dares to, his family members will exert tremendous pressure on him not to because he really cannot afford to. "Be responsible, you got mouths to feed. Don't be selfish ...". All are valid reasons. How to argue against that? It is like sabo-ing a friend to ask him take on such risks, not to mention his family's huge dislike of whoever that ask him out.

By the way, if all of you don't mind, may I know who else besides Musicwhiz do not own a second property here or at least not a slave to the salary job because of heavy debt? Building a list ... just in case Heehee.

[Temperament]

Anyone have friends who belong to this group?

Hi hyom,

I can relate what I know from my personal experience and my own social circle.

Currently, I have three friends who own an investment property (incidentally, they are all married with at least 2 kids). I do not know what is their refinancing schedule like but from what I understand it may be time for some of them to refinance in the next 1-2 years as they entered the market some time in 2010-2011. Assuming a three-year fixed rate loan (which is the common thing nowadays), it will begin to switch to floating rates probably some time in 2013-2014.

Sad to say I don't have much details about the location of properties, tenure, amount paid and other details; but I do recall one of them bought a condo for $1.2 million, and probably is on a 30-year mortgage.

What I can conclude is that it's pretty common nowadays for couples with kids in their 30s (my age group) to own one HDB and one investment property (condo), some even two! These are professionals who are holding good jobs (both husband and wife probably combined salary of $10,000 and more), educated and have to invest their money somewhere and have all chosen real estate.

Not sure if they will be affected, but I always assume people do their homework and ensure margin of safety.

Hi Musicwhiz,

Like you, I have never given a thought to buying a second property. The reason is the same. I do not want to take on debt. The price of heavy debt is the loss of freedom and slavery to one's salary job. Having a bully as a boss and not being able to quit the job will lead to mental depression. I would rather keep some f**k you money just in case I go through burnt-out conditions again.

When I lost my job last year, I toyed with the idea of starting my own company. One big problem was finding the right partners to complement my many weaknesses because people who know me expect me to be the last person on earth to start a company.

The love of property among Singaporeans in their 30s compound the problem of finding right partners to start a company. If a friend owns a 30-year mortgage with heavy monthly interest payment, he is a madman if he is willing to go without income for the next 2 years to pursue a dream with high chance of failure. Even if he dares to, his family members will exert tremendous pressure on him not to because he really cannot afford to. "Be responsible, you got mouths to feed. Don't be selfish ...". All are valid reasons. How to argue against that? It is like sabo-ing a friend to ask him take on such risks, not to mention his family's huge dislike of whoever that ask him out.

By the way, if all of you don't mind, may I know who else besides Musicwhiz do not own a second property here or at least not a slave to the salary job because of heavy debt? Building a list ... just in case Heehee.

Hi hyom,
" at least not a slave to the salary job because of heavy debt?"

You say it all for me and my wife during our "DINK" days.

i were the one thinking of doing business or investment all the times. i wanted to buy a second property for investment or upgrade to a private property by going quite heavy in mortgage debt. i even calculated it might be all right even if one of us lost our job. We could downgrade therefore depending on the property market at that time we might even made some money. Of course we might lost.

My wife being an easily contented person was never keen.
My job was never stable i think due to my character.
i can't handle office politics no matter how good i were at my job.

So the next best thing for me was to put all our money in the stock market. And putting all our money in the stock market after 2 consecutive Bear markets, i manage to survive and even prosper a little. i know then i can carry on for life if i want to. That's what i am doing now.
And in our life, we have not borrowed any loan from banks except free of interest or even slightly below bank rate interest loans from our company as a privilege or benefit from our company. Even then we always had cash to cover these company's loans in case we were retrenched or we resigned due to one reason or another.

So without leverage, we still can come so far. Which honestly i have never really planed it . i just do what i think i should do. And i never expect the result i have today.
Amen.