Are you currently paying more than the market interest rate? Have you passed the lock-in period for your home loan with your current bank? If your answer is yes to both these questions, you may want to consider refinancing your home loan.
As Singapore's biggest financial institution, we offer a highly-competitive refinancing package that comes with an extensive list of benefits. Ready for refinancing? Below are some steps to guide you along.
Step 1: Understand the Costs
Before you opt for refinancing, be sure to review with your existing loan provider to fully understand some of the costs that you may incur.
Check with our Home Advice Specialists for penalty subsidy to help you finance part of your exit costs, if any. Some of the exit costs or penalty fees may include:
- Prepayment penalty: Charges incurred when you terminate your housing loan early with your existing lender. This will be cushioned by our penalty subsidy (for selected home loan packages) when you refinance with us.
- Legal fees: Costs for legal services rendered in the property purchase and mortgage documentation relating to the bank loan; typically there is a 3-year clawback period.
- Cash rebate: Clawback of cash rebates that may have been given to you when you took up your existing loan
- Property valuation: Cost incurred for providing property valuation.
- Cancellation fee: Cost incurred for cancelling the loan.
- Fire insurance: Cost of the fire insurance policy on your property - if you refinance, you would have to terminate your existing policy and take up a new one in favour of the bank that is refinancing you
- Interest-in-lieu of notice: Interest costs for refinancing. Typically, you will need to serve a 3-month notice in writing to your existing financier. This is the interest you may have to pay your existing financier, if you give less than three months notice to fully repay your loan.
Will the CPF Housing Withdrawal Limit affect me when I refinance my loan?
If you refinance a property bought before September 2002, you will be subject to the CPF Housing Withdrawal Limit prevailing as at the date of the Letter of offer provided by the refinancing bank. If you refinance a property bought after September 2002, you will be subject to the CPF Housing Withdrawal Limit prevailing as at the date you bought the property.
For the latest CPF news, click here .
Step 2 : Appoint a lawyer to coordinate your purchase
You will need to appoint a lawyer to act for you in the refinancing of your property. At DBS, we provide legal subsidy for selected home loan packages. Do check with our Home Advice Specialist for more details.
Step 3 : Apply to the bank for a home loan
For the bank to process your loan, you will need to submit these documents:
- Application Form
Mortgage Application Form
- CPF Documents
Contribution History up to the last 12 months
- Income Documents
- Latest Income Tax Notice of Assessment or
- Latest computerised payslip or
- Latest 2 years Income Tax Notice of Assessment (only applicable to self-employed/commission based customers)
- Option to Purchase (OTP) or Sale and Purchase (S&P) Agreement
Upon approval of your application, you will receive a Letter of Offer (LO)* from the Bank, stating the details such as loan amount, tenure and terms and conditions. Before signing the LO, you should ensure that you understand its contents entirely, as it becomes legally binding upon acceptance.
Once you have accepted the LO*, the Bank will then instruct the law firm and valuation company to proceed with the necessary mortgage documentation and valuation report respectively.
A caveat^ will be lodged by your lawyer with the Singapore Land Authority against the property.
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An LO is a formal offer of housing loan from the bank, setting out the terms and conditions governing the housing loan offered therein. |
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A caveat serves as a public notice that the person lodging it is claiming an interest in the property, and it will lapse 5 years from the date of lodgement, unless it is discharged or renewed. |
Step 4 : Meet with your lawyer
Your lawyer will go through the mortgage documents in order to ensure that you fully understand all the terms and conditions stated therein.
Step 5 : Pay Legal Fees
Before the date of completion, your lawyer will prepare the necessary mortgage documents to be signed upon the following:
- Ensuring that the title is in order
- Satisfactory replies to legal requisitions to the various government departments
- The discharge of encumbrances like mortgage and CPF charge
The legal fees are usually payable at this stage.
Next Steps
- Find out more about our home loan
- Calculate your estimated monthly mortgage instalment
- Call us or request a consultation for customised rates.
- Get our home loan application checklist for the documents you will need
- Download an application form