Looking to refinance the housing loan.

As our home reached the 5 years MOP, and our daughter going to primary school next year. There are thoughts of moving if we can get into a preferred school which is within the 1km to 2km radius but near to my mother in law house, though chances are very slim. We stayed near my mother-in-law house, a few bus stops away, but there are always lingering thoughts to move closer, as that travelling time always eat up the remaining energy after a long day. My mother in law plays a very big part in the children upbringing, which we are very appreciatively of, a lot of activities and school location are planned around that, which indirectly increase our travelling time and effort.

With interest rates dropping to a low level not seen for quite some time, i am thinking of changing our default HDB 2.6% to the POSB 5 years fixed rate at 1.5%.

With a remaining 25 years duration and about $320,000 loan amount, refinancing could save us $200 a month for the first 5 years, which is a total of $12,000 saved. And we intend to increase the CPF monthly payment, to free up more cash for investing purposes.

We have some very simple requirements, which is not looking at the cheapest of all but required us to refinance every now and then, rather something more stable, with preferably longer locked in period with rates better than HDB 2.6%.

The primary school phase 2c will be from 3th to 5th August, and by 17th August we will decide on our next move.

Updated 15.08.2020 – we got a <1km primary school, and thus we will be staying put, we have also decided not to proceed with bank housing loan, mainly due to my unstable income that dropped a lot in the covid period (self-employed). From my understanding and online research, even when we have signed up and locked in the housing loan, if my spouse’s income suddenly drop a lot or stop due to any unforseen event, the bank can demand for us to pay the whole loan even if we are able to continue paying the monthly payment. This is the biggest downside for us, as my income is too unpredictable from time to time and with the current HDB loan, we won’t have any issues with that and we are covered under Hps which is payable by cpf and have generous rebates from time to time. The $200 savings per month is really attractive, but the peace of mind gained by sticking to the HDB loan is priceless.

If anyone have a better idea with regards to my situation above, please feel free to comment below.



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