TDSR & MSR - Fail: Loan-Reducing-Scheme.
Not all banks provide Loan-Reducing-Scheme for client. Which means the loan option is limited.
The major condition for loan reducing scheme is to paydown 3% of the outstanding loan at the point of refinancing.
For example if the outstanding loan is $1mil, the subject bank approve your refinancing application based on the bank internal guideline, the bank will offer you the refinancing package with $970,000 only instead of $1mil. You need to set aside $30,000 to pay toward your existing bank upon the refinancing is executed.
(Some banks allow client to pay down the 3% in the next 36 months, however, this portion of money may attract higher interest rate)
ii) Interest rate type: Floating rate or Fixed rate. It is depending on interest rate and individual risk appetitide.
iii) Package features: Lock-in or NO Lock-in. Flexibility could be one of the main criteria for you to decide a package. A NO lock-in package provides you the highest level of flexibility.
If you plan to sell your property in 2~3 year time, or plan to partially redempt your loan in near future, package with NO lock-in feature is important to you. Most bank package impose 0.75% to 1.5% penalty for loan redemption within lock-in period.
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