Summary
Make crisis-proof financial decisions during this pandemic; exercise cost-saving options when it comes to property decisions.
Once your lock-in period has expired, you can do repricing to benefit from lower interest payments.
Refinancing involves switching to another bank and may incur additional fees.
Article
The pandemic is riddled with uncertainty and fear. Since wrong decisions can exacerbate circumstances during this pandemic, it is important to make crisis-proof financial decisions.
1: Repricing
Call your bank and find out whether your lock-in period has expired and check the current rates. Especially since interest rates have lowered in this economic environment, repricing will allow you to benefit from substantially lower interest payments. Repricing involves renewing a contract with the same bank. Most packages involve a one-time free repricing.
For those on a BUC loan, there is no lock-in period; you can easily do a repricing to benefit from today’s low-interest rates.
Most loan tenures last till 65 years old. You can reprice and stretch to 75 years old, but the interest payment will be larger. Still, this scheme will lower your instalment payments and may help you tide over the pandemic.
2: Refinancing
Refinancing involves switching banks. As long as you are out of your lock-in period, you can do either refinancing or repricing. Refinancing, however, involves an application fee. The bank you switch to may offer rebates to cover some of these costs.
Ultimately, every bank has a set of interest rates they peg to. The choice to refinance or reprice will depend on whether the new terms can ease your financial burden during this trying time.