A Silver Lining in 2020: A Couple’s Home Loan Refinancing Journey

·6-min read

2020 has been a challenging time for everyone because of the unexpected COVID-19 pandemic that has taken the world by storm.

In Singapore, the economy has taken a huge hit where the GDP growth is expected to shrink by 5 to 7%. There have been job losses too, with Singapore’s overall unemployment rate rising to 3.4% in August, which is higher than during the 2009 Asian financial crisis.

However, if there is one positive to be taken out of the current poor economic climate, it’s the significantly reduced interest rates, which means loans are much cheaper. The Singapore Interbank Offered Rate (SIBOR) is based off the interest rate in the US, which is close to zero at the moment and will likely stay that way until the global economy picks up again. As a reference, the current 1-month SIBOR is 0.25% compared to 1.749% earlier this year in January.

Upon finding out about the opportunity to enjoy significant cost savings by refinancing their existing home loan, Yeri Tiete and Shan Wong, both 32, are now reaping the huge benefits.

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A Couple’s Home Loan Refinancing Journey_1
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A Couple’s Home Loan Refinancing Journey_2

 

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Thinking of refinancing your home loan as well? Head to PropertyGuru Finance to compare the best mortgage rates in town or reach out to our home finance advisors for more personalised recommendations (psst, it’s free!).

The Sensible Choice

It all started about four years ago for Yeri and Shan.

In 2016, Yeri, who currently works for Google as a Corporate Operations Engineer, was offered the opportunity to work in the company’s Singapore office. Just a few months into his move from Belgium, he met Shan and the rest is history.

“When you meet the right one, you have to move fast!” laughs Yeri.

Two years later, the duo are married and now live happily with their cats, Tofu and Taro.

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A Couple’s Home Loan Refinancing Journey_3

Originally from Belgium, when Yeri first arrived in Singapore, he stayed in a two-bedroom condominium unit in Potong Pasir. Three months into their relationship, Shan moved in.

The couple loved the apartment they were in mainly because of the convenience it offered. They could go for a dip in the condominium’s pool anytime when the sun was out, and travelling was a breeze as the MRT station was located directly below.

However, it was not a smart financial decision to continue staying there as they were “throwing money away”. For a small two-bedroom condominium unit, the couple was forking out $2,700 a month in rental fees.

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A Couple’s Home Loan Refinancing Journey_4

After much consideration, the couple decided to put their money to better use and opted for a place of their own.

Instead of going for a BTO flat, which would take “way too long”, the couple opted for a resale flat, and in particular, an older unit as “the layout is much bigger than the newer BTO flats”.

For Shan, who runs her own interior design consultancy firm, she was eager for a bigger space that she could tear apart and rebuild from scratch.

“I thought the house would be a great showroom for my clients to come in and take a look at the workmanship,” she says.

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A Couple’s Home Loan Refinancing Journey_5
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A Couple’s Home Loan Refinancing Journey_6

 

The Dollars and Cents

After deciding to search for four-room apartments close to her parents’ residence in Telok Blangah Crescent, Shan narrowed down some suitable choices on PropertyGuru. She then passed them on to her real estate agent, to assist them in their house-hunting journey.

Like how Yeri knew Shan was the right one when they first met, the couple knew their four-room flat in Telok Blangah was the perfect fit. Shan’s creative juices started flowing, and she started envisioning what she could do to truly make it their home (like renovating it to become a three-room flat).

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A Couple’s Home Loan Refinancing Journey_7

But there were hiccups when it came to financing their home purchase. As Yeri is a Permanent Resident and Shan was self-employed at the time, a bank loan was out of the question because of the numerous challenges. As such, they were only left with the option of a HDB loan (or striking the lottery).

Related article: HDB Housing Loan vs Bank Loans in Singapore

Opting for a HDB home loan meant the couple was able to take a loan of up to 90% of the house’s value and cough up a lower cash down payment of just $5,000. But in the long run, they had to pay a higher total sum because of HDB’s higher fixed interest rate of 2.6%.

The upside was that the lower cash down payment meant they (or rather, Shan) could spend more money to create their masterpiece home. For $60k, Shan repurposed the entire house that has now become their home, but also her “personal office and showroom”.

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A Couple’s Home Loan Refinancing Journey_8

 

The Silver Lining in a Bad Year

Two years on, Yeri and Shan are in a much better financial position. Shan’s business, Shan Wong Interior Design, has taken off and the two are incredibly happy in Telok Blangah. Before the COVID-19 pandemic, the idea of refinancing their home loan had already crossed their minds. Finally, the stars aligned.

“Right now, the interest rate is quite low, the lowest it's been in years. We wanted to lock in a low rate before a potential rise. So if there was a best time that we should do this, it would be now,” says Shan, referring to the historically low rates.

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A Couple’s Home Loan Refinancing Journey_9

As fate would have it, Yeri chanced upon PropertyGuru Finance earlier this year and decided to get in touch to find out more about the ins and outs of refinancing. The consultation is free anyway, so the couple thought, why not?

After the consultation the couple decided to take the plunge. Thereafter, their PropertyGuru Finance advisor Kendrick offered the couple several refinancing options – such as fixed or floating interest rates – and assisted them throughout the process.

  • Refinance Loan Amount: $250,000

  • Interest Rate: 1.35%

  • Monthly Repayment: $878.01 (23-year tenure)

By deciding to refinance, the couple’s interest rate went from 2.6% to 1.35% (floating rate) with UOB bank. Yeri says, “it's almost half the interest, so in the long run we'll fork out significantly less money.”

Related article: Fixed vs Floating Rate Home Loans - How to Pick the Right One

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A Couple’s Home Loan Refinancing Journey_10

Yeri and Shan look around at their masterpiece home with gratitude after recounting how much they have saved after the refinance.

Yeri then laughs and says, “We definitely have more money to spend on other things now, like going to restaurants more!”

 

Read stories of real people and their home journeys. Still searching for your dream home? Browse properties for sale on PropertyGuru or compare home loans on PropertyGuru Finance.

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