TDSR Rules on Refinancing Fine-tuned!

[bargain hunter]

http://www.mas.gov.sg/News-and-Publi...ine-Tuned.aspx

[richwang]

"commits to a debt reduction plan with his financial institution to repay at least 3 per cent of the outstanding balance over a period
of not more than 3 years".

That means just need to pay 1% of outstanding loan per year? - equivalent to 100 years loan? ( good match for 99LH).

[bargain hunter]

i think its even possible to negotiate with the bank to pay 3% right at the end of the 3rd year if the bank is flexible.

[Count]

Probably MAS realising that not so good times are lying ahead. More people losing jobs or getting pay cut, and govt wants to prevent situation where they go into default, firesale etc. This allows them to refinance and roll over, and take advantage of current low interest rates.

MAS says that this is not relaxing of CM, but in effect it is (albeit a very minor tweak). Apart from that, this also sends a signal to the market, and we all know how property market is largely sentiment driven. Some will interpret this as govt signaling that prices have reached the support level, and take their cue from there. Expect some fence sitters to start coming out of the woodwork.

[smellyfish]

How much above the 60% can one go? Must one be within the 60% tdsr limits after the 3 years when the 3% is repaid?

[xtreme_46]

How much above the 60% can one go? Must one be within the 60% tdsr limits after the 3 years when the 3% is repaid?

I also thinking about this question...is there any internal limits set by banks?

[teddybear]

Looks like you caught another one (the other one caught previously is by MOM and CPF) - Is MAS trying to confuse, mislead, or speak half-truths?????

As I have said before, the property cooling measures like ABSD+TDSR are causing many forcing selling of big quantum properties (mostly in CCR), but this will spread to lower quantum soon (many in OCR) as Singapore's economy is getting bad and residents' unemployment rate rises............... Is it any wonder for the "tweakling" (looks like "relaxing") of the property cooling measures?

Probably MAS realising that not so good times are lying ahead. More people losing jobs or getting pay cut, and govt wants to prevent situation where they go into default, firesale etc. This allows them to refinance and roll over, and take advantage of current low interest rates.

MAS says that this is not relaxing of CM, but in effect it is (albeit a very minor tweak). Apart from that, this also sends a signal to the market, and we all know how property market is largely sentiment driven. Some will interpret this as govt signaling that prices have reached the support level, and take their cue from there. Expect some fence sitters to start coming out of the woodwork.

[Werther]

Anyone knows what is the interest rate if the person is unable to do Repricing due to tdrs? Still low right, ard 2-2.5%？

[Kelonguni]

It will be based on the mortgage loan conditions. Can be over 3%.

Anyone knows what is the interest rate if the person is unable to do Repricing due to tdrs? Still low right, ard 2-2.5%？

[bargain hunter]

there is no limit coz this is not the LTV. fail TDSR means fail TDSR, doesn't matter how many % one can go.

i think this is called review every 3 years? every 3 years if the person keeps his promise to repay 3%, then review again, still fail TDSR, repeat for 3 years with another commitment to repay another 3% at the end of the next 3 years and so on.

How much above the 60% can one go? Must one be within the 60% tdsr limits after the 3 years when the 3% is repaid?

[bargain hunter]

I also thinking about this question...is there any internal limits set by banks?

it will vary from bank to bank and borrower's individual credit standing. to be sure, the bank will not want to 'dua' a borrower if he has been servicing the loan well. doesn't do the bank any good to push for mortgagee sales.

[bargain hunter]

It will be based on the mortgage loan conditions. Can be over 3%.

but the bulk of it is still between 2 and 3%. i also got a friend on those sibor rates and after expiry still < 2%. he can now refinance if he wants to.

[august]

it will vary from bank to bank and borrower's individual credit standing. to be sure, the bank will not want to 'dua' a borrower if he has been servicing the loan well. doesn't do the bank any good to push for mortgagee sales.

Refinance means can go with another bank that offers more competitive package. Stick to same bank is repricing.

[teddybear]

Your friend is lucky to be on SIBOR-pegged mortgage loans......
Those on Board-rate mortgage loans and they got hit bloody hard!

but the bulk of it is still between 2 and 3%. i also got a friend on those sibor rates and after expiry still < 2%. he can now refinance if he wants to.

[Werther]

I am due for Repricing end of the year. I called my bank last week and was told as long as I put in $6k as part of early redemption, I do not need to submit all the docs for TDRS.. so the bank is aware of this relaxation already?

[wind30]

Can refinance increase the loan amount?

If my outstanding loan is $500k, can I refinance to 1milllion and above my TDSR (assuming I have another loan on another property) and use that $500k plus savings to buy another property thus avoiding TDSR?

[bargain hunter]

Can refinance increase the loan amount?

If my outstanding loan is $500k, can I refinance to 1milllion and above my TDSR (assuming I have another loan on another property) and use that $500k plus savings to buy another property thus avoiding TDSR?

u say leh?

[bargain hunter]

Your friend is lucky to be on SIBOR-pegged mortgage loans......
Those on Board-rate mortgage loans and they got hit bloody hard!

but now they are saved.

[bargain hunter]

I am due for Repricing end of the year. I called my bank last week and was told as long as I put in $6k as part of early redemption, I do not need to submit all the docs for TDRS.. so the bank is aware of this relaxation already?

if owner stay then there was no need for TDSR at all rite? if investment ppty then that means they already knew.

[bargain hunter]

Refinance means can go with another bank that offers more competitive package. Stick to same bank is repricing.

but even repricing would previously require submitting for TDSR for investment property previously right?

but now all are exempted regardless of when they bought the unit as long as they reduce the loan quantum by 3% every 3 years.

[Werther]

if owner stay then there was no need for TDSR at all rite? if investment ppty then that means they already knew.

yup, its investment property. so they already knew beforehand.

[amk]

"fine-tuning" TDSR is step one
"fine-tuning" ABSD for citizen shall be the next

Refinancing should have never been subjected to TDSR in the 1st place. The outstanding loan is already taken out, whether it falls on this bank or the other bank, there is no change in the total loan book in the banking system. Making refinancing so difficult only serves to enrich the banks (since I dun need to do anything, just sit there and enjoy high Y4 spreads, cause I know you can't get out).

[Arcachon]

Can refinance increase the loan amount?

If my outstanding loan is $500k, can I refinance to 1milllion and above my TDSR (assuming I have another loan on another property) and use that $500k plus savings to buy another property thus avoiding TDSR?

This is called "home equity loan", not "refinance". Already did this in 2006 after receiving an email from the Bank.

However, one cannot purchase a home using a home equity loan, one can only use a home equity loan to refinance.

https://en.wikipedia.org/wiki/Home_equity_loan

Miss the good old days.

[Arcachon]

http://www.renotalk.com/forum/topic/...d-equity-loan/

[Kelonguni]

It was the quickest way to cool the hot market then.

Only SG uses such stringent financing criteria.

To make people unable to see upside and refrain from speculative overstretch. Preys on the human mind to be absorbed with worst case sscenario.

It was meant to be removed at the right time.

"fine-tuning" TDSR is step one
"fine-tuning" ABSD for citizen shall be the next

Refinancing should have never been subjected to TDSR in the 1st place. The outstanding loan is already taken out, whether it falls on this bank or the other bank, there is no change in the total loan book in the banking system. Making refinancing so difficult only serves to enrich the banks (since I dun need to do anything, just sit there and enjoy high Y4 spreads, cause I know you can't get out).

[Kelonguni]

The psychology of removal of TDSR for refinancing may seem a subtle one, but it will have far reaching impacts on various areas.

Without its removal, people with mortgage may be hesitant to spend on cars and credit purchases and subsequent investment property purchases. They may be unsure about income or their long term intentions to stay in a high paying job and be reluctant to take risks and change jobs.

They may worry about stuck with high rates if income drops or fall sick. But the concession means that the only consideration now is their savings if they lose their job.

The previous refinancing can only be up to 65 years old if one wishes to retire then (0 income) but even that is not relevant now for the group that managed to loan beyond. Even retire at 55 or 60 is more palatable now if manage to save enough.

[bargain hunter]

The psychology of removal of TDSR for refinancing may seem a subtle one, but it will have far reaching impacts on various areas.

Without its removal, people with mortgage may be hesitant to spend on cars and credit purchases and subsequent investment property purchases. They may be unsure about income or their long term intentions to stay in a high paying job and be reluctant to take risks and change jobs.

They may worry about stuck with high rates if income drops or fall sick. But the concession means that the only consideration now is their savings if they lose their job.

The previous refinancing can only be up to 65 years old if one wishes to retire then (0 income) but even that is not relevant now for the group that managed to loan beyond. Even retire at 55 or 60 is more palatable now if manage to save enough.

agree! money may also circulate around at least a bit more rather than everyone going defensive and start saving for whatever TDSR impact.

[bargain hunter]

"fine-tuning" TDSR is step one
"fine-tuning" ABSD for citizen shall be the next

Refinancing should have never been subjected to TDSR in the 1st place. The outstanding loan is already taken out, whether it falls on this bank or the other bank, there is no change in the total loan book in the banking system. Making refinancing so difficult only serves to enrich the banks (since I dun need to do anything, just sit there and enjoy high Y4 spreads, cause I know you can't get out).

it also dua some pple to kenna mortgagee sale in the last 3 years?

[Kelonguni]

It's a turnover effect for people who truly believe in Singapore properties or need to buy to get vested at decent prices from people who speculate purely for profits and don't really understand this market or really ever needed the property. Wise turnover.

it also dua some pple to kenna mortgagee sale in the last 3 years?

[richwang]

This is interesting:

http://www.mortgagewise.sg/3-ways-to-overcome-tdsr/