Banks have started lowering interest rates offered on housing loans to as low as 2.08 per cent. Thus, if you’re paying an interest rate of 3.5 per cent or more, it might make sense for you to refinance your housing loan to enjoy interest savings.

For example, if your outstanding loan is $500,000 and you’re currently paying 3.5 per cent interest with a remaining loan period of 20 years, the total interest savings for the next three years from refinancing can work out to $13,831.38. After factoring in the cost of refinancing, the net interest saving still works out to $13,331.38. Thus, by refinancing, you can be ‘richer’ by over $10,000.

Your browser may not support display of this image.Floating rate vs Sibor/SOR pegged packages: Each bank will usually set its own board rate and after deducting a ‘discount factor’, arrive at the floating (adjustable) interest rate charged to clients. The problem is that each bank will set its own board rate arbitrarily and there might be occasions when Sibor rates fall, and banks don’t reduce the interest rates charged on floating (adjustable) rate packages. Thus, in a bid to increase the transparency, some banks have recently introduced housing loan packages with interest rates pegged to Sibor or Swap Offer Rates (SOR).

The advantage of such packages is that as and when inter-bank offer rates move up or down, your interest rate would be adjusted as well – it would not be at the bank’s discretion. Currently, Sibor/SOR have fallen below 1.4 per cent and interest rates charged on such loans can be as low as 2.08 per cent.

With the US expected to continue cutting interest rates in the next few months, Sibor is expected to remain low or even fall further in the next six to 12 months. Thus, if consumers hold the view that interest rates are likely to fall, choosing a housing loan package pegged to Sibor would enable them to automatically enjoy lower interest rates as Sibor moves lower.

Beware: Fixed rate packages typically come with lock-in periods. Some banks recently also adjusted interest rates charged on their fixed rate packages downwards to an average of 2.58 per cent for the first three years. However, such packages come with a penalty period of three years. Thus, such packages might not be suitable for consumers who intend to sell their property within the next three years, as they are liable to a penalty fee.

Should you apply for a housing loan now for properties purchased on a deferred payment scheme? You might have purchased a property on a deferred payment scheme and only need to take a loan when the project gets its Temporary Occupation Permit (TOP), which might be in 2009 or 2010. Should you apply for a housing loan now?

By applying for a loan now, you eliminate the risk of loan rejection should there be any adverse change in your financial situation in future, for instance, a pay cut or job loss when the property is ready. You also eliminate the risk of banks granting a lower loan quantum should the property market turn and prices fall. To safeguard your interests, you can choose a loan package that allows you a free loan conversion so that you can switch to a better package should one be available nearer TOP.

Cash in on your property without selling it: With property prices having gone up in the past three years, you might now own a property whose value has doubled. In that case, your current debt-to-asset ratio might have fallen considerably.

For instance, say you bought a $1 million property three years ago and took an 80 per cent loan, or $800,000. Currently, the loan outstanding is about $750,000, while the current value of this property might have gone up to $2 million. This means your current debt-to-asset ratio is only 37.5 per cent.

How can you benefit from the rise in the property price without selling your property? You can consider taking an equity loan on the property. For instance, in the above example, subject to your credit score, banks might grant you an additional equity loan of up to $850,000. To be conservative, you can consider taking up a lower equity loan of, say, $450,000, bringing your debt-to-asset ratio to a comfortable 60 per cent. You can use the $450,000 equity loan granted by the bank to start a business, or even to invest in another property. The interest rate on equity loans in Singapore is very low and can be as low as 2.2 per cent currently.

Should you pay off or reduce your housing loan?: The Singapore government has projected the inflation rate in 2008 to be about 5 per cent. On the other hand, the interest rate on housing loans is about 2.2 per cent. Thus, we have a rare scenario of negative interest rates, that is, a person who takes a housing loan is actually ahead of someone who saves money in bank deposits because of the shrinkage of money from inflation.

On the other hand, interest rates on bank deposits have fallen to about 1.5 per cent. With inflation at 5 per cent, it means that a consumer is losing 3.5 per cent a year by putting money in bank deposits.

Instead of paying down your housing loan which charges low interest rates of less than 3 per cent, you can consider investing your cash in a stable investment that is not subject to large price fluctuations and offers higher returns than fixed deposits. One example is UK-traded endowments, which have a guaranteed cash value and generate annual returns of 6-8 per cent.

How to choose a suitable housing loan?: There are over 113 different housing loan packages available in Singapore at any one time. Each package has its own unique features, with its own pros and cons and different terms and conditions. Consumers might be confused by the wide array of choices. In the last few years, with the emergence of independent mortgage brokers in Singapore, home loan shopping and comparison have been made easier.

Basically, an independent mortgage broker who knows your requirements can help you zoom in on the most attractive home loan packages suitable to your needs. You typically do not have to pay for the service of a mortgage broker as banks pay them a fee.

In more advanced countries such as the US and Australia, people usually apply for home loans through a mortgage broker rather than go to the bank directly. In Singapore, many people are still unaware of the services and benefits of engaging a mortgage broker, but things are likely to change with public education and increasing awareness.

Dennis Ng is a Certified Financial Planner with 15 years of experience in bank lending. He co-founded an independent mortgage consultancy portal www.HousingLoanSG.com in 2003.

Political stance
Unlike the Indonesian government that gives priority to their fellow natives, the Singapore government is renowned for their emphasis on meritocracy. This ideology provides an equal chance to all and ensures fair competition.

Meritocracy in real life application means there is no quota to university entrance or application for business licenses because everyone is judged not based on race but on talent and diligence. In school or at work, the Indonesian Chinese community could maximize their potential through opportunities that may not have been available to them in Indonesia.

Clean and corruption-free
Many South East Asian countries suffer from dire consequences of corruption in both their political and corporate arenas. The case is starkly different in Singapore where our government adopts a harsh stance against every kind of corruption.

This leaves Singapore almost corruption-free as we score 4^th out 163 countries in the Transparency International Perceptions Index. Clean public and private sectors enhance efficiency and productivity throughout the island nation; as such quality of life for the Indonesian Chinese community is much higher.

Economic development
Poised as one of the powerful Asian Tigers, the Singapore economy has performed surprisingly well in the past 20 years. Even after the Asian Financial Crisis in 1997, this determined island state picked herself up relatively faster than any other city in the region.

This was due largely to the well-planned development routes by the local government that places huge importance on economic performance. As such, the Indonesian Chinese community has over the years, accumulated great faith in Singapore’s investment prospects.

Value of investments
Due to the limited land size of Singapore, property is often viewed to be extremely valuable and precious. In comparison with Indonesia where land is in abundance, property investments in Singapore are more lucrative with greater returns. This is especially true for prime districts where the crème de la crop developments are located.

Due to the openness of our condominium and private apartment markets, the increase in prices can occur swiftly in a few years, generating profits for investors. Recently, a surge in downtown property demand has in fact done so for the Indonesian Chinese community who prefer to live near Bukit Timah and Somerset.

Home away from home
Singapore is truly the home away from home for many Indonesian Chinese expatriates. They may start off treating this island as a place for business but most of them eventually move their entire families over.

This is because Singapore has a lot to offer in terms of standard of living, security and stability. Furthermore, our metropolitan culture means that these expatriates could easily enjoy Indonesian cuisine like beef noodle soup or a relaxing Javanese message in Orchard. So really, home is not that far away.

Summary: For Indonesian Chinese looking for new investments and living prospects, Singapore is the ideal location due to its political stability, economic strengths and equal platform for competition.

Location is critical, as we at Singapore Prime Districts understand. And Orchard Boulevard fulfills this criterion perfectly. Situated just next to the heart of Orchard Road, it has convenient access to the shopping belt, for starters. The Central Business District is just a 10 minute drive away, so you would never be late for work. You are also well-connected with the rest of the island through the Pan Island Expressway.

Despite staying in the midst of downtown, Orchard Boulevard maintains a quaint and serene atmosphere. The only buildings around are sophisticated private residences and 5 star hotels. Filled with lush greenery and the sweet sounds of chirping birds, it’s really a paradise unto itself.

So the area is great, but what about the condominiums? Rest assured, our professional agents have scouted Orchard Boulevard and they are impressed, to say the least. First on our list – the Boulevard Residences. Immensely luxurious and elegant, the high-end condominium is made up of 2 sleek towers linked with a sky bridge.

Paneled with full length glass windows, it provides a breathtaking bird’s eye view of the city below. The designers were also thoughtful enough to create units that either faces north or south to avoid the glare from our tropical weather. We also adore their sky terraces where you could enjoy a relaxing yoga session while the cooling breeze brushes against your skin. At Orchard Boulevard, exquisite and tasteful design is a given, not a bonus.

Yes, yes, we know you can’t wait to hear about the shopping. Living so near to Orchard Road, shopping is without a doubt, pretty darn good. Just beyond your doorstep, there’re high-end malls like Forum and Palais Renaissance which are stocked to the roof with big, international labels. Go crazy with the this season offerings from Dolce & Gabbana, Hugo Boss, Louis Vuitton and much more.

If that’s not enough for you, stroll further down and Takashimaya and Paragon come within sight. Hold your breath for Chanel, Tiffany’s, Armani and Miu Miu! To all you shopaholics out there, Orchard Boulevard is your sweet demise.

Of course, we at Singapore Prime Districts don’t simply recommend Orchard Boulevard for the shopping, good as it may be. This area is worth buying into because of its laid back lifestyle and exclusivity.

Imagine coming home from a hard day’s work without having to face rush hour traffic jam. Then going to 5-class Chinese dinner at Jiang Nan Chun, the signatory restaurant of Four Seasons Hotel. After dinner, enjoy a tangy cocktail in Hard Rock Café with good live music. Or take a slow walk in the tranquil neighborhood. This is what Orchard Boulevard is truly about – suburban lifestyle in an urban setting.

And what are you waiting for? Contact Keith at keith@singaporeprimedistricts.com to move into the elegant and luxurious Orchard Boulevard now!