A simple story of my home mortgage

 

Because of the politically charged atmosphere, I've decided to take a break from the YouTube videos to focus on this blog instead, where I will write about my home mortgage.

As it stands, I have a home mortgage of about $520,000 over the EC I bought a decade ago, the mortgage is paid using my CPF contributions and dividends I receive from my portfolio. It has always been a pleasure paying for my mortgage as I watch my home equity grow. Also, not using my equity portfolio to repay the home loan feels like leveraging my dividend portfolio. 

During COVID-19, the bank offered me a six-month break from mortgage payments, but fearing other events in the future, I stopped paying for the principal but kept paying the loan interest. When SIBOR became SORA, I took the chance to switch to a fixed-rate loan at a promotional price and managed to free up some cash flow for myself as my business turned terrible. It was still tough to feed about $3,000+ into a mortgage as interest rates have increased, so a reduction to $2,700 was a lifesaver. 

So this year was a year of a lot of inconveniences. Last time on my blog, I wrote about fiscal marksmanship as I replenished my CPF-MA after my mum's hospitalisation, thinking that it was the right thing to do.

So recently, I had a new but less unpleasant surprise. 

My mortgage came up for repricing, and the bank is offering an even lower rate from 3.65% to 2.45% for the next two years, followed by SORA+0.7%.

But there's a catch—I need to contribute 2% of the remaining loan quantum, which is about $15,200. 

The loan was attractive as it could reduce my monthly burden, so I took a hit by paying this sum from my cash reserves. If you think about it, it's just another event like a medical emergency, so I have to rely on my dividends this quarter to recover from another drawdown. I'm okay with it because I can catch up with the loan moratorium I took years ago. My only regret is that I can't buy more stocks over the next 3 months as I refill my cash reserves.

This is my first repricing experience, so I'm unaware that banks customarily seek a small repayment before they are willing to process one. I hope readers will consider keeping about 2% of their loan quantum as part of their emergency funds if they get an offer from their bank that they can't refuse.

There's another interesting point in this story. The bank asked me to apply for a credit card to waive a $200 repricing fee. I went through the application process but was rejected by the bank. I earned enough during the past two years, and the bank clarified that the reasons for the failed application would never be shared with me. 

Is it my age?

Or could I always pay my credit card expenses on the dot every month, so I'm not a good customer?

This will remain a mystery to me forever. 

YouTube videos will return next week.