Citibank Refinancing Loans
(Product Review)

Product Review

Citibank is an innovative financial institution that is a major participant in Singapore’s lending industry. This bank does not provide low-interest loans. However, its starting rate is affordable and ideal for individuals with a preference for frequent refinancing. It also offers prospective customers reasonable interest rates on functioning savings accounts which can be used to refund home loans.

Citibank has a penchant for promoting fair introductory rates that tends to significantly increase after a few years. This makes the average borrower describe its total loan cost as expensive. Whereas its competitors promote attractive introductory rates and affordable total loan costs. As a rule, borrowers regularly change their home loan interest rates. So, you are advised to examine current interest rates before choosing a convenient mortgage plan.

Citibank is preferred for its low-cost beginning rates by individuals willing to renew their housing loans every few years. In addition, the bank offers more moderate rates for CITIGOLD customers and prospective clients requiring loans above S$500,000. Citibank has a splendid feature in its home lending plan which is the interest-offset account. It allows loan-takers to deposit and save 50% of the home loan’s interest rate in a registered Citibank savings account. Thus enabling these clients to quickly refund their loans through the consistent yield from their savings account.

Citibank associates standard service charges with its home loans. These include partial refund penalties, full recovery fees and termination charges. However, the recovery and termination charges do not apply to its valued CITIGOLD clients.

Applicable Fees

Citibank demands service charges on all its home loans including partial reimbursement fees, full reclaiming prices and termination penalties. However, these charges do not apply to esteemed CITIGOLD clients. The table below shows the full details of fees pegged with Citibank’s standard home loan plans.

Citibank Refinancing Loans

Due to the nature of the market, prices tend to climb up the charts and later fall. So, a thorough analysis of the market should be used to determine the movement of rates in the next few years and its impact on your loan cost. Your analysis will determine if a fixed or floating rate will be appropriate for your refinancing plan. Note that it is not necessary to consider a longer period because you can refinance your loan at the end of your lock-in period.

When are Floating Interest Rates Applicable?

Citibank recommends that you should use a floating rate for your refinance program when the market is relatively stable or declining. Floating charges are generally cheaper than fixed ones because banks are willing to offer low rates in the short term to gain your loyalty and demand higher rates when the market interest rates grow. While fixed rates are slightly higher because banks demand premium service fees for such loans.

When are Fixed interest rates Applicable?

When overall interest rates are rising, it is generally advisable to refinance with a fixed rate rather than a floating rate. Although fixed rates are a bit higher than floating rates, they provide borrowers with an opportunity to save if market rates rise significantly. For example, imagine 2 individuals who respectively chose a fixed rate of 1.5% for three years and the option of refinancing at a floating rate beginning at 1%. If market interest rates rise soon after they refinance, the floating rate could end up being 2% to 3%, while the fixed rate would remain at 1.5%. While these may not seem very significant, this could result in a difference of S$5,000 in annual interest.

When requesting a new refinance plan for your home loan, lenders often inquire about your current loan’s interest rate and offer you a preferred interest rate to win and maintain your loyalty. This is great for homeowners who can refinance their current loan packages and thereby reduce their monthly payments and total loan interest rate. It is necessary to be aware that most banks in Singapore, demand a loan balance of at least S$100,000 ( covering 5 years). However, this rule can be adjusted, so visit our competent mortgage broker before ruling out refinancing.

With lower interest rates, you will enjoy better and lower monthly payments. If you choose to not refinance your existing mortgage plans, your interest rate will likely always increase leading to higher monthly installments and expensive total interest costs.