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Move Overseas Mortgage to Singapore

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covers
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Move Overseas Mortgage to Singapore

Postby covers » Wed, 06 Apr 2016 4:10 pm

Hi,

We have recently moved to Singapore and we have a house with a mortgage in Sydney, we would like to move the Mortgage to Singapore for the lower rates.

All the banks say not a problem, but the devil is in the detail:

DBS = First you must deposit $200,000 to become a Treasures Member....Yeah Right!
UOB = Require $100,000 Hedge Fund (Just in Case)
ANZ = Almost double the local interest rate + Hedge Fund

Anybody out there actually moved a NZ or Aussie mortgage to a Singapore bank without being ripped off?

Please resist recommending a local broker. :)

Covers

RoastBeefBaron
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Re: Move Overseas Mortgage to Singapore

Postby RoastBeefBaron » Wed, 06 Apr 2016 6:58 pm

Try SMATS (Google it). One thing to note - in order to enjoy the lower interest rates, you'll need to borrow in SGD. The SGD is a relatively volatile currency and swings heavily affect SGD mortgages. Long story short, say you borrow 50% for an Aussie property. The loan is issued in SGD. If the AUD subsequently goes down, the value of the 50% owned by you decreases in SGD terms, so you'll need to top up the difference to get it back to a 50% loan. Thus, you need to have a wad of cash at the ready otherwise you're up the creek.
I'd also check the interest rate differences. They often work out to be negligible, and are again highly volatile. I also don't see the Aussie govt raising rates for a while yet.

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JR8
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Re: Move Overseas Mortgage to Singapore

Postby JR8 » Wed, 06 Apr 2016 7:00 pm

Hi Covers, welcome to the forum!

I suppose a question to ask is if lower rates are so simple to get why isn’t everyone doing it, a kind of x-border mortgage arbitrage? The apparent benefit is lower SGn rates but the cost? It reminds me of the question we sometimes see, ‘Why should I have a bank deposit in Singapore earning X%, when if I convert it and put it offshore into the Bank of Bongoland it’ll earn 4X%!?’.
In a perfectly liquid financial market you might suggest any benefit you gain via lower or higher interest% will be matched precisely by a respective gain or loss on the FX rate.

As the notes on the ‘DBS Treasures’ [‘scuse me while I figure out whether to laugh or chuck over that...]
A note before you invest
Overseas properties are subject to inherent foreign exchange risks. For instance, if your loan is in Singapore Dollar (SGD), and it weakens against the Sterling Pound (GBP) or Australian Dollar (AUD), you may have to top up the difference in cash.
https://www.dbs.com.sg/treasures/loans/ ... -financing

And you have no control over where that FX rate will go, so it’s a material risk. But the %rate differential forewarns you that bet is not going to go your way...

The other thing is these x-border mortgages are usually pitched at 2nd home owners; wealthier people. That’s why you see them connected with $/premium banking services. And what’s the reference to ‘Hedge fund’? Is that x-selling investment products, or a compulsory hedge on your FX exposure? You could try and go through a worked example including all costs and see how it stacks up vs your current loan.
'Do it or do not do it: You will regret both' - Kierkegaard

PNGMK
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Re: Move Overseas Mortgage to Singapore

Postby PNGMK » Wed, 06 Apr 2016 8:25 pm

I use ANZ Singapore. The rate isn't as good as my local Maybank rate but a damn site better than any AUD rate. I've weathered the exchange rate swings as on the whole I am so much better off.
I have gay, black, Asian friends and then JR8.

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Strong Eagle
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Re: Move Overseas Mortgage to Singapore

Postby Strong Eagle » Wed, 06 Apr 2016 10:11 pm

covers wrote:Hi,

We have recently moved to Singapore and we have a house with a mortgage in Sydney, we would like to move the Mortgage to Singapore for the lower rates.

All the banks say not a problem, but the devil is in the detail:

DBS = First you must deposit $200,000 to become a Treasures Member....Yeah Right!
UOB = Require $100,000 Hedge Fund (Just in Case)
ANZ = Almost double the local interest rate + Hedge Fund

Anybody out there actually moved a NZ or Aussie mortgage to a Singapore bank without being ripped off?

Please resist recommending a local broker. :)

Covers


Just make damn sure to hedge your currency exchange risk. I knew a fellow who did just what you are thinking about... then the Australian dollar tanked and he had to put up a very large sum of money with the SG bank in order to be in compliance with the loan percentages (his was 80 percent of value I think).

Yes, over the long haul it doesn't matter... you are paying off your loan... but you better be able to withstand cash calls.

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Re: Move Overseas Mortgage to Singapore

Postby PNGMK » Thu, 07 Apr 2016 8:13 am

SE has a point. There's not much point doing this unless your debt ratio is 60% or lower otherwise everytime the AUD blips you'll get a margin call.
I have gay, black, Asian friends and then JR8.

covers
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Re: Move Overseas Mortgage to Singapore

Postby covers » Thu, 07 Apr 2016 11:48 am

Appreciate the feedback. I'm not particularly worried about the AUD dropping as this has already happened against the SGD.
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PNGMK
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Re: Move Overseas Mortgage to Singapore

Postby PNGMK » Thu, 07 Apr 2016 11:58 am

No guarantee it won't fall further. There's a serious problem coming with AUD housing mortgages - if housing prices fall off a cliff the bank may insist on revaluing. However I am also in this boat and I bought in when the AUD was SGD1.17....
I have gay, black, Asian friends and then JR8.

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Re: Move Overseas Mortgage to Singapore

Postby Strong Eagle » Thu, 07 Apr 2016 12:01 pm

covers wrote:Appreciate the feedback. I'm not particularly worried about the AUD dropping as this has already happened against the SGD.


Yeh... that's what all those other folks thought, too. If you don't want to ferk yourself royally, you'll take the steps to avoid currency issues, even if you're not particularly worried.

Unless of course, you know a lot more about China and the AU commodities trade than most people do.

RoastBeefBaron
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Re: RE: Re: Move Overseas Mortgage to Singapore

Postby RoastBeefBaron » Thu, 07 Apr 2016 12:02 pm

PNGMK wrote:No guarantee it won't fall further. There's a serious problem coming with AUD housing mortgages - if housing prices fall off a cliff the bank may insist on revaluing. However I am also in this boat and I bought in when the AUD was SGD1.17....

I guess that worked out well? Or?

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Re: RE: Re: Move Overseas Mortgage to Singapore

Postby PNGMK » Thu, 07 Apr 2016 12:05 pm

RoastBeefBaron wrote:
PNGMK wrote:No guarantee it won't fall further. There's a serious problem coming with AUD housing mortgages - if housing prices fall off a cliff the bank may insist on revaluing. However I am also in this boat and I bought in when the AUD was SGD1.17....

I guess that worked out well? Or?

Sent from my SM-G900F using Tapatalk


Considering my payments dropped from AUD$4000+ per month to around SGD$2000 pm frankly it hasn't bothered me at all. I pull in over AUD$2000 pm rent so they are paying themselves off. Also I have funds on long term deposit which increased my equity to debt ratio so no margin calls ever.... the props will be paid off in about 8 years.
I have gay, black, Asian friends and then JR8.

covers
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Re: Move Overseas Mortgage to Singapore

Postby covers » Thu, 07 Apr 2016 2:25 pm

Appreciate people views on the Forex, Housing Market and Commodity risks.

However I'm still looking for the best bank in Singapore to leverage this opportunity! :)

RoastBeefBaron
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Re: RE: Re: Move Overseas Mortgage to Singapore

Postby RoastBeefBaron » Thu, 07 Apr 2016 2:26 pm

covers wrote:Appreciate people views on the Forex, Housing Market and Commodity risks.

However I'm still looking for the best bank in Singapore to leverage this opportunity! :)

You've already been given a few suggestions...

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Re: RE: Re: Move Overseas Mortgage to Singapore

Postby PNGMK » Thu, 07 Apr 2016 2:31 pm

RoastBeefBaron wrote:
covers wrote:Appreciate people views on the Forex, Housing Market and Commodity risks.

However I'm still looking for the best bank in Singapore to leverage this opportunity! :)

You've already been given a few suggestions...

Sent from my SM-G900F using Tapatalk


CBA/NAB/ANZ do this here AFAIK.
SBI and some other non resident banks do this.
The locals you've explored.
If the amount is significant and well secured you may consider a broker who can match you to an investor looking for a better return on SGD than he is currently getting in a bank account.
I have gay, black, Asian friends and then JR8.


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