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SINGAPORE AND BANK LOAN DEFERMENT RELIEF PLANS DURING THE COVID-19 CRISIS
As the world battles the poisonous arrow of coronavirus and its associated sickness, COVID-19, the economies of many nations and, of course, the global economy have been hugely affected. Employees are getting laid off every day. Customers are adjusting the spending pattern, household consumption budgets stricken, subscriptions halted, and sales are being canceled. Borrowers, especially those paying with mortgages, have expressed their expected fear. These people fear they could be thrown in deeper debts as millions have lost their source of income, and retirees watch their retirement savings plunge further. It's indeed a sad moment for both the developed and developing countries of the world.
Fortunately, however, many financial institutions and banks aren't foreclosing or taking over their customers' assets to cover their loss. Instead, they have announced timely and life-saving bank loan deferment relief packages for their customers. As a result, banking policies are altered, their products changed, and customer-friendly loan repayment plans are rolled out.
Many banks and other financial institutions are providing much greater financial assistance and mortgage leniency to the customers seriously affected by the pandemic. These plans include but not limited to extending terms, waiving fees, loan deferments and repayments. But while these packages are geared towards creating a huge relief, a lot of borrowers are still confused since you can't just assume you are qualified for any of the relief plans - notably, the loan deferment plan. The good news is that this article seeks to clarify any assumption or confusion as we are committed to keeping you updated about the real estate and mortgage industry in Singapore. Read and share.
SINGAPORE AND BANK LOAN DEFERMENT RELIEF PLANS DURING THE COVID-19 CRISIS
From the Raffles Place station to the city-bound Mass Rapid Transit (MRT), the streets are empty. The circuit breaker mode is live in Singapore. With every place and business shut down, the Ministry of Health reported about 1,375 people have been infected in Singapore as of Wednesday, April 8th, 2020.
As this pandemic has its toils on the Singapore economy, many banks in the country have scrambled to provide relief for Singaporeans whose businesses, jobs, and lives have been upended by the global crisis. This means that borrowers whose businesses depend on bank loans and homeowners with huge mortgage repayments risk falling into huge debts as the nation's economy takes a sharp dive.
As a result, Singapore's central bank announced the apex bank's decision to provide loan relief plans for companies and individuals as one of the palliative measures to improve the well-being of the citizens. For instance, major banks propose helping people whose finances are impacted by the COVID-19 outbreak by deferring their monthly mortgage repayment until December 31st, 2020. However, this comes in two phases.
These are:
a. a full monthly repayment that covers both principal and interest, BUT the interest continues to accumulate during the period
b. While the interest is only being repaid, banks will defer the repayment of the principal portion of the borrower's monthly installment.
It's worth mentioning that these plans aren't only for customers with mortgage but also those with a personal line of loans or credit and other people with unsecured credit facilities.
Home Owners can now choose to defer their home loans for up to 9 months. The good thing is that this will not have any impact on the home owners’ credit bureau records as this is a government initiative. However, do note that interest will be accrued on the principal that is deferred. Here’s some reasons for taking up this deferment relief package:
- To free up cash for the next 9 months
- With the excess cash, you can leave it for rainy days or reinvest in any opportunity in time to come.
- Those with investment properties renting out would in return have more positive cash flow instead!
With the above, should you take up the Home Loan Deferment Relief Package or refinance your home loan instead?
Contact Mortgage Consultancy for an unbiased advice now!
We are here to help you stay updated and informed during this crisis.
+65 8556 5271
https://www.mortgageconsultancy.com.sg