Do I borrow in Australia or Singapore? **Updated May 2017

May 2017 - AU Mortgage News

Australia or Singapore banks

by David Moss

Do I borrow in Australia or Singapore? This is a question I get asked daily.

I recently spoke at an Australian property event (PropertyGuru Singapore) very much about this exact topic on the differences between the two banking systems when it comes to Aussie home lending.

Lets look at some key mortgage differences between both countries.

Australia based lenders:

The good….

  • Interest rates are at an all time low

  • Sophisticated mortgage products, Fixed & Variable rates

  • 100% offset accounts

  • Full internet banking

  • No TDSR assessment applied

  • Redraw easily available

  • Low fees

  • Lending still available to Aus Citizens and Aus PR’s

  • Cash out for refinances is possible

The not so good….

  • Lending assessment polices have tightened in 2017

Singapore based lenders:

The good….

  • Borrow in AUD or Multi currencies

  • Align the mortgage to your income you are paid in

The not so good…..

  • High fees- You’ll be paying an application fee, legal fee & valuation fee.

  • Full TDSR applied to assessment

  • Rigid assessment guidelines

  • Zero internet banking with Aus banks in SG

  • Age restrictions

  • Lower LVR’s

  • Restrictions on locations

  • The need to repatriate the loan when leaving SG

  • No offset facilities

  • No redraw

  • WBC Singapore no longer lending for Australia

  • NAB Singapore no longer lending for Australia after integration to OCBC

  • ANZ Singapore no longer lending for Australia after integration to DBS

  • DBS will only lend to Treasury status clients

It’s really a no brainer to say that in 2016 & 2017, more and more borrowers are opting for our Australian based banking partners. The perception Singapore banks  are cheaper is just not correct.

Now that rates between the two countries are similar, the need for sophisticated banking products, 100% offset facilities, low fees and higher lending ratios are simply more appealing.

I recently came across Aussie customers who had been dealing with a local Australian bank in Singapore purchasing a $2mil property in Sydney. They had been quoted some $2500 in banking fees made up of an establishment fee, valaution fee and legal fees. All were passed onto the customers from the bank. The  same transcation with an Australian based bank would’ve cost around $395 which covered everything. Rate wise, the Australian based bank would’ve also been cheaper and they could’ve borrowed 80% compared to the 60% that was on offer.

My suggestion to anyone considering borrowing in Singapore for their Aussie property is to way up all costs involved before committing…and if your broker only has Singapore options only,  it possibly means they’re not Australian licensed  (ASIC &  MFAA approved) OR they simply don’t have the expertise to explain the differences.

Understanding and comparing options from both banking systems ensures you get a deal that’s right for your circumstances. One things for certain, your own bank, regardless of where they’re based, wont be able to explain if another bank has a better deal.

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