Mortgage Loan I Equity Loan I Term Loan I Refinance
Equity Loan or Term Loan is basically taking mortgage loan from your bank secured by your property.
It is only applicable when your loan outstanding over the valuation of the property is below 80% after deducting your CPF contributions and Outstanding balance with the bank.
Customer take up a Equity Loan or Term Loan because they may want to use it to purchase something they desire or to invest the money because the interest rate of the housing loan is low, and they take advantage of it. (see below example of how the rich gets richer)
- Take up a $1million equity loan / term loan, pay 1% pa interest for the $1million.
- Invest the $1million into bonds or preference share that receives dividend of 4-5% pa.
- Nett gain 3-4% ~ $30,000 – $40,000 per year