Today we look at the Cash-Out Refinancing, and how it helps you get money out of your house. Cash-out refinancing is also called a reverse mortgage, or just cash-out refi for short. In effect, a cash-out refi allows you to take out a bank loan using your house as collateral. In Singapore, this is only possible for private properties, not HDB properties. Say you bought a condo for $500,000 back in 1990. Today, you have finished paying off the entire loan, and the condo’s value has appreciated to $1.2 million. You could borrow, say, half the value of your property ($600,000), and put up your condo as collateral for the loan. Since this is a secured loan, the interest rate for the cash-out refi is very low; typically around 1.6 per cent per annum. In this way, you’re able to convert the value of your property into cash without selling it. The interest rate of 1.6 per cent per annum is also very low – it’s even lower than your CPF interest rate of 2.5 per cent.... Continue Reading