As part of the initiatives to help Singaporeans tide over cashflow in this difficult period, MAS, Banks and the Tax Authority have came together to assist individuals defer their obligation payment in the near term.
Home Mortgage Deferment
For banks, most of the deferment will apply up until Dec 2020 so that will help tide over working capital needs during these 7 to 8 months period.
Most banks offered 2 packages in the form of i.) Deferral of Principal Payment only or ii.) Deferral of both the Principal And Interest Payment. Interest accrued on the principal will still continue to be applied so what the banks essentially are helping out here is with the credit liquidity. This is vastly different initiatives than what we saw during the Gfc, when banks themselves are short of liquidity.
Interest arrears will be re-amortised when your loan repayment starts again in Jan 2021, so it is likely that the repayment sum will be larger than what you are paying today.
Personally, I have applied for this deferment myself as I find it a pretty good deal to conserve cash / cashflow in the midst of all the uncertainty. Even if you are not facing a cash crunch at this point, you can treat the extra cash (I am still receiving rental income for my case) as an emergency funds or warchest that you can plough into the market at this point.
Plus, it helps that we are in an era of low interest rate environment.
I believe if the situation gets worst from here and we go into a recession, MAS and banks are likely to extend further beyond this year, unless we get a liquidity crunch like what we experienced in gfc.
For all the links to the respective banks, you can find it here:
Standard Chartered Bank
If you are one of those people who’ve yet to refinance your mortgage, you may want to do so here. Loan rates are so low now that it is probably the best time to refinance or take out your home equity loan, if you wish to do so and qualify.
Individual Tax Deferment
Aside from mortgage deferment, I have also applied for the individual tax deferment that you can defer for the next 3 months.
This is a no brainer to me.
It is free interests and the application outcome is automatic and straightforward.
The amount is unlikely to be a significant breaker to me at this point but anything that I can delay at this point is a bonus.
The link is as follow:
Pending the outcome of these two deferment applications, it will likely determine the amount of warchest injection I can put into the market to use over the next few months.
At this level, I think the stock market for both the STI and Dow is attractive enough to enter if you have a mid to long term view and there are some interesting companies I want to put my money more aggressively. All the cash savings arising from the deferment will greatly help to boost that.
Thanks for reading.
If you like our articles, you may follow our Facebook Page here