{"id":10457,"date":"2022-10-25T07:48:02","date_gmt":"2022-10-25T07:48:02","guid":{"rendered":"https:\/\/chettioan.com\/?p=10457"},"modified":"2023-01-26T06:48:45","modified_gmt":"2023-01-26T06:48:45","slug":"heres-how-you-can-get-cash-out-of-your-private","status":"publish","type":"post","link":"https:\/\/chettioan.com\/heres-how-you-can-get-cash-out-of-your-private-10457.html","title":{"rendered":"Here\u2019s how you can get cash out of your private property without selling it"},"content":{"rendered":"<p>If you&rsquo;re a card player, you know what it means to &ldquo;cash out.&rdquo; It&rsquo;s when you collect your winnings and exit the game. OK, so maybe there&rsquo;s a bit more to it than that. Cashing out usually comes after your pride has been shattered and your wallet has been drained completely.<\/p>\n<p>Thankfully, &ldquo;cash-out&rdquo; refinancing isn&rsquo;t as traumatic as having to cash out from a Resorts World Sentosa (RWS) poker table. In fact, cash-out refinancing can provide you with thousands of dollars that you already have safely locked up! Not in your bank, but in your most valuable asset &ndash; your home.<\/p>\n<h4>What Is Cash-Out Refinancing?<\/h4>\n<p>In short, cash-out refinancing involves remortgaging your property with an additional loan. These &ldquo;cash-out&rdquo; funds can then be used for purchases ranging from financial emergencies to luxury items and holidays. If you own an HDB flat, unfortunately you can&rsquo;t cash-out refinance.<\/p>\n<p>If you own a private property and are still making loan repayments on it, you can tap into your home&rsquo;s equity with cash-out refinancing.<\/p>\n<p>A great thing about cash-out refinancing is that it&rsquo;s the cheapest form of financing available because you&rsquo;re using your property as collateral.<\/p>\n<p>So how good are the interest rates?<\/p>\n<p>Consider that renovation loan rates are quite low at 4-5%. Cash-out refinancing rates on the other hand are at about 1%+.<\/p>\n<h4>Reasons for Cash-Out Refinancing<\/h4>\n<p>Cash-out refinancing can be an easy way to get the money you need to make purchases that&rsquo;ll either grow your cash-out funds (&ldquo;growing&rdquo; your money with a trip to MBS is NOT a good reason), or cover emergency expenses.<\/p>\n<p>There are plenty of good reasons to tap into the equity of your home with cash-out refinancing. Here are a few to consider:<\/p>\n<ul>\n<li>Improve your home with new renovations and furnishings<\/li>\n<li>Free up capital for investment (property, stocks, bonds, etc.)<\/li>\n<li>Free up capital to start a business or expand your existing business<\/li>\n<li>Consolidate debt (auto loans, personal loans, student loans, credit cards)<\/li>\n<li>Finance the tuition fees of family members<\/li>\n<li>Pay for medical expenses<\/li>\n<li>Purchase a car<\/li>\n<\/ul>\n<p>You can also use cash-out refinancing to free up enough money to take a holiday in Bhutan or purchase that $20,000 luxury bag you&rsquo;ve been drooling over.<\/p>\n<p>It&rsquo;s not wrong to use some your cash-out funds for &ldquo;personal&rdquo; spending, but if that&rsquo;s all you&rsquo;re going to use it on, you&rsquo;re better off taking a personal loan for a smaller amount. That way you&rsquo;re not tempted to blow tens of thousands of dollars on items you&rsquo;ll regret purchasing.<\/p>\n<h4>How Much Can I Get With Cash-Out Refinancing?<\/h4>\n<p>Cash-out financing works a bit differently in Singapore than in other nations, primarily because Central Provident Fund (CPF) contributions have to be factored into the equation.<\/p>\n<p>Let&rsquo;s say you owe $300,000 on a home that&rsquo;s now worth $900,000, and you&rsquo;ve used $100,000 in CPF towards your home loan repayments.<\/p>\n<p>Here&rsquo;s how your cash-out refinancing deal will look like:<\/p>\n<p>A (60-80% of the property&rsquo;s market value)<\/p>\n<p>&ndash; B (Outstanding Loan Amount)<\/p>\n<p>&ndash; C (CPF used for property purchase)<\/p>\n<p>= Total Cash-Out Funds Available<\/p>\n<p>Let&rsquo;s assume that the bank agrees to lend you 70% based on your home&rsquo;s value of $900,000. 70% of your current home value ($630,000), minus your outstanding loan ($300,000), minus your CPF usage of ($100,000) equals a cash-out maximum of $230,000.<\/p>\n<p>Here&rsquo;s what the calculation looks like:<\/p>\n<p>I know you&rsquo;re probably wondering how the banks determine the percentage of your property&rsquo;s market value for cash-out refinancing.<\/p>\n<p>Here&rsquo;s how they do it:<\/p>\n<ul>\n<li>If you don&rsquo;t have any other housing loans on other properties, then the bank will lend you up to 80% of your property&rsquo;s current market value.<\/li>\n<li>If you have other existing housing loans on other properties, the bank will only lend you a maximum of up to 60%.<\/li>\n<\/ul>\n<h4>What to Consider Before Cash-Out Refinancing<\/h4>\n<p>Cash-out refinancing isn&rsquo;t without terms and fees &ndash; it&rsquo;s a loan after all. There are many things to consider before applying for cash-out refinancing, especially when it comes to the planning how much you want to borrow and how long you need to pay it off.<\/p>\n<p>Here are the biggest things to consider before you cash-out:<\/p>\n<ul>\n<li>Your maximum loan tenure is 75 years minus your current age, minus the number of years you&rsquo;ve spend servicing the loan (ex. 75-45-10= loan tenure of 20 years).<\/li>\n<li>You&rsquo;ll need to plan your repayment timeline (ex. you use cash-out refinancing to expand your business, you&rsquo;ll need to determine how many you need to pay it back, whether it&rsquo;s 5 or 10 years based on your projected ROI).<\/li>\n<li>You&rsquo;ll need to keep in mind that it can take 2-3 months for your cash-out refinancing deal to fall through, as it&rsquo;s not like taking out a quick personal loan.<\/li>\n<li>You&rsquo;ll need to pay for the legal and valuation fees, which can cost up to $3,000.<\/li>\n<li>You&rsquo;ll need to consider your cash-out amount carefully (ex. making sure you take enough money the first time, otherwise you&rsquo;ll need to pay legal fees again in the future when you need to cash-out for more money).<\/li>\n<li>You can only use cash for your loan repayment, as CPF funds aren&rsquo;t allowed to be used.<\/li>\n<\/ul>\n<p>Don&rsquo;t worry, applying for cash-out refinancing isn&rsquo;t that scary, especially when you have experienced professionals guiding you through the process for free. Visit MoneySmart to get free expert advice on finding the best possible cash-out refinancing deal possible.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you&rsquo;re a card player, you know what it means to &ldquo;cash out.&rdquo; It&rsquo;s when you collect your winnings and exit the game. OK, so maybe there&rsquo;s a&#8230;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v19.7.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Here\u2019s how you can get cash out of your private property without selling it - chettioan.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/chettioan.com\/heres-how-you-can-get-cash-out-of-your-private-10457.html\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Here\u2019s how you can get cash out of your private property without selling it - chettioan.com\" \/>\n<meta property=\"og:description\" content=\"If you&rsquo;re a card player, you know what it means to &ldquo;cash out.&rdquo; It&rsquo;s when you collect your winnings and exit the game. 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