| By: Zeng Han Jun, CPCG, Singapore
The most straight forward answer to the above question is: Do your prepayment when you have the money! However, you should not just do your prepayment as and when you like. It is best to draft out a plan for prepayments.
Prioritize your debts
At some point of your life, it is possible that you might have different types of debts. They can range from the auto loan for that Alfa Romeo, student loan for that MBA, personal loan for that latest financial system and so on. So you got a housing loan too, and you are planning a prepayment for it. Now should you? Decide which of your loan is good or bad. Decide which loan has the most pressurizing effect on you. From there, work out a plan and decide which of these loans gets paid off first. After that, see if you have enough money for a prepayment.
Did you save?
Remember; keep a portion of your money for savings. If you have no private bankers or financial consultants to attend to you, you can try putting your money into the CPF account. Doing a prepayment but not saving can be a bad idea. You never know what might happen in the long run and there may be a sudden need for some extra cash. You may not be able to apply for that equity loan or overdraft as and when you pleased. Approval depends on financial profile and the type of property that you possess.
Draft out that prepayment letter clearly
Most banks require you to give a one months notice prior to prepayment. Remember to draft out the letter as clearly as possible and keep that copy as a template on your hard drive. You will be using it often. Remember to state that the prepayment is made towards the principal. Do not wait until prepayment has been done and the bank uses it for next months payment instead.
Prepayment definitely allows you to build up equities in your house quickly. It is best that you own your house fully before you retire as it can give you a peace of mind. This is especially so for government civil service staffs. Doing so allows you to fully enjoy your retirement period without having to worry about the next payment. However, do take note that each situation is unique and doing a prepayment may not be the correct decision for everyone. It is best that you talk to your mortgage advisor on your unique financial situation.
Zeng Han Jun is an EzineArticles.com Expert Author, Lensmaster and the Business Financial Manager of Chan & Partners Consulting Group, based in Singapore. He actively contributes articles about business and finance on a weekly basis, so as to share his knowledge with the financial community. He has been directly involved and plays a crucial role in marketing and sales of several businesses in CPCG. He also provides advice on various kinds of mortgages and construction financing for private individuals. Till date, he has assisted countless clients in securing mortgages for investment, commercial and residential properties
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