I’m Michelle Martin and today my mission is to help you figure out how you can pick the best mortgage loan for yourself. If you bought a home, you know that it’s sometimes not easy picking the right loan.

A homebuyers survey in February 2019 by personal finance company Bankrate said nearly two-thirds of millennial homeowners regret their purchase, in part because of excessive, massive mortgage payments.

So buying a home is one of the biggest financial decisions you’ll make, and today I’ve invited Mortgage Master in. They’re going to help us get the best mortgage deals, help us understand for to figure out which deals are catered to our specific needs and wants. Our next guest believes that a homeowner typically conducts 10 hours of research, assesses 15 banks, with each touting to provide the best offering. They then spend 2 hours on paperwork, but still ends up with buyer’s remorse! Welcome to Money and Me, David Baey!

David: Hi, good morning Michelle.

Michelle: Good to have you here! David is co-founder and chief executive of Mortgage Master. First up, just about 13 hours ago, David, news broke that Mortgage Master has raised over $520,000 in an oversubscribed seed round. You outperformed your initial target of $400,000. Congratulations!

David: Thank you.

Michelle: How are you going to be using the money?

David: Mainly into investing in technology, so that we can build better algorithms to allow a better process flow and user journey for our consumers.

What is Mortgage Master?

Michelle: What is Mortgage Master, for the listener out there?

David: Mortgage Master is a mortgage brokerage. What we do is find the best rate, tailored to the needs of the customers. What we always want to do for our customers is add value to their mortgage and inform them so they can make the best educated decisions, rather than take something they may not understand fully.

Michelle: If you’re investing in tech right now, is it personalised human service that one gets at Mortgage Master? Somebody walking you through the numbers?

David: Yes. The world right now is very focused on technology-driven services. But when it comes to things like mortgage or insurance, the biggest personal finance products that you get, I believe most people want a human being to guide them, regardless. We have a marriage of both worlds, and we try to give them the best.

Michelle: So, you do use tech as well. How does that fit in with what you offer the consumer?

David: Mainly, tech will help us do the calculations better, as well as allow us to filter what people want. With more data collected, we would then be able to shorten the time for consultants to ask the right questions to find out your needs and wants. We will have a better idea of that, even before we speak with you. That will shorten the whole process, making it an easier, seamless journey.

Michelle: That is very clever!

How is Mortgage Master solving problems in Singapore?

Michelle: How and what are some of the major problems that you are hearing Singaporeans bring to you when it comes to their mortgages? How does Mortgage Master help solve these problems?

David: Typically bank loans are low for the first two or three years, and they would move to a very high rate after that. Most Singaporeans don’t know, until they receive a letter from the bank, take a look and realise you’ve suddenly, from 2 per cent, jumped to 3 per cent. For a $500,000 loan, that’s $5,000 a year wasted! For those with young families, or anyone at all, $5,000 makes a significant difference. And that’s just for a $500,000. There are 1 million-dollar loans, 2 million-dollar loans…

Michelle: And you can save just by doing the paperwork and the research and switching out and realising when your lock-in period ends. I’ll share my own experience as a homeowner, a young homeowner, and allergic to paperwork, and thinking that my bank was the best because they offered me such a great preferential rate to start with. I ended up paying 3.4 per cent for the longest time and not even realising it! And then when I did, I decided to look around, and I didn’t even realise there were mortgage brokers in existence, and you say that’s quite common.

David: About 80 per cent of Singaporeans don’t know that mortgage brokers exist. What we want to achieve is to build a system to give you timely reminders. Even when it’s not time for you to refinance, you would get an email or an SMS saying, “Your interest rate is low, and that’s great, when it’s time (to refinance) we will remind you.” We would do the reminding.

Michelle: That’s great! Like a concierge service! What are some other problems that you’re attempting to solve?

David: Creating awareness for mortgage brokering.

About 80 per cent of Singaporeans don’t know that mortgage brokers exist.

David: Mortgage Master wants everyone to understand that there’s more than one choice when it comes to getting a home loan or refinancing. Most people think that you can only stay in your current rate, or refinance. In the market, most people don’t tell you there’s an additional option called repricing, because mortgage brokers do not earn if you reprice.

But our values at Mortgage Master is to always tell you the truth, do the mathematics for you, and if you have a better deal if you reprice, we will tell you that. “We don’t need to take your business today but do it the better way.”

Michelle: What’s repricing?

David: Assume you’re with Bank A right now, on your old rate. If you go to Bank B, it’s called refinancing – you take your loan from one bank to another. Repricing means staying at Bank A but changing the pricing of your package to a better one.

Michelle: My old bank is going to offer me a better interest rate, compared to my old one, based on the new amount that I have. Why isn’t that just refinancing with the bank?

David: Refinancing is moving from one bank to another so there’s legal paperwork to be done.

Michelle: So, you can actually stay with your provider – most people do that, don’t they?

David: No! They stay with their provider without repricing. For example, let’s say you got to 3.4 per cent. If you had stayed with Bank A, maybe they’ll offer you 2 per cent, but for refinancing you can get 1.8 per cent. It’s then our job to inform you that there’s a cost to repricing – there’s an admin fee of $500 to $1,000, refinancing is free, you get a lower interest rate. Your savings difference now – it’s not fair to compare 3.4 to 1.8 per cent, so we compare 2 per cent to 1.8 per cent – and tell you, you save $3,000 a year, this is the hassle you have to go through, you decide what you want to do.

Michelle: Love it! I love the fact that somebody’s done the maths for you and is walking you through the options. The big point is, people wonder: Are you pushing certain packages because you’re making nice with the banks and getting a cut back from the banks?

David: Firstly, we are not motivated by money, but we are motivated by building the relationship. We will tell you to reprice if that makes more sense for you. And again, repricing doesn’t give us any revenue at all. However, if it’s time for you to go to a new bank, or if you’re buying a new house, so you’re choosing between all the banks, all the banks pay us the same fee throughout. There’s no need to be biased. The system is unbiased by itself.

When is a good time to refinance in Singapore?

Michelle: David Baey is co-founder and chief executive officer of Mortgage Master. They’re mortgage brokers and they’re there to help you figure out what is the best deal for you in existence. Because there are new deals that come out all the time, interest rates adjust according to what the Fed does, so what’s the market like now for interest rates, David? Is it a good time to refinance?

David: If your interest rates are high, I would say 2.4 is high today, the market rates I can get 1.8 to 1.9 for fixed rates, 1.9 to 2 per cent for floating rates. Because, like you said, the Fed, the global economy, causes Singapore’s interest rate trends to move, we are actually looking at a downtrend today. About 6 to 9 months ago, fixed rates were at 2.5 per cent, and today you can get it at 1.8.

Michelle: Wow! That’s a big difference! Big! Can you share some examples of how you’ve delivered unbiased advice? And so far, is it $2 billion of home loans you’ve advised on?

David: Through my career, probably more? Haha. But yes, at Mortgage Master, we’ve done $2 billion in advising.

Michelle: Okay, do you want to share how you deliver unbiased advice? Some examples, maybe?

David: Just to take you through a customer journey, for new purchase or refinancing, what Mortgage Master does is, firstly, find out the needs and wants of each customer. Because everyone has a preference – different risk appetites.

Michelle: Yep, some people like it fixed, they don’t want any variation, they don’t understand what the SOR is, they don’t understand what SIBOR is either.

David: And some people want to take more risk. Do they believe that interest rates are going to continue dropping over the next 5 years, which is the trend? However, as we have no crystal ball, we can’t predict the future, this is where our job comes into play. We advise and we find a rate tailored for everyone.

There is a mortgage rate for everybody.

David: Let’s say we get an aunty. We tell the aunty, if you take fixed rates, and floating rates drop, I fear losing out. That’s kiasu. But if you take floating rates and SIBOR rises so much, I’m afraid I’ll gett in trouble. That’s kiasee. So if you’re both kiasu and kiasee, there’s a rate for you called fixed-deposit linked rates, which is more stable than the SIBOR, yet at the same time, if it rises, it rises slower than SIBOR. There’s a rate tailored for everybody.

Listen to the rest of the interview with Michelle Martin!