THE current economic downturn has triggered a light bulb moment for POSB. In a first for the home loans market, the local bank has launched a mortgage, known as Home Ideal, which comes with an unemployment cash benefit.
Should the borrower lose his job, he will receive a cash payout of up to $600 over a maximum period of six months to cover the education of his child.
POSB is also throwing in a free one-year home contents protection benefit. This insurance package protects a borrower’s home and its contents against loss or damage from a fire. This payout is up to $20,000.
The loan comes with a seven-day return policy.
Response to the plan so far has been “encouraging”, said a POSB spokesperson. She did not disclose the take-up rate.
Home Ideal marks the latest package to join the fray in the competitive home loans market.
Just last month, HSBC launched a “first-in-market” home loan pegged to the Singapore Interbank Offer Rate (Sibor), offering a progressive discount until it reaches a zero-per-cent interest-rate spread.
United Overseas Bank (UOB) tied up with SingPost to offer its HDB home loans at selected post offices. Maybank offered $888 cashback for loan amounts of $888,000 and more for complete properties. This is subject to a clawback mechanism if the borrowers take out their loans after the lock-in period of three years.
The local scene has regularly seen lenders come up with innovative mortgages to win customers. In 1994, UOB launched HomePlus, a mortgage that allows borrows to earn the same interest rates in their deposit accounts. Borrowers can use the deposit interest earned to offset the interest of the mortgage or opt to keep funds in the deposit account. This product is still available today.
Source: Today, 23 April 2009