“Why has the notice period shorten from 3 months to 2 months?”
- So you decides to redeem or refinance your property, you went to the bank, and the banker tells you that they need you to appoint a law firm to serve a 2 months notice to them down from the usual 3 months.
- What is this redemption notice about? – This is to forewarn the bank that you will be redeeming/refinancing the loan.
- How long is the period, and when did it all started? – it used to be 3 months, but With effect from 1 July 2021 it has been shorten to 2 months, this is in line with the industry’s initiative to shorten the property loan redemption notice period.
- What kind of loan does it applies to? – the shorten period applies for both Residential and Commercial Property Loan.
- Which are the participating banks (including but not limited to):
– Bank of China
- Why does bank need 2 months notice? – The bank need to retrieve your records and compile your outstanding loan at this moment in time, at the end of the 2 months, the bank will need to give u a final redemption figure and also return you the title deed.
- Is it always 2 months notice? can it be shorter? is there enough time? – Typically a law firm will take about 2 months from serving the redemption notice to the completion, it may be possible to serve a slightly shorter notice period with interest in lieu to be paid.
- What is a interest in lieu? – The word lieu originally comes from the Latin locus, meaning “place” it means to replace it or substitute for. When you serve a shorter notice, it doesn’t mean that you will pay lesser interest to the bank, you will still have to pay the full 3 months interest in lieu of the shorter notice.
- How is this interest in lieu calculated? – Take your interest payable per month / 30 days then * by the number of days shortened.
- What if I wish to do a lump sum prepayment? – Lump sum prepayment must be served outside of this 2 month redemption notice. ie you serve 1 month repayment notice followed by 2 months redemption notice to refinance.
So you are still unsure? Do contact us if you have any further queries and we will do our best to answer it if it is not found anywhere here!