Can I Cancel My Home Loan Before Settlement?

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Can I Cancel My Home Loan Before Settlement?

Getting a home-mortgage is a time-consuming and stressful exercise. You need to have a good credit standing and have to comply with the many legal requirements of your bank. But sometimes, problems may arise and you may want to cancel that hard-earned mortgage before maturity.


Cancelling and refinancing a home loan in Singapore is equally as troublesome and prone to litigation as applying for your first mortgage. In Singapore, a borrower has all the right to cancel his or her mortgage before settlement. However, you should follow some basic steps to ensure that the process goes as smoothly as possible:


  • Real-estate and mortgage contracts vary from one country to another and each contract is different from the other. Many contracts have contingency clauses which allow either party to cancel the agreement at any stage; however, there are some possible consequences for doing so. You may be subject to some penalties or legal actions. Go through you loan agreement in detail and if possible contact a lawyer to do this for you.
  • Give the bank an air-tight reason to negotiate with you instead of foreclosing on your house. In most cases when you apply for the cancellation of your mortgage, the bank has nothing to lose in except for the future payments.
  • Call your lender and inform them that you want to cancel your mortgage before settlement. Remember to keep a copy of the cancellation notice for your own record. Enter a loan application number along with your name, address and signatures on the letter.
  • Review the contingencies associated with termination and be ready for that: Every contract generally has contingency clauses in them and so is the case for home mortgages. You should read all the contingency clauses included in your agreement before signing it off and at the time of termination.
  • Know about the cooling-off period: In some cases, a cooling-off period is a standard clause in mortgage agreement. This clause enables the borrower to terminate the loan agreement within a stipulated time period by paying a nominal fee. So, if you are concerned about cancelling the mortgage before maturity, knowing the cooling-off period can help you get out of the situation.
  • Get a copy of your mortgage release letter from your lender. This will guarantee that the mortgage has been released and there is no lien for the lender on your home or property.
  • Last but not least, make sure that you really want to cancel your mortgage. Because once you cancel the mortgage, it might affect your credit score and you will have to go through a cumbersome process to re-apply for a new mortgage.

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