SIBOR or SOR?

SIBOR is generally more stable while SWAP tend to fluctuate more. However 3-month SWAP has recently stayed consistently lower than 3-month SIBOR for an extended period of time. SOR is also very reactive to currency exchange rates.

Which bank offers the best home loan deals?

Interest rates and spreads are not all that matter. Don't ignore the closing costs involved. Different banks can have different customized home loans for you. Don't be surprised if you will save more on a home loan that charges more interest because of the lesser closing costs involved. This is especially so if you know that you will refinance your home loan as soon as the lock in period has expired.

HDB loan or bank housing loan?

Our opinion is to always take a HDB concessionary loan if you are eligible for one. One of HDB's objectives is to to provide affordable housing for the people. While a bank is profit driven.

Affordability

Affordability is a measure of a borrower’s ability to afford a house.

It is usually expressed in either one of three ways, or any combination of the 3.

  1. Maximum price and maximum loan amount
  2. Maximum loan to value
  3. Maximum monthly installment payment

The maximum price is the highest price a home buyer can afford to pay for a house after taking into account the maximum loan amount that he qualifies for.

The difference between the two will have to be topped up with cash.

The maximum loan to value is the maximum percentage of a property’s value that the bank will be willing to loan the borrower.

This limit is usually imposed by government policies.

Combined with max price and max loan amount, a borrower’s affordability might be a loan approved up to $$400,000 at 80% LTV, translating to a maximum property purchase price of $500,000.

The maximum monthly installment amount refers to the maximum monthly installment that the borrower can afford with his income.

This is determined after factoring debt ratios including TDSR guidelines.

The rule with affordability is that people should need someone else to tell them that they cannot afford a house.

If you are not totally comfortable in buying a house at a specific price, the odds are that you can’t afford it.

In this case, it’s better to buy a smaller house or wait until you have a higher personal or household income.

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