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.

Initial Interest Rate

Initial interest rate is an industry jargon used by mortgage professionals.

It refers to the interest rates on housing loan before it reverts to a “thereafter” rate.

For example, if a home loan is structured by:

Year 1, SIBOR + 0.75%

Thereafter, SIBOR + 1%

The initial interest rate is SIBOR + 0.75%.

If it has:

Year 1, Fixed 1.5%

Year 2, Fixed 1.5%

Thereafter, SIBOR + 1.25%

The initial interest rate is fixed 1.5%.

Initial interest rate are often much lower than what is charged thereafter so that home buyers find the loans attractive enough to consider.

One of it’s selling points is that even if borrowers find the thereafter rates high, they can still take up the loan to take advantage of the low rates and refinance the mortgage when they enter the period of thereafter rates.

The initial rate period is the period of time when the initial interest rate is active.

However be mindful not to be sway by gimmicks and pay attention to the interest that you will actually pay.

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