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.

Late Payment Fees

Late payment fees are penalty charges when a lender determines a payment as being overdue.

What constitutes late and how much the fees are varies from lender to lender.

The details should be found in the facility letter of the mortgage the borrower originally signed on.

Sometimes, lenders even voluntarily overlook late payments without charging penalty fees on borrowers so as to retain a friendly relationship.

Late payment fees typically come in two types:

  1. Flat fee
  2. Percentage of payment

A flat fee is a fixed dollar amount charged to the borrower.

A percentage of payment means that the late fee will be calculated as a percentage of the payment amount being late.

For example, if a lender charges 5% and the late payment is for $1,000, then the late fee would be calculated by:

(5%/12) x $1,000 x number of periods being late

The above example assumes interest rates calculated on a monthly basis (12).

Be mindful that it can also be calculated on a daily basis. This depends on the type of credit facility and the terms of the agreement contract.

In that case, we would substitute 12 with 365.

Finally, when your payment is overdue, it is recommended that you settle it quickly by paying it off.

Depending on the terms of the loan, it could trigger deferred interest and negative amortization which is not ideal in the long run.

Homeowners are already paying a lot to finance their homes, it won’t make sense to pay more than you have to due carelessness and forgetfulness.

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