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.

Simple Interest

Simple interest refers to interest rates on loan products that do not charge interest on interest via compounding.

For most consumers, this should be the default interest rate to charge on home loans simply because the variety of methods interest rates are calculated are too complicated for general consumers to understand.

For example, when a lender quotes 3% interest on a $100,000 home loan, the borrower might be confused as to why he is paying more than $3,000 a year on interest costs.

This is why banks often quote the interest rate of a loan, but also inform what they interest would mean when converted to simple interest.

This means that whenever you are unable to grasp why a certain interest rate is a specific amount, always ask the banker what is the interest converted to simple interest.

On a simple interest mortgage, interest is calculated daily instead of monthly. And it is based on the principal balance on the payment day.

For example, a $100,000 home loan at 3.5%, interest per day will be calculated by:

($100,000 x 3.5%) / 365 = $9.59

The amortization table for a simple interest mortgage should reflect that.

Because of how it is calculated and charged to the borrower, should a borrower make extra payments towards the home loan, it will immediately reduce the balance, creating an immediate impact on the interest amount the next day.

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