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.

Tenure

The tenure of a loan refers to the period for the entire life of the housing loan.

For example if a loan is for 30 years, the tenure of the loan is 30 years.

Sometimes also known as term, the tenure of a loan plays a more important part to a bank than most consumers think as it determines how to calculate amortization and monthly payments.

While extending the tenure results in lower monthly installment payments, borrowers should note that the consequence is a slower growth of equity. And also a higher eventual total interest payment.

When the intention to stretch the tenure is to lower monthly payments, the reduction in monthly payments will become smaller and smaller the longer the tenure extends.

For example, the decrease in monthly payments will be much larger when increasing from 15 years to 20 years compared to increasing from 25 years to 30 years.

This is due to how interest rates are computed for home loans.

The most common tenure that home buyers select are 25 years or 30 years.

Changing tenure during the course of the mortgage

Banks prefer that borrowers stay with the terms of a original loan and can sometimes put up resistance when borrowers want to increase or decrease their loan tenures.

Most would think that shortening a tenure will be easily acceptable by a lender as the borrower will be repaying the debt much faster.

However, reducing the loan will mean that they would eventually make a smaller profit from the borrower than initially anticipated.

Moreover, a shorter terms results in a larger monthly payment. Giving rise to the potential of delinquency and default.

This is why borrowers will be put through another round of underwriting and credit assessment to determine whether such requests for tenure change can be approved.

Saying that, if the goal of a borrower is to reduce interest costs, the option of making partial redemption should be considered.

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