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.

Negative Amortization?

Negative amortization for a housing loan occurs when your outstanding housing loan balance increases instead of decreases. There are a few instances that this can happen. Speak to us to learn more.

Singapore Housing Loan Basics

What is a housing loan?

A secured loan that you as the borrower puts up the title to the property as collateral for a loan used to purchase it. If you don’t repay the debt according to the agreed repayment schedule, the mortgage lender can enforce foreclosure on the property and sell it off to repay the loan that is due to them.

In simplicity, the housing loan that you have taken up is secured against your home. Failure to repay the loan according to the agreed upon repayment schedule can result in you losing your home. So before you commit to a Singapore housing loan, you should have a good look at the loan structure and use tools like a housing loan calculator to forecast whether you can comfortably afford the home loan repayments.

Main components of a housing loan

  • Loan quantum amount – the amount of financing that the lender is willing to offer. It can be typically up to 80% of the market value of your home or purchase value, whichever is lower.
  • Housing loan Interest rate – the interest that the lender will charge annually. Housing loan Interest rate can be on flexible rate, fixed rate, or combination of both over the whole tenure of the housing loan.
  • Tenure – the duration over which the mortgage loan is supposed to be repaid. This can be up to 30 years or more depending on your current age and the prevailing retirement age.

Singapore housing loans are generally repaid on a monthly basis. The repayment amount consist of a portion of interest and a portion of principal. A proper housing loan calculator should illustrate this clearly to you. You will know how much you are paying for interest and how much for principal with little deviation.

Significance of housing loans in Singapore

People take up housing loans to purchase property or refinance their existing homes while generating usable cash. Buyers typically buy houses for 2 purposes. It can be for “owner-occupied” where you buy the house for your own occupation, or “investment” where you buy the house to rent it out and make capital gains in future when the home value appreciates.

Housing loan refinancing occurs when a home owner pays off the existing mortgage with another from another lender. It can be because of better home loan interest rates or that the owner wants to generate cash from the home equity built up over the years. Generally, home owners only consider refinancing after the loan lock-in period so as not to incur expensive penalty charges. Savvy property investors may refinance more often so as to generate cash out from the home equity to invest in more properties. Cashing out on home equity is also commonly considered as housing loans usually have lower interest rates for other forms of loans like a personal loan in Singapore. So refinancing serves as a good alternative to other loans when the home owner needs cash.