Considering that a home loan is likely the biggest and lengthiest financial burden that most Singaporeans will take on, it’s definitely worth finding out more about the intricacies of home loans. Almost all banks’ most attractive home loans are pegged to in-house rates. You’ve considered the options, crunched the numbers, and have finally decided to refinance your housing loan. Refinancing simply means switching your existing home loan (even if it’s an HDB loan) for another cheaper provider’s loan package. This is particularly important for this type of housing loan because loans for properties under construction typically charge low interest rates in the first 2-3 years, but in later years higher rates compared to normal home loans. If you’re buying a completed HDB flat (i.e. This is known as repricing. You can, But since SIBOR is volatile, the downside is that your repayment amounts. That’s bad news for those who would like the certainty of a fixed rate. Once it’s built, however, you can get the full range of loan options, including fixed rate home loans. According to our research, about 80% of home loan shopping decision process is dependent on the interest rate, which is logical because interest rates account for the vast majority of a home loan's cost. Whether you’re new or a seasoned investor, our research and tools will help you build and manage your portfolio. In many cases, the interest rate will rise after the lock-in period. That said, even HDB flat buyers can opt to loan from a bank — and we’ll talk about why you might want to do that in the later sections. This has its pros and cons. Intrigued? When comparing these home loans, it is crucial to consider the affordability of the monthly payment and the total interest cost as well as the lock-in period, which dictates how soon you can refinance your loan. resale) — or if you’re refinancing for your newly-built BTO, perhaps — then you have a lot more options. What Really Drove Singaporean Real Estate Prices Down During COVID-19? Home loans for completed private property — floating vs fixed. Read the previous 2 sections on how to choose a good floating rate home loan. Also, banks do change their interest rates and. After that, fixed rate packages revert to floating rate packages, so the stability does not last forever. Most of these are pegged to what’s known as the SIBOR rate, which is an inter-bank “market rate”. However, banks may charge higher spreads for the more stable home loans. Of course, it is crucial to make sure your monthly instalment is still affordable and that you get a loan with a competitive total interest cost. The other thing to look out for are penalties during the lock-in period. Don't forget though — if it can down, it can also go up. You may need to pay an admin fee to complete the repricing process. This is usually the case for smaller loan amounts. But first, you need to know what your current home loan package is. Some of the offers that appear on this website are from companies which ValueChampion receives compensation. , however, you can get the full range of loan options, including fixed rate home loans. These rates are approximately 20% lower than the market average and can save the average homeowner about S$30,000 over the course of their 25-year, S$500,000 mortgage. (More on the difference between those later.). This is normal and expected for homeowners to do in the 3rd or 4th year of servicing a bank loan, since that’s when the fixed rates expire and the interest rate usually slides back up. For 6M SIBOR, the interest rate is revised only every 6 months, so your repayments are fixed for half a year. In many cases, the interest rate will rise after the lock-in period. Use the links above to connect with our home mortgage partner to obtain the best loan for your financing needs. Instead, they are only valid for a stipulated lock-in period — usually 2 or 3 years, but can be up to 5 years. 12 months. Even if you are still happy with your current bank loan, well, the financial world is ever-changing — so you should read up on how to refinance home loan anyway. ANZ does not store the information you provided to generate this document. Depending on your income, you may or may not be eligible for the HDB loan when you buy an HDB resale flat. Private residences account for about 20% of homes in Singapore. But the one big caveat is that fixed rates only last as long as the lock-in period. For example, a SIBOR-linked home loan may quote “3M SIBOR + 0.8%”, while a broad rate-linked one may be represented by “MBR + 0.2%”. Your repayments will be the same every month. Note that for bank loans, fixed mortgage rates are not valid forever. Unfortunately, there’s an element of risk as banks typically only offer floating rate packages for uncompleted properties. You’ll realise that “no lock-in” doesn’t mean it's completely fee-free, it means that there is no penalty fee on redemption of disbursed portion whether in part or full. As mentioned, banks offer only floating rates for buildings under construction (BUC) — you won’t get the comfort and stability of a fixed interest rate. Individuals are limited in the amount that they can borrow based on their monthly income and other debt obligations. Regardless of which package has the better rate right now, it is more important to pick the underlying interest rate structure you’re comfortable with. Germany’s New Cases Hit Record; India Peak Seen: Virus Update. In the case of young couples getting an HDB BTO, the standard route is often an HDB concessionary loan as it doesn’t require a cash downpayment (if you have enough CPF). Connect with friends faster than ever with the new Facebook app.