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Best Home Loan Rates - What does it really mean

Written by Admin on .

Often enough, we have people asking 'What is the best home loan rate now?'. When choosing a home loan package offered by banks, it may not be as straight forward. By focusing only on rates, you may miss considering other important aspects of your home loan. A loan package that is the best for one, may not be so ideal for another. How do you know which package suit you most? Here we look at the factors to consider when choosing a home loan package. 

Type of Loan Packages

First thing to consider is whether to go for fixed rate or floating rate. At times, the choice between fixed rate and floating rate can be a tough one. It involves the assessment of the current interest rate gap between the fixed rate and floating rate and your interest rate outlook. It also depends on your risk appetite whether you can accept volatility. Most importantly, it depends on your repayment ability if floating rate rises more than anticipated

Legal Subsidy / Cash Rebate

It is a common practice that banks offer subsidy or cash rebate for refinancing when the loan amount meets certain minimum criteria. This benefit is significant as it can partially or fully cover your refinancing costs which include legal fee and valuation fee. When comparing refinancing options, you should look at the overall savings which should take into consideration all the costs and benefits on top of the interest savings.

Interest Rate and Loan Disbursement Timing

When checking on loan rates, knowing the rate for first year is not good enough since your loan does not exist only for one year. It is meaningful to know the rates for the second and third year as well. To some, even the thereafter rate is important. For property under construction, as the loan is progressively disbursed over a few years, having the lowest first year rate does not necessary translate to more interest saving whe the bulk of the loan is disbursed only in the third year.

Time Horizon

Are you looking at short term (next 2 to 3 years) or longer term for this loan contract? Some prefer to review their loans every 2 to 3 years and refinance their loans when there are interest savings. Whilst others who are not actively managing their loan may prefer to take a longer-term view when choosing their package.

Your Plan for the Property / Mortgage

What you plan to do for the property or loan in the next few years matters when choosing a loan package. You may be planning to make lumpsum prepayment as and when or periodically. It will be most useful to have a loan package that allows prepayment without any penalty fee charged by the bank during lock-in period. Or you may be planning to sell your property in the near future. As timing for sale can be uncertain, you may consider loan packages that do not incur penalty fee upon sale of property or go for package with no lock-in period.

Loan Size

Banks generally offer more appealing packages for higher loan amount. Depending on the circumstances and timing, you may be eligible for better offerings by applying for a slightly higher loan. This is one reason why it is good to compare the loan packages offered by different banks. A mortgage broker will be able to do that for you, saving you the time and trouble.

Another thing to note, as your loan balance get smaller, it may be more costly to refinance your loan. Some banks may not allow you to switch to another package or make partial prepayment when the loan size drops below a minimum loan amount. Therefore, before your loan balance drops below $200k for HDB flat or $400k for private property, you may want to choose a bank package that can last till maturity.

Your Deposits

Some banks offer better rates if you bring in funds to place with the banks. This can be crucial as you can compare and weigh your options for both your deposit and loan.


Given the multiple factors to consider when choosing a bank loan package, it is therefore an advantage if you can have an experienced mortgage specialist to help you iron out your requirement and do the interest calculations and comparison for you.

To round it up, the best home loan package is the one that gives you the most savings and at the same time best meet your objectives.

With better understanding, hope you will find your best loan package in no time.


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Different Types of Housing Loan Packages Offered by Banks in Singapore

Written by Admin on .

Last updated on 14 October 2018.

If you are looking for housing loan in Singapore, you will realise that there are a few different types of  loan packages to choose from. Home loan borrowers are spoilt for choice with a myriad of loan packages that are offered by banks. 
More than a decade ago, you can only find housing loan packages that are pegged to bank’s mortgage board rates. Bank’s board rate is internal cost set by the bank. Around 2006-2007, banks introduced packages that are pegged to SIBOR (Singapore Interbank Offer Rate) or Swap Offer Rate (SOR) which offers more transparency. SIBOR and SOR are considered market rates.
In 2014, we saw DBS launched home loan packages pegged to their SGD Fixed Deposit rate. Other banks, like UOB, OCBC, Maybank, Stanchart and HSBC also followed suit in offering mortgages pegged to banks' fixed deposit rates, ranging from 8 months fixed deposit rate to 48 months fixed deposit rate. 
In early 2018, some banks, like UOB, OCBC and Maybank have however switched back to packages pegged to Mortgage Board Rates. Leaving with only 3 banks, namely DBS, Stanchart and HSBC still offering fixed deposit rate pegged packages.
With this, we came across more customers checking on the differences between property loan pegged to SIBOR, Fixed Deposit rates and Board rates. 

Deciphering MAS Broadening of Exemption from TDSR Threshold for Refinancing

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Since the 60% TDSR threshold took effect on 29 June 2013, not only property buyers are affected, borrowers with existing housing loans are facing challenges refinancing their loans. MAS’s announcement on 10 February 2014 on the broadening of exemption from TDSR threshold has provided some relief to these borrowers. The news has brought about a surge in the number of enquiries related to refinancing. 
Here, we decipher the latest MAS announcement, which comes in two parts: