Private Property Loan Refinance
Be it a private condominium or a landed property, our Mortgage Specialists are able to provide individuals, be it for own stay or investment to readjust the interest rates that one is paying for to a lower rate. As the quantum of each individual condominium or a landed property is larger, home owners or investors will be able to see a significant saving in their monthly installments. Our well informed Mortgage Specialists are the go-to people with the right knowledge of current trends to advise customers according to market sentiments.
Fixed-deposit Rate Home Loans
It is a home loan package where the interest rate is linked to a bank’s fixed deposit savings account interest rates. If those interest rates go up, so do the home loan interest rates.
DBS pioneered this product in 2014 with the Fixed Deposit Home Rate (FHR). Several other local and foreign banks have followed in their footsteps, and it has since become an open marketplace for all home owners.
SIBOR Home Loans
In Singapore, fixed-rate and floating rate home loan packages can be packaged based on the appropriate SIBOR rate plus an extra (or premium) amount, called a spread, that is determined by a number of factors, such as the size of the home loan, the credit standing of the borrower, the location of the property, and more.
A fixed rate home loan has a specific interest rate that is fixed and guaranteed for the initial period (typically 2 or 3 years) of the entire loan tenure, and the subsequent years’ interest rates can vary.
On the other hand, a floating rate home loan could be pegged to the prevailing SIBOR rates, usually based on 3-month or 1-month SIBOR rates.
In determining the interest rate for the loan, the bank applies the relevant SIBOR rate on a specific date (Rate Review Date) plus a specific percentage above the SIBOR rate.
For example, if the 3-month SIBOR is used, the 3-month SIBOR rate on the Rate Review Date plus the additional percentage will be used as the interest rate for the following 3 months, and this interest rate will be revisited on the next Rate Review Date.
First Business Day Of Month
The SIBOR component of a mortgage interest rate is typically the SIBOR daily rate as of the first day of the month and applies to all mortgages pegged to SIBOR for the month.
Theoretically, although SIBOR-pegged mortgage packages might be available with reset periods (or tenures) of 1, 3, 6 or 12 months, in practice the 1 and 3-month packages are by far the most popular, especially when interest rates are fairly low.
Advantage Of Longer-Tenure SIBOR-Pegged Packages
Naturally, these packages are more popular during periods of rising rates, as borrowers save money up until the next reset date, but the packages are also favored by borrowers who want more certainty of unchanged rates for a longer period of time.
1M SIBOR vs 3M SIBOR
The “M” stands for a month, so a 1M SIBOR home loan package resets its rate every month, while the 3M package resets every 3 months, depending on the prevailing SIBOR rate in play on the reset date / Rate Review Date.
Despite everyone’s best efforts, a forecast of future interest rates is never certain, so you might choose a short-tenure SIBOR package only to see rates start to rise, or see rates fall after you’ve selected a long-tenure SIBOR package.
Advantage Of Shorter-Tenure SIBOR-Pegged Packages
These packages are popular during periods of falling interest rates because they give borrowers more opportunities to benefit from decreasing rates.