Home Loan Packages

Sibor/ SOR Rate Mortgage

Sibor stands for the Singapore Interbank Offered Rate.

Sibor Singapore is the rate at which banks lend to one another in SGD. When it falls, so does the mortgage rate of Sibor-linked Mortgages.
Sibor also gives a rough indication on where deposit and savings account rate at banks might be heading as it is influenced partly by the supply and demand for funds in the Singapore interbank market.

SOR stands for Swap Offer Rate.

SOR rate represents the cost of borrowing SGD synthetically through borrowing USD and swap out in return for SGD for the same tenor.

Sibor/ SOR rate are available at 1month, 3months, 6 months, 9 months and 12 months and is published in The Business Times.
Sibor/ SOR rate are usually stated as 3m Sibor + x%, or 12m SOR + x%.

Advantage
Transparency as Sibor/ SOR rates are made known to the public (rates can be readily obtained through The Business Times).
Generally does not come with any lock in period.

Disadvantage
Uncertainty as rate is adjusted based on market conditions.

More information of Sibor and SOR can be found at Sibor vs SOR Home Loan

Fixed Rate Mortgage

Banks/ financial institutions will state upfront the fixed interest rate for a number of years.
The fixed rate is usually 1-3 years, followed by a floating rate.

Advantage
Simple and straight forward.
Worry-free as it is not affected by the market conditions.

Disadvantage
Interest rate is usually higher compared to a floating rate mortgage.
Generally, it comes with a lock-in period (Eg. 2 years fixed rate = 2 years lock in period).

Floating Rate Mortgage

Interest rate varies and is adjusted based on the banks/ financial institutions discretion.
It is usually stated as Mortgage Board Rate – x% = floating rate.

Advantage
Interest rate is usually lower than fixed rate.

Disadvantage
There is uncertainty as the rate is adjusted based on banks/financial institutions discretion.

Cash Rebate Mortgage

Upon signing up on the mortgage loan, the banks/financial institutions will provide you with a cash rebate.
The rebate is usually 1.5% of the mortgage loan amount and it comes with a 3 years claw back condition.

Advantage
Cash rebate upfront to pay for your existing home loan penalty.

Disadvantage
Generally, there will be an additional interest loading to your mortgage loan.
Comes with a 3 years claw back condition on the cash rebate amount..

Interest Offset Mortgage

This mortgage loan comes with a repayment account which earns you interest.
The interest earned will help to reduce the outstanding principal balance on your mortgage.
The more cash you have in your repayment account, the faster you reduce your mortgage principal balance and the lesser the interest you pay to the bank.
This mortgage loan targets cash rich client who wants liquidity.

Advantage
Liquidity.
Interest rate is lower if you are able to ‘park’ your cash in the repayment account.

Disadvantage
Interest rate is usually a floating rate which creates uncertainty.
The base interest rate is usually higher due to the unique features of this loan.

Interest Only Mortgage

This mortgage loan allows you to service only the interest portion.
The interest servicing period is usually for the first 1 or 2 years and will revert back to the original package.

Advantage
Low monthly instalment as the client only services the interest portion.

Disadvantage
During the interest servicing period, you principal is not reduced by a single cent.

Equity Loan/ Term Loan (Cashout)

Client can pledge their property with the banks/financial institutions to get cash.
It is possible to take a equity loan together with a Mortgage loan.

Advantage
Able to borrow a much larger amount compared to a personal loan.
Interest rate is charged as per mortgage loan interest rate which is much lower as compared to a personal loan.

Disadvantage
Only applicable to Private Property.