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Best Fixed Rates For Student Loan Refinancing – Once you’ve cleared the hurdle that is the down payment on your new home, don’t forget that you still have monthly mortgage payments to make. Different home loan packages will have different benefits and features, so it’s important to explore your options and find the plan that best suits your needs (and saves you the most money!). We’ve compiled a comprehensive list of what to look out for and our recommendations for the best home loans this year.
If you are buying an HDB flat, you have the option of taking out an HDB loan. HDB loans have higher interest rates, but the rates are fixed and the loans only require a 10% down payment compared to the 25% required by banks.
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The interest rate may vary by only a small percentage from one plan to another. However, the difference can add up to a significant amount because each property is such a valuable asset. Choosing the lowest interest rate among several options can save you thousands of dollars in the end.
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Banks usually offer low spreads, which means the rate will be low for the first few years and then rise again. The spread is the number you see after the “+”.
Most bank loans usually come with a lock-in period of up to five years, during which the interest rate is guaranteed at a fixed rate. During this period, you will be charged a penalty if you decide to prepay or cancel your home loan. The penalty is usually 2% to 5% of the outstanding loan amount.
This is because banks are taking a risk when they offer you a loan, and if borrowers can cancel their loans and abandon ship immediately after receiving the loan, Planning your finances will be difficult. The first few promotional years with low interest rates are intended to encourage buyers to stick with the loan.
If you’re buying a home that’s still under construction (yes, Building Under Construction (BUC) is the actual acronym), we recommend that you look for a loan with no lock-in period. So that you have the flexibility to refinance. Any time after completion of construction. Refinancing is paying off your existing home loan in full or extending the loan to a competing lender (usually because of a lower interest rate).
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If your home loan has a fixed interest rate, the same interest rate will apply throughout the term of the mortgage agreement. It provides stability and consistency and makes it easier for you to plan your finances, so it’s a great choice if you have a low risk appetite. Interest rates will not increase due to market fluctuations. However, stability (literally) comes at a price, as fixed interest rates are higher than floating interest rates.
During the lock-in period, the fixed interest rate is not linked to market or regulated rates. However, after the lock-in period ends, they will be pegged to market or loan rates. You will then receive an indication as to whether you should refinance.
Meanwhile, floating interest rates (also known as variable interest rates) are subject to market fluctuations. They are linked to the Singapore Interbank Rate (SIBOR), Singapore Overnight Average Rate (SORA), Board Rate or Fixed Deposit Rate (FHR), which vary according to the index. (Note that SIBOR-based loans will be phased out by the end of 2024.
Floating interest rates are better for those with a high risk appetite. When the interest rate goes down, you can save more one month, but if it goes back up the next month, you may have to pay more.
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However, most banks will usually give you 30 days when interest rates are going to change. This gives you time to consider refinancing.
Also, for SIBOR-based loans, banks usually offer either 1-month (1-month) or 3-month (3-month) SIBOR, which means how often the rates are updated. are going 3M SIBOR rates will be less volatile and risky because rates are only adjusted every three months.
HDB flat buyers, rejoice! You can choose between an HDB loan or a bank loan. HDB loans have a fixed interest rate (the current rate is 2.6% according to the HDB website), and the down payment is only 10% of the purchase price of your flat, making it more affordable in the short term. . The downside is that HDB interest rates are much higher than what banks offer.
Well, bank loans can have a fixed or floating rate. A bank loan can be taken whether you are buying an HDB flat or a private property. See the next two tables for a selection of the best fixed and floating rates available based on a $500,000 loan and a 25-year term.
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Maybank has arguably the lowest interest rate at just 1.2%. However, this rate is guaranteed only for a two-year lock-in period. Also, you can decide if refinancing is a better option.
While many banks offer higher interest rates with longer lock-in periods, OCBC’s fixed rate stands out in that it offers a rate of 1.38% with a choice of two, three or four-year lock-in periods. (Note that only HDB housing owners are eligible for the four-year lock-in period).
On interest rates alone, OCBC 3M SIBOR is way ahead of all its competitors at an astonishing 0.46% per annum.
However, if you plan to refinance your bank loan soon, we recommend the Maybank SORA with a rather short one-year lock-in period that still has a fairly low interest rate of 1.04% p.a. Is.
Should You Refinance Your Student Loans Before Interest Rates Rise?
For floating interest rates, remember to keep an eye on the SORA and SIBOR rates, which are constantly changing.
Some people may think that it is best to take out a loan only after the house is completed… but we disagree! Getting your home loan settled early can give you peace of mind and (for some, more importantly) potentially even higher interest rates.
As we mentioned earlier, BUC homeowners often look for home loans that have no lock-in period, allow them to refinance whenever their home is finished, and get lower interest rates. Free to do.
Based on this list, Standard Chartered SORA is the best home loan, offering the lowest interest rate of 0.98%.
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However, these interest rates (which are valid until December 2021) and spreads are constantly changing and may not be updated by the time you read this article. We suggest that you check the websites of banks for the latest rates before applying for a loan.
Knowing the future will be useful for many things. Arrange a TOTO, invite the girl who will later become your wife, and of course get a home loan at a minimum rate. But we can’t always get what we want.
According to this Bloomberg article, Tharman Shanmogurtnam, Singapore’s senior minister and head of the Monetary Authority of Singapore, said, “The risk of interest rate hikes is a reminder that everyone should exercise caution in their property buying decisions. ” Interest rates in Singapore are expected to rise with those in the US.
“Buyers should assume that interest rates will rise and be confident in their ability to service their loans before making long-term financing commitments,” he added.
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If these predictions come true, it may be time to get a home loan soon before interest rates rise further.
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