3 Useful Home Loan Tips in Singapore (2013)

Our home loans market has changed dramatically since 2011. We have new cooling measures, and new restrictions on bank practices. As such, applying for a loan may not be as simple as before. But with a bit of information and foresight, you can still save a lot of money. In this article, we look at three important tips for picking the right loan package in 2013:

 

Repeated cooling measures may be affecting our home loans market, and causing interest rates to climb.

 

The Home Loan Trend in 2013

The last round of cooling measure may be affecting the current home loans market. See the full article on those measures, or here’s a quick summary:

  • Tighter loan quantums for second and third time buyers (as low as 20% – 30% financing in some cases)
  • A maximum tenure of 35 years, even with refinancing activities
  • Higher buyer stamp duties (up to 15%) based on residency status

While demand for property remains strong, there have been slight downward movements in price (an overall decline of 0.3%, as of January 2013).

In addition, home loan rates since Dec ’12 have shown an upward trend, despite factors like quantitative easing. Average SIBOR rates have moved from around 1.3% to 1.7%, as of January 2013.

From this, we speculate that because the cooling measures discourage anyone from having multiple housing loans, banks are experiencing or expecting a decline in volume (i.e. fewer people taking home loans). As such, banks may be compensating by raising interest rates in an attempt to keep their bottom line afloat.

But don’t worry; with a bit of foresight, you can still keep your home loan rates down:

 

1. Consider Fixed Rates

 

Mess of documents

As an added bonus, fixed rate loans can make financial planning easier.

 

Fixed rate packages are starting to regain popularity.

Previously, these loan packages were not as favoured; they usually cost more than floating rates. However, buyers are now responding to the possibility of further rate hikes. By getting a fixed rate, which usually lasts three to five years, you could be paying the same rate in 2016 or 2018 that you are now.

This could mean significant savings in the long run. Besides, if you find the right bank, the extra cost of a fixed rate can be minimal (as little as 0.2% to 0.3%).

As an aside, fixed rates provide consistency in loan repayments. If you are using cash and not CPF, you will have an easier time knowing how much to set aside each month.

 

2. Don’t Be Distracted By Exotic Features

 

Don’t be confused or distracted by exotic features. This year, keep a tight focus on the lowest rates.

 

In the current loans market, “exotic” home loan features have been unimpressive. These are mostly attempts to compensate for higher interest rates.

Some typical examples, used to entice borrowers, are:

  • Interest offset loans (use the interest on your existing bank account to reduce your home loan interest)
  • Hybrid loans (based on the average of both SOR and SIBOR)
  • Internal Board Rate (loan rates are determined by the bank in question, not by a publicly visible index like SIBOR)

We are not suggesting these features are always irrelevant. In some cases, they can be cost savers. However, many of them only benefit people in specific situations (e.g. Interest offset is only meaningful if you can maintain large sums in your bank account).

With interest rates heading north, it is not a good time to be distracted by circumstantial benefits. You would be better served by looking at hard numbers, and simply picking the lowest rate (extra features aside).

 

3. Look for Lock-In Packages

 

Padlock

Lock-in packages tend to be cheaper, and the drawbacks may not even be relevant to you.

 

Lock-in packages prevent you from refinancing and making partial/full prepayments, for a set period (often three to five years). Do note that fixed rates automatically mean a lock-in, for as long as the fixed rate is maintained.

The disadvantages of lock-ins can seem discouraging. But practically speaking, most of the disadvantages may be irrelevant. As interest rates are heading up, there is less chance you will want to refinance in three to five years anyway.

Also, most owner-occupiers have little reason to make partial/full prepayment. The move is only typical of property investors, who want to quickly sell for profit after about five years.

So the disadvantages are not noticeable to the typical home buyer. On top of that, lock-in packages tend to cost less, as compensation for the restriction.

 

Where Do I Find the Cheapest Rates?

You can compare SIBOR rates on teletext. As for the full bank rates, you can use loan comparison sites like SmartLoans.sg. The site’s mortgage specialists can also help with comparisons.

You can also follow us on Facebook, and we’ll update you regularly.

 

Image Credits:
yeowatzup, psd, jeff_golden, marc kjerland

Have you got any concerns about home loan rates? Comment and let us know!

Get more Personal Finance tips and tricks on www.MoneySmart.sg

Click to Compare Singapore Home Loans, Car Insurance and Credit Cards on our other sites.



More From MoneySmart

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...
  • AP Top Extended Financial Headlines at 11:33 p.m. EDT Associated Press - 5 minutes ago

    Need a loan for a diamond ring or used car or wrench set … More »

  • Asian stocks mixed as traders follow US debate
    Asian stocks mixed as traders follow US debate Associated Press - 5 minutes ago

    Asian stock markets were mixed Tuesday as traders followed the U.S. presidential debate between candidates Hillary Clinton and Donald Trump. KEEPING SCORE: Hong Kong's Hang Seng index advanced 0.4 percent ... … More »

  • BRIEF-United Malacca reports monthly production data Reuters - 7 minutes ago

    Sept 27 (Reuters) - United Malacca Bhd : * Aug fresh fruit bunches 29,036 tonnes; Aug crude palm oil 5,989 tonnes; Aug palm kernel 1,392 tonnes Source text : ( http://bit.ly/2dflunz ) Further company coverage:... … More »

  • China August industrial profits rise nearly 20 percent, fastest in three years
    China August industrial profits rise nearly 20 percent, fastest in three years Reuters - 16 minutes ago

    Profits earned by China's industrial firms in August grew at the fastest pace in three years helped by rising sales, higher prices and lower costs, pointing to strengthening economic activity. The world's second-largest economy has shown recent … More »

  • Asia stocks bounce, yen ebbs amid U.S. debate
    Asia stocks bounce, yen ebbs amid U.S. debate Reuters - 17 minutes ago

    Asian share markets recouped early losses on Tuesday and the dollar edged away from a one-month trough against the yen, suggesting investors judged Democrat Hillary Clinton was winning her debate against Republican Donald Trump. Markets have tended … More »

  • Gold slips as equities, dollar gain after US presidential debate
    Gold slips as equities, dollar gain after US presidential debate Reuters - 17 minutes ago

    Gold edged lower on Tuesday as equity markets bounced back and the U.S. dollar strengthened, hinting that investors viewed Democrat Hillary Clinton as the winner of her first U.S. presidential debate with Republican Donald Trump. Spot gold was … More »

  • China’s Shibor Climbs to Seven-Week High as PBOC Withdraws Funds Bloomberg - 29 minutes ago

    The one-month Shanghai Interbank Offered Rate climbed to 2.74 percent, the highest since Aug. 4, according to the National Interbank Funding Center. The People’s Bank of China has in the past month started to use 14- and 28-day reverse-repurchase … More »

  • Asia stocks bounce, yen ebbs amid U.S. presidential debate
    Asia stocks bounce, yen ebbs amid U.S. presidential debate Reuters - 35 minutes ago

    Asian shares recouped early losses on Tuesday and the dollar edged away from a one-month trough against the yen, suggesting investors judged Democrat Hillary Clinton was winning her debate against Republican Donald Trump. Markets have tended to see … More »

  • KWAP crosses out Airbnb potential Business Times - 37 minutes ago

    RETIREMENT Fund Inc (KWAP) has crossed off Airbnb, an online marketplace for property rental, as its second potential investment in a global digital company after pumping in US$30 million (RM123.8 million) in Uber Technologies Inc.  “We did look at … More »

  • UEM Edgenta to buy UEMS for RM563m Business Times - 37 minutes ago

    KUALA LUMPUR: UEM Edgenta Bhdis buying UEMS Pte Ltd for RM563 million to strengthen its healthcare services operations. UEMS is an established market leader, providing facilities management services to the healthcare sector. It serves more than 60 … More »

  • Good governance, leadership play key roles Business Times - 37 minutes ago

    MALAYSIA needs to keep its growth momentum going through good stewardship in terms of governance and leadership in order to further progress, said Khazanah Nasional Bhd managing director Tan Sri Azman Mokhtar. … More »

  • 'Khazanah firms to drive growth' Business Times - 38 minutes ago

    KUALA LUMPUR: Khazanah Nasional Bhd expects the continuation of a pro-growth and pro-society focus in the 2017 Budget, with its companies remaining the nation’s growth engines. Khazanah managing director Tan Sri Azman Mokhtar said at the same … More »

  • New concepts but Paris car show losing va-va-voom
    New concepts but Paris car show losing va-va-voom AFP News - 38 minutes ago

    The Paris Motor Show opens this week with promises of groundbreaking electric concept cars from Volkswagen and Opel, but the shine appears to be wearing off what was once a must event for the industry. Ford, Mazda, Volvo, Aston Martin, Bentley, … More »

  • China’s Long March to Rival Dollar Faces Obstacles After SDR (1) Bloomberg - 43 minutes ago

    The yuan will join the International Monetary Fund’s Special Drawing Rights this Saturday, marking a milestone in China’s efforts to build a currency that reflects the country’s economic and political sway. The SDR, created in 1969, gives IMF … More »

  • China Industrial Profits Jump Most in Three Years in August (1) Bloomberg - 49 minutes ago

    Industrial profits rose 19.5 percent in August from a year earlier to 534.8 billion yuan ($80.2 billion), the National Bureau of Statistics said Tuesday. "The pickup in industrial profit is driven by commodities prices and the property market boom, … More »

  • Tokyo stocks pare losses by break AFP - 53 minutes ago

    Tokyo shares pared their losses Tuesday morning as investors focus on the first US presidential candidates' debate. The benchmark Nikkei 225 index was down 0.33 percent, or 54.15 points, at 16,490.41 by ... … More »

  • Wall Street Shrinking in Asia Continues With Goldman, BofA Cuts Bloomberg - 56 minutes ago

    Bank of America plans to eliminate about a dozen senior positions at its corporate and investment-banking operations in Asia, the second time the U.S. firm is cutting jobs in the region this year, according to people with knowledge of the matter. … More »

  • China's Wanda in talks to buy Golden Globes producer
    China's Wanda in talks to buy Golden Globes producer AFP News - 1 hour 17 minutes ago

    Chinese conglomerate Wanda is considering ramping up its push into Hollywood with the acquisition of the production company behind the Golden Globes, the US firm said. Eldridge Industries, which controls Dick Clark Productions, said discussions to … More »

  • Asian Stocks Pare Losses as Clinton, Trump Spar in U.S. Debate Bloomberg - 1 hour 20 minutes ago

    The MSCI Asia Pacific Index fell 0.3 percent to 140.42 as of 10:51 a.m. in Tokyo after sliding as much as 0.9 percent earlier. While investors had became more risk-averse ahead of the U.S. debate, partly due to a rout in shares of Deutsche Bank AG, … More »

  • When deals go bad - China state firm managers spooked by new liability rules Reuters - 1 hour 33 minutes ago

    Business development managers at Chinese state-owned firms have been put on notice: mess up on M&A deals and you can be held personally liable - for life. Under new rules unveiled by China's State Council, or cabinet, last month, managers will be … More »

  • Asian Hunger for Yield Tested by Junk-Rated Casino Bond Plan (1) Bloomberg - 1 hour 35 minutes ago

    Imperial Pacific International Holdings Ltd. plans to sell dollar bonds for the first time to fund its casino resort in Saipan Island, a U.S. territory in the Pacific Ocean, according to a bond document. The bond is rated B1, four steps below … More »

  • U.S. Stock Futures Rise With Mexican Peso Amid Debate; Yen Falls Bloomberg - 1 hour 36 minutes ago

    With the first of three U.S. presidential debates taking place late Monday New York time, a Bloomberg poll showed Donald Trump and Hillary Clinton were tied in a head-to-head contest. “The peso started the debate near its weakest levels but at … More »

  • Clinton, Trump spar over plans for US economy AFP - 1 hour 36 minutes ago

    Hillary Clinton accused Donald Trump of peddling "trumped up trickle down" economics Monday on the presidential debate stage, as the candidates clashed in fiery exchanges over how to create American ... … More »

  • Nomura Sees More Europe Banks Boosting Defenses With Samurai (1) Bloomberg - 1 hour 41 minutes ago

    The London-based bank joined Standard Chartered Plc this month in selling yen bonds compliant with total loss-absorbing capacity, or TLAC rules, in a Samurai market where issuance is running at its lowest in four years. “Wherever you look, banks … More »

  • Ringgit opens lower against US Dollar Business Times - 1 hour 54 minutes ago

    KUALA LUMPUR: The ringgit closed lower against the US dollar today as investors remained cautious awaiting the outcome of the three-day Organisation of the Petroleum Exporting Countries (OPEC) meeting in Algiers that began on Monday.At 9.02 am, the … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.140.00+1.45%
    N21.SI
    0.107+0.004+3.88%
    43E.SI
    3.97+0.01+0.25%
    Z74.SI
    0.745+0.005+0.68%
    BS6.SI
    0.155+0.003+1.97%
    AFC.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    1.48+0.16+12.12%
    S91.SI
    0.245+0.025+11.36%
    K14.SI
    1.365+0.085+6.64%
    BVP.SI
    0.53+0.03+6.00%
    BFK.SI
    0.30+0.02+5.26%
    S71.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.56-0.18-24.32%
    5VJ.SI
    0.151-0.039-20.53%
    BGO.SI
    0.405-0.060-12.90%
    K1Q.SI
    0.15-0.02-11.76%
    5PL.SI
    0.10-0.01-9.09%
    5DL.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3583-0.0019-0.14%
    USDSGD=X
    1.5277-0.0026-0.17%
    EURSGD=X
    1.76280.000.00%
    GBPSGD=X
    74.1860+0.462+0.63%
    SGDJPY=X
    5.7069+0.0076+0.13%
    SGDHKD=X
    3.0282-0.006-0.20%
    SGDMYR=X
    9,589.5410+10.7188+0.11%
    SGDIDR=X
    4.9084+0.0066+0.13%
    SGDCNY=X
    1.0414+0.0028+0.27%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,339.00-5.10-0.38%
    GCZ16.CMX
    19.50-0.09-0.46%
    SIZ16.CMX
    94.45-1.31-1.37%
    ^XAU
    2.18-0.02-0.73%
    HGZ16.CMX
    43.85+0.41+0.94%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.13-0.03
    ^FVX
    1.59-0.03
    ^TNX
    2.33-0.01
    ^TYX