Updated: Jan 1, 2019
Are you confused by the types of property packages offered by various banks? In this article, we are going to summarise for you the 4 types of property packages.
1) Fixed Rates
This is the only package that offers home owners 100% certainty during a period of time between 2-3 years. Rates will be certain irregardless of market movements. However, such packages normally come with a lock in feature during the period where rates are fixed and home owners maybe subjected to cancellation fees should they make a redemption on the loan.
2) Variable Rates Pegged to SIBOR
SIBOR is a short form of Singapore Interbank Borrowing Offer Rate and is pegged to inter banks borrowing rates. SIBOR comes in 1, 3, 6, and 12 months tenor by banks and rates can be found in our newspapers, The Association of Banks in Singapore and various finance portals, which makes SIBOR very transparent to the public.
3) Variable Rates Pegged to Board Rate
This package is pegged to the bank’s own internal interest rate. Hence, such packages offer lesser transparency to the public compared to SIBOR or Fixed Deposit linked rates packages.
4) Variable Rates Pegged to Fixed Deposit Linked Rate
This package has gained popularity among home owners during the recent few years in view of its lower volatility and rise comparing to SIBOR and board rates. The home loan rates are pegged to the banks' fixed deposit savings interest between 8-48 months tenor. However, one common misconception is that most home owners are always confused with these packages over fixed rates packages. Remember, fixed deposit linked rates are not fixed and are on a variable basis.
This post was written by our Mortgage Advisory Manager in Mortgage Consultancy Pte Ltd. To get in touch with our guest writer, you may like to PM us at +65 85565271.