If you are living in Singapore and are buying a home for the first time, you might be wondering about all the different types of home loans you can apply for. In Singapore, there are a couple of different types of home loans that not many people understand. This is why this guide to the 4 most common home loans is essential to know about.
Fixed-rate mortgage loan
Fixed-rate mortgage loans are the most common mortgage loans on the market. And, not just available in Singapore, but all over the world. This is the home loan where the premium is fixed. No matter if the interest is increasing or decreasing over time. Your premiums will stay fixed.
SIBOR Pegged Mortgages
SIBOR stands for Singapore Interbank borrowing offer rate. This is a loan where you know exactly what the interbank market interest rate is and the costs of borrowing. The SIBOR rate comes in terms of one, three, six, or twelve months. They are normally offering home loans or commercial industrial mortgage loans. A longer-term tenor typically comes with an increased interest rate. The normal tenor terms are between one or three months.
SOR Pegged Mortgages
SOR stands for swap offer rate. This is a bit complicated when applying for this type of home loan. But it basically means that you swap currencies when you are applying for this home loan. To let you understand better, you are getting a home loan where you are swapping the SGD funds for USD dollar funds at a certain cost. This also is just for a certain amount of tenor which can be one, three, six, or twelve months.
Combination Fixed and Variable Mortgages
This is a home loan that is fixed with a combination of the previously mentioned types of pegged mortgages. For example, this is a fixed mortgage with SOR pegged mortgage. Or, it is a fixed home loan with SIBOR pegged mortgage. Before you decide to consider this option, you need to make sure that you do your homework and make sure that this is the right decision for you.
These are just the common home loans you can apply for when you are living in Singapore. There are some other home loan options as well. You need to make sure that you do your homework and know the different mortgage loans before you just apply for anyone. You are going to repay your home loan for a long time, and you can’t make any mistakes.
Learn more about refinancing home loans.