Total interest saved over remaining loan tenure Prepayment amount (% of outstanding home loan) If you have an outstanding home loan of $800,000 over 25 years, and you make a one-time partial prepayment:
Be sure to check if there are any penalties first. You can consider making a lump sum pre-payment on your home loan to reduce your monthly payments and save on interest over the long run. TipEven if you are eligible for a bigger loan or a longer loan tenure, do not take it up unless you are sure you will have the resources to fund it. To illustrate, here's what happens to the monthly instalment for an S$800,000 30-year loan at different interest rates using monthly rest method: The common method of calculating interest is monthly reducing (monthly rest).Įven a small increase in interest rates can affect your monthly instalment and the effective interest rate that you will end up paying for your loan. Make sure you know how much your monthly payments will increase when the promotional period is over. Note: A promotional rate is lower than the rate for the remainder of the loan. What special features, if any, apply and if these will be removed or amended later.Under what circumstances the rate is changed.How often this interest rate may be reset.To understand the differences of the various bank loan packages better, ask your bank to explain: Banks must inform you in advance (usually 30 days) before they change the interest rate on your housing loan. The reference rate can change at any time, depending on the prevailing market conditions. If the reference rate goes up, the interest payable will increase and vice versa.CPF Ordinary Account, Singapore Interbank Offered Rate (SIBOR), Singapore Swap Offered Rate (SOR) or a rate determined by the bank (e.g. Rate varies and is usually tied to a reference rate e.g.After a fixed rate period, interest becomes variable.Rate does not change even when market rates fall.Rate is fixed and will not change for the first few years (promotional rate).This interest rate is revised in line with the revision of CPF interest rates.įor banks, there are two main types of home loans: HDB offers a concessionary loan for HDB buyers only, at an interest rate that is pegged at 0.1% above the CPF Ordinary Account interest rate. Each lender will assess your eligibility based on its criteria. If you are self-employed or do not have a regular income, you must demonstrate the ability to service monthly instalments to be eligible for a loan. Fulfilment of the Monetary Authority of Singapore’s property loan rules and HDB's/the bank’s internal credit requirements.HDB and the banks will have their own eligibility criteria for prospective borrowers. Interest is charged from the first disbursement.The loan is disbursed after the downpayment is made, when you pay the remaining purchase price to the seller.The amount granted is based on eligibility.Your property is used as collateral for the loan.For HDB flats, you may also be able to tap on housing loans at a concessionary interest rate, subject to HDB's criteria. Making a partial pre-payment can help you lower your monthly loan payments and save on the interest as well.Īn HDB loan or home loan is money borrowed from HDB or the bank to help you buy your property.Refinancing a home loan may help you save on the interest.For bank loans, variable rates will kick in after the fixed rate lock-in period ends (differs by loan package).The HDB Loan Eligibility (HLE) letter and property loan fact sheet contain the terms of your loan and show how rising interest rates could affect your repayments.
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