Options for Fixed or Floating Home Loan Rates

A mortgage loan is a huge commitment, and the the temptation with current low interest rates is to borrow big and get the bigger grander homes. But this can be a minefield especially when it comes to loans.

It is obvious that with the current low levels of interest rates, that means the only way it can go is up and up. So an affordable mortgage could soon become a deadly noose when interest rates soar. Home buyers need to understand how rising interest rates will impact their repayments.

Buyers must consider, when buying a home, their ability to repay the loan over the long term and their monthly cash flow and other outstanding liabilities. But with a myriad choices available by the banks for borrowers to consider, making the crucial decision can be difficult.

Generally, banks offer either a fixed or floating rate package. A fixed rate package means that the interest rate is set for a period of one to three years. The actual rate varies between lenders.

Floating mortgage rates have interest rates pegged to an index which fluctuate from time to time. Floating mortgages in Singapore are usually pegged to Singapore Interbank Offer Rate (Sibor), the Swap Offer Rate (SOR) or the CPF Ordinary Account interest rate, and the board rates of each bank.

Besides the standard rate package, most banks also reward customer loyalty and take the their relationship with customers into account when making a mortgage offer. The rates offered by banks may appear competitive, but do shop around in case something better is available.

Local Singaporean and foreigners looking to invest in in Singapore property market should check out BuyRentSingapore.com - or BuyRentSingaporeProperty.com - to get an overview of the available projects and the latest promotional offers.

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