Refinance Housing Loans

What does SIBOR/SOR mean?

Difference between SIBOR and SOR

SIBOR stands for Singapore Interbank Offered Rate and is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the Singapore wholesale money market (or interbank market).

On the other hand,

The Swap Offer Rate (SOR) represents the effective cost of borrowing SGD synthetically through borrowing USD for 3 months and swap out the USD in return for SGD for the same maturity.

The fixing authority for both rates is the Association of Banks in Singapore. To summarize some of the differences between the two:

* Sibor is influenced by the supply and demand for funds in the Singapore interbank market, whereas SOR is more exposed to factors external to Singapore such as USD interest and exchange rates.

* SOR is more volatile because exchange rates as well as USD money market rates tend to fluctuate more.

What are housing loans?

Mortgages are secured loans. Your property is the collateral in this loan transaction. These loans are normally used to finance purchase of HDB flat and private residential property. In Singapore, financial institutions can lend up to 80% of the value of the property, inclusive of CPF contributions, for owner occupied property. The balance of 20%, 5% must be paid in cash and 5% can be in CPF. Before the loan is approved, the bank will get an independent valuer to value your property. This property value is used to determine your loan amount.

For investment properties, the financing offered may vary from bank to bank.

Financial institutions normally approve loan amounts with instalment repayments that are not more than half of your monthly income. This amount will include any other outstanding instalment repayments such as car loans, and other financial commitments.

Currently, there are loan packages which provide fixed rates of up to a few years while others offer floating rates that are pegged against the bank’s board rates.

How do they work?

Interest calculations: Currently, there are two methods of interest rate calculation:

Monthly Rest:
The interest calculations are computed on a fixed date each month. If you repay your installment earlier than this date, you do not benefit from any interest savings.

Daily Rest:
The interest calculations are computed daily. This provides an incentive for you to pay promptly as any reduction in the outstanding balance results in a reduction in interest charge almost instantly. The advantage of daily rest over monthly rest is therefore a slightly more rapidly declining interest expense.

Bridging loans:
Most banks will provide a bridging loan for any mismatch in timing during the process of selling an existing property and buying a new property. This is to tie you over the gap period. However, to qualify for a bridging loan the bank will want assurances that you have sold your existing property. The interest rate for bridging loans is calculated on a daily basis and payable every month. Upon completion of the sale of the property, the bridging loan has to be repaid in full subject to a maximum period of six months.

Default: Mortgage payments that have been delayed for more than three months will be considered a default and usually the bank will step in and try to resolve the problem for instance, by restructuring your loan repayments for you. The bank would only see forced sale of property as the last resort. In any case if you plan your finances properly, forced sale of property is unlikely to happen.

How do I find the best deal?

When shopping for the right mortgage loan, keep these tips in mind:

Match duration: Check the maximum loan term that you can get. The normal loan term is 30 to 35 years, or up to when you are 65 years old, whichever is lower.

Monthly payment projections: Compare the monthly repayment (based on different interest rate scenarios) from various providers to see if you are comfortable with the amount.

Interest rate Comparison: Check to see if the bank offers fixed rate loans and how long the fixed rate period will be, especially if you anticipate interest rates going up.

Fees: Check to see if the bank charges a processing fee, pre-payment fee, or third-party fee (such as a legal fee, valuation fee or insurance premium)

Extras: Check to see if the bank gives free fire insurance and free valuation on your property. Banks may also give legal subsidies.

Penalties: Ask to see what fees will be applied if you do partial or full redemption of your loan.

Banks try to vary their packages here and there to make an “apple to apple” comparison difficult. Consumers also might find comparing different packages daunting. Now, we have a solution to all these problems.

You probably have better things to do than shop around for the perfect home loan. We can check out more Housing Loans in a minute than most people could in a day. This is a service we provide all our clients.

So let us do the legwork. Tell us what’s important to you and we’ll compare the features, benefits and cost of loans from All Banks (both Local and Foreign) and All Finance companies in Singapore.

We provide a hassle-free, one stop comparison and analysis of ALL the housing loan packages available in Singapore.

You can call me Raama at +65 9-235-4014 or email me at

Do not forget to provide us your name, contact no. and email address for a FREE no-obligation discussion and housing loan analysis.
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Raama Subramaniyan
Premium Realtor
CEA Licence No.:
L3010738A / R009557I
+(65) 9235 4014