SECOND: Know the Pros & Cons

FIXED RATE

Pros: Provides stability and ease of mind. Rates normally will not fluctuate in the first 3 years. Thus, the monthly installment will be a fixed amount.

Cons: Rates might be higher than floating rates especially in the current market environment. Thus, you might be paying more ‘$$’ monthly.

FLOATING RATE

Pros: Might help you to save lots of ‘$$’ on the interest throughout the loan tenure of the mortgage loan.

Cons: Installment payments vary as it fluctuates up or down depending on the market. Suited more for higher risk threshold customers and depends on the respective bank’s mortgage loan interest rate.

SIBOR AND SOR VS BANK BOARD RATES

If you have chosen floating rate packages for your home loan, you will have to decide on a package that is pegged to SOR, SIBOR, or rates that fluctuate based on the bank’s board rate at its sole discretion.

SIBOR	SOR	BANK’S BOARD RATE
More Stability	More Volatile	Subject to changes
Higher rates (As of now)	Lower rates (As of now)	Higher Rates (As of now)
Pegged against cost of lending of the banks to each other	Pegged against the movement of the US currency	Bank has the discretion to change the rates anytime and it is not as transparent as SIBOR & SOR

NOTE: Do take your time to consider carefully regarding which home loan package and interest rate is the best choice. Transparency in interest rates is the key deciding factor in choosing between banks or financial institutions. There is higher risk involved if you choose a floating rate package that is pegged to Board rates which is set by the bank.