As I write this article, SIBOR prices in Singapore are always low. This means that many Singaporeans, especially young people in middle class, are buying expensive land because of low borrowing rates that enable them to repay large sums of money. But architects warn you not to take this bad habit for granted. The Singapore market cannot remain secure from what is happening around the world. If current trends are a sign of things to come, the world is headed for another recession (or perhaps depression), and Affordable suit Singapore will be an unwilling participant. The government has also warned that unemployment rates could rise in 2012. Buyers of real estate, especially beginners, must understand the risks before committing to a mortgage that can last up to 20 to 30 years. Here are a few things to consider when considering Singapore loans:
- Banks are not charities and are here to make money. Do not go hunting for the best loan package in the market; instead choose the one that suits you best. Factors such as your risk tolerance, market impact, and other personal circumstances should be considered before buying a property. There are hundreds of packages out there in the market, and each one is designed to fit the profile of the target segment.
- SIBOR refers to the Singapore Interbank Offered Rate and is equal to the area of LIBOR (London Interbank Offered Rate). Determined by the Association of Banks in Singapore (ABS). In Singapore, fluctuations in SIBOR rates are causing considerable interest in the market, with many mortgage lenders using SIBOR values as a benchmark for their loan portfolios. Contrary to popular opinion SIBOR ratings are also flexible, albeit very volatile. And if you choose to borrow money with a short downtime, you are at risk of being caught unfairly SIBOR, unless you are willing to pay a ransom.
- The SOR or Swap Offered Rate is also adjusted by the Association of Banks in Singapore and depends on the calculation of the complex forex rate. Although SOR rates are traditionally known to be variable, recent trends have shown that they are lower than SIBOR. A SOR bank-based loan is good if you can afford the risk.
- Both SIBOR and SOR are portable signals based on market factors. Changes in market trends will certainly affect these levels, and you cannot protect yourself from these changes. Fixed interest rates are good if you do not agree with the risk. Therefore, you will be paying a fixed amount even if the SIBOR and SOR values fluctuate. But most home loan packages offer only a fixed amount for a period of time, after which interest rates are calculated at SIBOR or SOR rates.
Before choosing a home loan package, make sure you understand the basics of the interest rate structure, and other details. Only you know your status; therefore decide for yourself a structure that works best for you.
