How can I lower my home loan interest rates? 

There are 5 points to take note of if you want to lower your home loan interest.

1. Interest-offset mortgage

You are allowed to earn interest is (albeit only a certain fixed portion, usually 2/3 of the deposit amount) on your loan deposit to help offset the interest on the mortgage. The remaining of the deposit earns a lower rate. This is an attractive option if you have a significant amount of cash in banks that earn lower deposit rates.

2. Interest-only mortgage

This is where your monthly repayments cover only the interest portion. The principal repayments are made only at the end of the loan term. Usually, this option applies if you intend to refinance your loan at the end of the loan term.

3. Refinancing

 You can refinance to get lower rates again, especially after your lock-in period with your current bank is about to expire in 2 months or has already expired. It can sometimes allow you to increase your loan amount, thus saving money from paying too much for the property. In Singapore, current loan rates are lower than the inflation rates; hence having more loans is actually advantageous to the Borrower. By large, mortgages are the cheapest means of financing available as compared to personal loans and other types of loan.

4. Loan to Value (LTV)

A percentage figure indicating the size of the housing loan on a property in relation to its value. For example, a house worth S$500 000 with a mortgage of S$400 000 would have a loan to value of 80%. Most banks have better housing loan deals for LTV 80% and below. The maximum LTV that lenders can legally go to in Singapore is 90% by DBS and OCBC, while Standard Chartered can provide up to 85%.

5. Quantum Loan

 The loan amount that you borrow from a bank, which can lead up to 90% of the property price. The lower the quantum loan, the lower your interest rates will be.