Channel NewsAsia (CNA) featured SingCapital CEO ALFRED CHIA

Mr. Alfred Chia provides insights on Floating, Fixed, or Flexible: How to Save Money on Your Home Loan

The US Fed has signaled that interest rates will continue to rise, causing some uncertainty among mortgage rates in Singapore. Mortgage brokers are seeing those who took advantage of low rates during the pandemic coming to the end of their lock-in period.

To manage individual risk profiles, it may be beneficial to stick with a fixed rate for the next two years. Flexible packages are also being offered by banks, such as the option to reprice the loan after 12 months or packages with higher fixed rates for the first year in line with market expectations.

Ultimately, it is up to the individual's preference on how to manage their finances in regards to interest rates.

Mortgage holders should consider adjusting the tenure of their loan if their goal is to reduce monthly payments. Extending the tenure from 65 to 75 years can reduce monthly installments, however, the loan will need to be paid for an additional eight to ten years.

For those looking to save more money, shortening the tenure may be beneficial; for example, if a loan of 500,000 is shortened by eight years, monthly payments will increase, but the total savings over the loan period will be 90,000.

It is important to review available loan packages every two to three years to ensure that the best deal is secured prior to the lock-in period ending.

With the current market, it is essential to assess financial requirements and tailor mortgage packages to suit evolving needs.

Source: CNA Insider