Different Home Loan Package
BLR(Base Lending Rate) is set by the central bank, and current BLR is 6.75% while fixed rate is set by the financial institution, normally they have a certain limit when you do the prepayment, you will be charged once you exceed the limit.
Different bank may give you different BLR rate, but 1 thing that I can tell you here is ABN AMRO Bank always give the lowest rate. (app 6.0%-6.5% )
Thus you need to know what is your needs in order to choose the right loan package.
Fixed Vs Floating
Should we switch to a fixed-rate loan, as every increase of BLR will affect our cash flow?
It is beyond our expectation indeed. If the rates don’t jump a lot, floating rates loans may still be lower than fixed rate loans.
1) Short term property investor, they will look for the floating loan package, which is lowest rate or even zero interest rate at the 1st year. Once the capital appreciates in 2 years, they will sell off the property to gain the profits.
2) Own staying purpose, mostly people will go for fixed interest rate. This is because they are not planning to sell the house within 10years or 20years. Fixed rate loan provides peace of mind for those who like stability. The only downside of fixed rate is lack of flexibility, which does not allow you to pay off more loans to save interest and withdraw the extra that you paid.
*But certain bank have such feature like OCBC Islamic Banking.
April 26th, 2008 at 12:07 pm
u have good post about diffrent between 2 types of rate…
April 27th, 2008 at 7:29 pm
I would say those fixed interest rate are suitable for those who’re doing business and looking for stability.
April 28th, 2008 at 11:58 pm
from the history record..the BLR rate can go up to 13% like that..it’s a challenge for home purchaser to choose…
i don get what u meant by “normally they have a certain limit when you do the prepayment, you will be charged once you exceed the limit.”????
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September 26th, 2008 at 9:29 am
Understanding the various types of home loans will help you choose the best home loan that is right for you and for your family as well.
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