As you may already be aware, there are three kinds of bank home loans – fixed, floating and hybrid – and SORA loans are floating interest rate loans.
If you are planning to buy a new launch condo that hasn’t received its TOP (i.e. building under construction (BUC)), you may be wondering which type of loan suits you best.
In reality, for BUCs, there really isn’t much of a choice. Although the current climate of rising interest rates probably favours a fixed-rate loan, for BUCs, only floating-rate loans are applicable.
However, you may be heartened to note that developers will often throw in other incentives such as per-square-foot discounts, absorption of stamp duties or waiver on administration costs.
Fixed-rate home loans are not available for buildings under construction
What’s more, if you had chosen a loan package that doesn’t have a long lock-in period, you can convert to a loan with a lower interest rate once the lock-in period has expired. Having this feature is important because, typically, housing loans for BUCs are lower during the initial 2 to 3 years, but subsequently rises to higher rates comparable to normal home loans.
On top of that, having bought the property during the launch period, you have already saved a fair bit because property prices rise as building work progresses.
So, all in all, it’s a pretty good deal for you. Here’s a sample of home loan packages for BUCs offered by five financial institutions in Singapore
(3M SORA + 0.700%)
(3M SORA + 0.700%)
(3M SORA + 0.750%)
(3M SORA + 0.800%)
(3M SORA + 0.700%)
(3M SORA + 0.700%)
(3M SORA + 0.750%)
(3M SORA + 0.800%)
(3M SORA + 0.700%)
(3M SORA + 0.700%)
(3M SORA + 0.800%)
(3M SORA + 1.500%)
(3M SORA + 0.800%)
(3M SORA + 1.350%)
(3M SORA + 1.000%)
(3M SORA + 1.500%)
(3M SORA + 0.800%)
(3M SORA + 1.350%)
(3M SORA + 1.000%)
(3M SORA + 1.500%)
(3M SORA + 0.800%)
HDB
>= $250K to $2,000
(3M SORA + 1.350%)
Min loan $500K
Legal subsidy: $1,800
(3M SORA + 1.000%)
(3M SORA + 1.500%)
<$500K – 0.40% x loan amount
>= $500K to $2,000
>= $1M to $2,500
>= $1.5M = $2,800
Legal subsidy: $2,000
>$1.5M = $2,500
≥$1M to $2,500
≥$1.5M to $2,800
$300K to $2,000
1 X free conversion after 1st disbursement
Valuation subsidy for refinancing
$500K: $350
$1M: $500
Min loan for SCB priority
Client: $800K
1 x free conversion within 6 month from T.O.P
Waiver of cancellation due to sale
3M SORA: 1.2712% (as of August 2022, first business day)
Mortgage One interest offset feature (Private property only)
Or
Priority mortgage plus
>$200K deposit
Y1 – Y4: Spread lowered by 0.05%
Thereafter: Spread lowered by 0.10%
>$500K deposit
Y1 – Y2: Spread lowered by 0.05%
Thereafter: Spread lowered by 0.10%
3M SORA: 1.2712% (as of August 2022, first business day)
Waiver of cancellation fee due to sale
3M SORA: 1.2712% (as of August 2022, first business day)
– No valuation report required.
3M SORA: 1.2712% (as of August 2022, first business day)
Clawback is pegged to lock in period
Loan disbursement must be within 9 month from date of LO
1 x free conversion within 6 month from T.O.P
Source: Redbrick.sg
In this article, we’ve discussed the home loans available for buildings under construction. If you want to know more, schedule a visit with us or book a free consultation with our trusted and renowned representatives.
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