Answer
How to Compare Home Loans in Singapore
Fixed vs floating, lock-in periods, penalty fees, and when to refinance.
Answer: Compare home loans on 4 factors: (1) rate type — fixed 2.65-2.80% for 2-3 years vs floating SORA/SIBOR + 0.8-1.2%; (2) lock-in period — typically 2-3 years with 1.5% penalty to break early; (3) total cost over the lock-in horizon, not just headline rate; (4) flexibility — partial repayment caps, refinancing restrictions. Start with fixed rate if you want certainty, floating if you believe rates will stay low. Refinance when lock-in ends and you can save ≥0.3% p.a.
Fixed vs Floating Rate
| Type | Current Range | Pros | Cons |
|---|---|---|---|
| Fixed Rate | 2.65-2.80% | Predictable monthly payment, immune to rate hikes | Higher initial rate, miss out if rates fall |
| Floating (SORA) | 2.50-2.80% | Lower initial rate, benefit if rates drop | Monthly payment fluctuates, risk of rate spikes |
Rates as of Feb 2026. Fixed rate locks for 2-3 years, then converts to floating. Floating rate (SORA/SIBOR + spread) changes monthly.
Lock-In Period & Penalty
Lock-in period = minimum time before you can refinance or fully repay without penalty. Typical lock-in is 2-3 years for Singapore bank loans. HDB loans have no lock-in — you can repay early anytime without penalty.
| Lock-in Period | Penalty (if broken early) | Example Cost |
|---|---|---|
| 2 years | 1.5% of outstanding loan | $15,000 (on $1M) |
| 3 years | 1.5% of outstanding loan | $15,000 (on $1M) |
| HDB loan | No penalty | $0 |
Partial repayment is usually allowed up to 20-25% of the original loan per year without penalty, even during lock-in. Check your loan agreement.
4-Step Loan Comparison Checklist
1. Interest Rate (headline vs effective)
Don't just compare headline rates. Calculate total interest paid over the lock-in period. A 2-year 2.68% fixed might cost more than a 3-year 2.75% fixed if you plan to hold for 3 years.
2. Lock-In Terms
Check: (a) lock-in duration (2 or 3 years?), (b) penalty % (1.5% is standard, some charge 2%), (c) partial repayment cap (can you pay down 20-25%/year?). Shorter lock-in = more flexibility to refinance.
3. Post-Lock-In Rate
Fixed-rate loans convert to floating after lock-in. Check the spread (e.g., SORA + 1.0%). Some banks lure you with low fixed rates, then charge high floating spreads. Plan to refinance at lock-in expiry.
4. Fees & Flexibility
Legal fees ($2K-$3K), valuation ($300-$500), subsidy clawback (if refinancing with cash rebate). Ask: Can you switch from fixed to floating mid-contract? Any caps on partial repayment? Any age-based tenure reductions?
Example: $1M Loan Over 25 Years
Comparing 2-year fixed vs 3-year fixed vs floating SORA
| Loan Package | Monthly Payment | Total Interest (Lock-In) | Penalty to Exit |
|---|---|---|---|
| 2-year fixed 2.68% | $4,570/mo | $53,200 (2yr) | $15,000 |
| 3-year fixed 2.75% | $4,620/mo | $81,500 (3yr) | $15,000 |
| Floating SORA+0.95% (2.50%) | $4,460/mo* | $48,800 (2yr)* | $15,000 |
*Floating rate assumes SORA stays at ~1.55% for 2 years. Actual payment will fluctuate monthly. Interest shown is illustrative.
When to Refinance
Start comparing rates 3 months before lock-in expires. Banks need 6-8 weeks to process refinancing. Refinance if:
- →Market rate is ≥0.3% lower than your current rate (savings justify $2K-$4K refinancing cost)
- →Your lock-in has ended (no penalty)
- →Outstanding loan is ≥$500K (below this, refinancing costs eat the savings)
- →You plan to hold the property for ≥2 more years (don't refinance if selling soon)
Repricing (staying with same bank, new rate) is free and easier than refinancing (switching banks). Ask your current bank first.
Calculate Your Mortgage Cost
Use the mortgage calculator to compare monthly payments, total interest, and stress test scenarios at different interest rates.
Mortgage CalculatorFAQ
What's the difference between fixed and floating rate home loans?
Fixed rate loans lock your interest rate (e.g., 2.65-2.80% for 2-3 years), then revert to floating. Floating rate loans (e.g., SORA/SIBOR + 0.8-1.2%) change monthly based on market rates. Fixed = predictable, floating = lower initial rate but subject to market volatility.
What is a lock-in period and how long is it?
Lock-in period is the minimum time you must stay with the bank before refinancing or early repayment without penalty. Typical lock-in is 2-3 years for Singapore property loans. Breaking it early costs 1.5% of the outstanding loan amount.
When should I refinance my home loan?
Refinance when: (1) your lock-in expires, (2) market rates are 0.3% or more below your current rate, and (3) refinancing costs ($2K-$4K in legal/valuation fees) are justified by interest savings over the next 2-3 years.
How much is the penalty for breaking a lock-in period?
Typical penalty is 1.5% of the outstanding loan amount. For a $1M loan, breaking lock-in early costs $15,000. Some banks charge up to 2%. HDB loans have no early repayment penalty.
Should I pick a 2-year or 3-year fixed rate?
2-year fixed if you expect rates to fall soon and want flexibility. 3-year fixed if you want maximum rate certainty and plan to refinance after lock-in ends. Compare the all-in cost over the lock-in period.
Related
Last updated Feb 2026. Interest rates are indicative and change frequently. Lock-in and penalty terms vary by bank. This is a comparison guide, not financial advice. Always read the loan agreement before signing.