Home loan for BUC

[joannen85]

I am looking at 2 loan package for condo for 30yrs tenure:

DBS- FHR 18 months + 1.25%, No Lock in
UOB- 1.68% board rate, No Lock in

I would like to know which is the better package to go with?

Thanks.

 

[Perisher]

I am looking at 2 loan package for condo for 30yrs tenure:

DBS- FHR 18 months + 1.25%, No Lock in
UOB- 1.68% board rate, No Lock in

I would like to know which is the better package to go with?

Thanks.

Just curious which condo are you looking at?

 

[doody_]

I am looking at 2 loan package for condo for 30yrs tenure:

DBS- FHR 18 months + 1.25%, No Lock in
UOB- 1.68% board rate, No Lock in

I would like to know which is the better package to go with?

Thanks.

Obviously the FHR one. That will be more stable in the long run. Fed just raised rates so I wouldn't be surprised if UOB raises their board rate by next month.

 

[starfish.starfish]

Safer to get fixed rates now.

 

[joanie_dan]

no fix rates available for BUC

Safer to get fixed rates now.

 

[joanie_dan]

In which stage is your BUC? If totally from scratch, and expected TOP 3 yrs later(csc 4yrs), you will be stuck with the same bank package for 4 years(til csc). No such thing as after 2 years refi to another bank unless you are ok to pay penalty (typically 1-1.5%) on undisbursed loan amount (add up to thousands) as usually after 2 yrs probably only 20-30% loan disburse, which totally don't make sense. Unless you are buying sub sale, then different story.

I am looking at 2 loan package for condo for 30yrs tenure:

DBS- FHR 18 months + 1.25%, No Lock in
UOB- 1.68% board rate, No Lock in

I would like to know which is the better package to go with?

Thanks.

 

[joannen85]

Obviously the FHR one. That will be more stable in the long run. Fed just raised rates so I wouldn't be surprised if UOB raises their board rate by next month.

Isnt FHR similar to board rate?

 

[joannen85]

no fix rates available for BUC

Yes, there isnt. Its fixed deposit rate that dbs is offering.

 

[doody_]

Isnt FHR similar to board rate?

Not really. I think it's FDR18 you're referring to. Board rate is happily set by the bank, and the only consequence is how much money the bank earns from you.

FHR18 is the fixed deposit rate offered by DBS. Increasing this means DBS also has to pay out more to their depositers.

 

[pty123]

Hello I just got my loan with ocbc. The package they offered me was quite competitive too! Pegged to their 36m fixed deposit rate

 

[joannen85]

Not really. I think it's FDR18 you're referring to. Board rate is happily set by the bank, and the only consequence is how much money the bank earns from you.

FHR18 is the fixed deposit rate offered by DBS. Increasing this means DBS also has to pay out more to their depositers.

Hmm does that mean there is no basis for bank to increase their board rate?

 

[joannen85]

Hello I just got my loan with ocbc. The package they offered me was quite competitive too! Pegged to their 36m fixed deposit rate

Hi, can I know whats the interest rate they offer?

 

[joanie_dan]

36m FD +1.03%? Seems similar to DBS FHR as a counter marketing strategy. Even though "pegged" to fix deposit rate, I am still biased to say they can jolly well increase the loan rate without increasing deposit rates.

Especially so with OCBC, they are very aggressive in their marketing language using words like "pegged" etc on their websites and emphasizing their board rate has not changed since donkey years when selling their board rate pegged loans, but they did raise loan rates when their actual bank board rate has not changed. (Just a personal experience I'm very biased against their mortgage, but I'm using their Ocbc 360, credit cards, etc)

Will be good if you can upload your letter of offer (removing all personal info, address, loan quantum etc) for a very big benefit to all HWZ peeps here so that we can see how they word their contract

Hello I just got my loan with ocbc. The package they offered me was quite competitive too! Pegged to their 36m fixed deposit rate

 

[doody_]

Hmm does that mean there is no basis for bank to increase their board rate?

What I understand is, board rate is simply a number that the bank has plucked out of thin air. They want to earn 3% interest from you, they say their board rate is 3%. 2 years later not earning much, they will just say "Hey guys, raising our board rate to 4% now for no reason at all except to earn more interest from you."

FHR on the other hand is now being used both ways. They could raise it from 0.50% to 1%, which means you need to pay 1.25+1=2.25% interest on your loan. But that also means the bank will be paying out 1% interest on their fixed deposits instead of 0.50%. It's a balancing act, if they have more money in fixed deposits than loans then no way the bank will raise the FHR as they end up paying out more money than they receive.

I have compared both OCBC and DBS before, you do pay lesser for OCBC in the first 3 years as their spread is lower. But 4th year on their spread goes up and it's about 0.25%+ higher than DBS. DBS is a flat 1.25%+FHR18, the spread will not change once you lock it in.

Also, for BUC, it's ok to pay higher interest in the first few years since only part of the loan has been disbursed. The full amount only comes after TOP, if you take OCBC then by then it's "perfect timing" to hit you with their higher interest rates.

 

[joannen85]

No to UOB board rate definitely, even OCBC FDMR package wins UOB board rate, at least you know OCBC FDMR is pegged to their FD while board rate is totally not transparent.
Don't see why they can be even speak on a level term with DBS FHR when they already lose out to DBS effective rate of 1.55% (1.05+FHR18) or 1.65% (1.15+FHR18 with no mortgage insurance)

Advice is to take up 1.25% + FHR18 for the whole tenure.
makes much more sense to take up 1.25% + FHR than 1.25% for only the first 3 years and thereafter 1.80% + FHR.

Thanks. However, who have benefited from either FHR rate or board rate? All I see here is how "buyers" would suffer from board rate etc... But I am just wondering if there are anyone who actually suffer from board rate especially when the rates are increased?

 

[SBC]

Of course, there are.

Do track no of bedok reservoir cases as indicator.

 

[starfish.starfish]

Thanks. However, who have benefited from either FHR rate or board rate? All I see here is how "buyers" would suffer from board rate etc... But I am just wondering if there are anyone who actually suffer from board rate especially when the rates are increased?

You must be very young and not gone through the high interest era, housing rates > 4% was the norm then.
Imagine 4% rate on a million dollar loan.

 

[joanie_dan]

Totally agree UOB board rate is the least favourable. I have seen UOB increase board rate component when SIBOR was decreasing!

No to UOB board rate definitely, even OCBC FDMR package wins UOB board rate, at least you know OCBC FDMR is pegged to their FD while board rate is totally not transparent.
Don't see why they can be even speak on a level term with DBS FHR when they already lose out to DBS effective rate of 1.55% (1.05+FHR18) or 1.65% (1.15+FHR18 with no mortgage insurance)

Advice is to take up 1.25% + FHR18 for the whole tenure.
makes much more sense to take up 1.25% + FHR than 1.25% for only the first 3 years and thereafter 1.80% + FHR.

 

[joanie_dan]

You are right to say that there is no significant interest difference during first 3 years of progressive payment.

Just to add on the board rate portion, technically, the board rate loan packages are just a benchmark "referenced" to the bank board rate. Such loan packages with different spreads are launched to different customers based on tranches (I.e. board rate reference rate - spread) So technically when board rate is unchanged at say 4.5%, they can suka suka increase your loan to 5% - spread.

What I understand is, board rate is simply a number that the bank has plucked out of thin air. They want to earn 3% interest from you, they say their board rate is 3%. 2 years later not earning much, they will just say "Hey guys, raising our board rate to 4% now for no reason at all except to earn more interest from you."

FHR on the other hand is now being used both ways. They could raise it from 0.50% to 1%, which means you need to pay 1.25+1=2.25% interest on your loan. But that also means the bank will be paying out 1% interest on their fixed deposits instead of 0.50%. It's a balancing act, if they have more money in fixed deposits than loans then no way the bank will raise the FHR as they end up paying out more money than they receive.

I have compared both OCBC and DBS before, you do pay lesser for OCBC in the first 3 years as their spread is lower. But 4th year on their spread goes up and it's about 0.25%+ higher than DBS. DBS is a flat 1.25%+FHR18, the spread will not change once you lock it in.

Also, for BUC, it's ok to pay higher interest in the first few years since only part of the loan has been disbursed. The full amount only comes after TOP, if you take OCBC then by then it's "perfect timing" to hit you with their higher interest rates.

 

[joanie_dan]

Thanks. However, who have benefited from either FHR rate or board rate? All I see here is how "buyers" would suffer from board rate etc... But I am just wondering if there are anyone who actually suffer from board rate especially when the rates are increased?

Technically you only have floating rates as a choice. Sibor/Sor, probably sibor/Sor hybrid, board, & FD pegged options.

FHR is a new product (About 2+ yrs), and there is already an example cited on how sibor has increased this past 1-2 years but FHR remained stable, so I don't get your point about asking who benefitted from getting FHR. And also given mortgageguru's analysis of fix deposit rates(FD tenor difference comparison, probability of bank raising FD, transparency of each type etc), & also examples explaining the mechanism of board vs FHR, there is more than sufficient info to extract a decision to your own comfort level.

I don't see a point in asking also for more examples for board rate sufferers or benefiters. It really depends on the year of loan taken and how market rates move and what the bank did consequentially at that time. If you really need so detailed info, i think you should get the services of a mortgage broker(like mortgageguru who has replied, or Loansupermart, icompare, redbrick etc) who might be willing to value add.( and pls take your loan through them) Otherwise I think you can continue to wonder about your various scenarios of benefiters and sufferers of each type of loan package. No offense. Just my opinion.