ESSENTIAL QUESTIONS TO ASK BEFORE GETTING THE BEST MORTGAGE LOAN IN SINGAPORE

Buying a home is one of the biggest commitments many of us will ever make. In Singapore’s dynamic property market it’s especially important to ask the right questions so you can capture the best home loans and avoid costly surprises. 

Below are key questions you should ask before applying for a mortgage loan in Singapore — with a focus on understanding and comparing mortgage loan rates and home loan interest rates.

Am I getting the lowest home loan rates available for my situation?

It’s easy to rely on the first bank you approach. But there are hundreds of home loan products in Singapore at any given time. Many borrowers only explore one or two.

You should ask your bank (or a mortgage broker) if they have access to the full range of options, including those not openly advertised. A broker can do the heavy lifting of comparing multiple lenders and presenting you with what might truly be the best mortgage loan for your profile.

Comparing home loan packages from different banks is the best way to find the cheapest mortgage in Singapore. Avoid assuming all banks offer similar rates—each lender prices their loans differently.

What happens to the interest rate after any introductory or teaser period?

Many home loans begin with attractive rates for a few years (for example, low initial best home loan rate). But after that period ends, the rate may adjust higher.

Ask: “What is the rate beyond year 3 or year 5?” Because if you’re planning to repay the loan over 20-30 years, those long-term mortgage loan interest rates matter far more than the introductory rate. Also ask how often the rate can change, and what the typical uplift has been historically.

Is the loan linked to a floating benchmark like SORA or a fixed-deposit-based rate?

You’ll commonly find two broad types in Singapore today:

• A rate tied to the Singapore Overnight Rate Average (SORA) — the current industry benchmark that replaced SIBOR.

• A rate linked to the bank’s fixed deposit rate (often called FHR or FDR).

Each has its pros and cons: a SORA-pegged loan moves in line with market interest rates — you could benefit if rates fall, but your repayments may rise when rates climb. A fixed-deposit-based loan generally offers more stability, as banks adjust these rates less frequently, but the trade-off is less transparency compared to SORA.

For a more comprehensive explanation, refer to our prior article on the different types of home mortgage loan rates in Singapore

Ask the bank: “Is the rate pegged to SORA or your fixed deposit rate? How often does it adjust? What has been the movement over the past few years?”

Understanding how your chosen benchmark affects your repayments is key to comparing home loan packages properly.

Are there lock-in periods, and what are the penalties for refinancing early?

Some home loans appear cheaper because they offer attractive rates — but they bind you in via lock-in clauses for, say, 3 to 5 years. During this time, if you want to refinance (because a better rate has appeared), you may face a penalty — e.g., a percentage of the outstanding loan amount.

Ask: “What is the lock-in period? What is the exit or refinancing penalty?” Because flexibility is important — if rates drop, you don’t want to be stuck paying more.

When comparing mortgage loan rates, always factor in how much cost you’d incur to switch.

How do the property valuation and loan-to-value (LTV) ratio affect my borrowing capacity?

Your maximum borrowing and monthly repayment capacity depend in part on how your chosen bank values the property. The lower the bank’s valuation, the more cash you may need to bring in — and the more your effective cost per month goes up.

Also in Singapore the Total Debt Servicing Ratio (TDSR) limits your total monthly debt repayments (including your home loan) to a certain percentage of your gross income.

So ask: “What valuation is assumed? What LTV can I expect? How will the TDSR affect how much I can borrow?” This helps you compare home loans more meaningfully — it’s not just about the interest rate, but about realistic monthly repayments.

Will the bank’s rate remain competitive throughout the tenure?

Sometimes banks offer aggressive rates to attract borrowers but then taper the competitiveness of subsequent offers or adjustments. When you’re looking for the best home loans, you should ask: “How often do you review the rate? Have you raised the margin previously? Under what conditions might the rate go up?”

Even if you plan to lock in a long-term rate, you should understand how the bank behaves over time. Mortgages are long-term commitments — what matters is how the rate plays out 10, 15 or 25 years later.

Have I engaged a qualified mortgage broker to help me compare home loan interest rates?

A good mortgage broker in Singapore can save you time and potentially money. They typically have access to multiple lenders, some of which may offer exclusive or unadvertised deals. They help you compare the fine print (lock-in, penalties, benchmark, margin) — not just the headline rate.

If you wish to go it alone, make sure you still ask all of the above questions yourself. If you use a broker, ask: “Which banks do you compare? What are the exclusive deals you have access to? What are your fees?”

Using a broker doesn’t guarantee the lowest home loan rates — but it does increase your chance of finding the best mortgage loan for your specific profile.

Final thoughts

Securing the right mortgage loan in Singapore means more than just looking at the rate advertised today. It means looking at the long-term structure of the loan, the benchmark used, the flexibility, the penalties, your repayment capacity (via TDSR), the property valuation, and whether you’ve truly compared across the market.

When you focus on these essential questions, you’ll be in a much stronger position to choose a home loan that won’t just look good on paper, but will perform well for you over the long haul.