If you have a mortgage loan with a bank, you should get worried. Because the mortgage interest you are paying is going to be more than double of what you have paid last year.
To many people, interest rate used to be something you can neglect. It used to be that 0.25% pathetic savings rate which the banks reluctantly credit to you, or the 0.6% to 0.8% fixed deposit rate which makes you to move your money from one bank to another.
But if you are a home owner, the interest rate you should concern now is Sibor (Singapore Interbank Offered Rate). This is because in Singapore, most home loan packages are pegged directly to Sibor or Sor (Singapore Swap Offer Rate). When Sibor or Sor increases, your mortgage interest rate increases and so is your monthly mortgage payment. Do you know how much Sibor has increased last year?
It doesn’t matter whether you like it or not, you have two options:
- Option 1: Be prepare to pay a higher monthly mortgage payment
- Option 2: Refinance your home loan now
How much are you affected by the rising Sibor rate? How many types of home loan package are there? Which one should you choose? Let me explain.