Financing & loans

EIR

The effective interest rate (EIR) is the true yearly cost of a loan, taking into account how interest is calculated and how often you repay.

Fixed-Rate Home Loan

A fixed-rate home loan charges an interest rate that stays the same for the first few years of the loan, regardless of market movements.

Floating-Rate Home Loan

A floating-rate home loan has an interest rate that moves with a reference rate, such as SORA, the CPF Ordinary Account rate (for HDB loans) or the bank's own board rate.

HDB Housing Loan

An HDB housing loan is a loan from HDB to buy an HDB flat, at a concessionary interest rate pegged 0.1 percentage point above the CPF Ordinary Account rate (2.6% a year when the OA rate is 2.5%).

IPA

An In-Principle Approval (IPA) is a bank's early, indicative assessment of how much it may lend you for a home, given before you commit to a purchase.

Loan Tenure

Loan tenure is the length of time over which you repay a home loan.

LTV

The loan-to-value (LTV) limit is the maximum share of a property's price or valuation, whichever is lower, that you can borrow for a home in Singapore.

Lock-in Period

A lock-in period is the time at the start of a home loan during which you may pay a penalty if you repay part or all of the loan, or refinance it with the same or another bank.

MSR

The Mortgage Servicing Ratio (MSR) limits the monthly repayment on a loan for an HDB flat or a new executive condominium to 30% of the borrower's gross monthly income.

Refinancing

Refinancing means moving your home loan from your current lender to a new one, usually for a lower interest rate.

Repricing

Repricing means switching your home loan to a new package with the same bank, usually to get a lower interest rate.

SORA

The Singapore Overnight Rate Average (SORA) is the average interest rate at which banks lend Singapore dollars to each other overnight without collateral.

TDSR

The Total Debt Servicing Ratio (TDSR) caps how much of your gross monthly income can go towards all your debt repayments when you take a property loan from a bank in Singapore.