Understanding Home Loan Types in Singapore
Singapore offers three primary types of home loans: fixed-rate mortgages, floating-rate mortgages, and hybrid loans that combine both. Each type has distinct advantages depending on your financial situation, risk tolerance, and market outlook. Understanding these differences is essential for making an informed decision that protects your financial security—a core principle at Homejourney, where we prioritize helping you make confident property decisions.
The mortgage landscape in Singapore has evolved significantly, particularly with the shift from SIBOR to SORA (Singapore Overnight Rate Average) as the benchmark interest rate.[1] This change, implemented from 2021 onwards in accordance with Monetary Authority of Singapore (MAS) regulations, affects how floating-rate loans are structured and priced.[1] Whether you're a first-time buyer or an experienced investor, understanding these loan types helps you compare options effectively and identify which structure aligns with your long-term financial goals.
Fixed-Rate Home Loans: Certainty and Budgeting
A fixed-rate mortgage locks in an interest rate for an initial period, typically between two and five years.[3] During this lock-in period, your monthly repayment remains constant regardless of market interest rate movements. This predictability is particularly valuable when interest rates are rising, as it protects you from unexpected payment increases.
Current market data shows fixed-rate options ranging from 1.45% to 1.75% for 2-year terms, depending on the bank and loan amount.[2] For example, promotional rates from select banks start as low as 1.45% (EMI basis) for 2-year fixed packages, while established banks like Maybank offer 2-year fixed rates at 1.55% to 1.65%.[2] After the lock-in period expires, your loan typically reverts to a floating rate unless you choose to re-fix at the then-current market rate.
Fixed-rate loans are ideal if you prefer budget certainty and believe interest rates will continue rising. However, they typically carry higher initial rates compared to floating options, and breaking the lock-in period early may incur penalties. At Homejourney, we help you compare fixed-rate offerings from major banks like DBS, OCBC, UOB, HSBC, Standard Chartered, and Maybank to find rates that match your financial profile.
Floating-Rate Home Loans: Flexibility and SORA
Floating-rate mortgages tie your interest rate to a benchmark rate plus a bank spread. Previously, Singapore banks used SIBOR and SOR as benchmarks, but the industry has transitioned to SORA, which is considered more stable and transparent.[1] With a floating-rate loan, your monthly payment can change when the benchmark rate moves, offering potential savings if rates decline but exposing you to payment increases if rates rise.
Current SORA-based floating rates range from approximately 3M SORA + 0.25% to 3M SORA + 0.65%, depending on the bank and your loan profile.[2] For context, shorter lock-in periods (such as 1 year) provide more flexibility to switch to different rate packages, while longer periods offer more stability. Standard Chartered and Maybank currently offer competitive SORA spreads with shorter lock-in periods, allowing borrowers to adapt quickly if market conditions change.[2]
The chart below shows recent SORA trends to help you understand how rates have moved:
Floating-rate loans suit borrowers who can tolerate payment variability and believe rates may decline. They're particularly attractive when you want to minimize initial costs or plan to refinance within a few years. Homejourney's real-time SORA tracking feature helps you monitor rate movements and time your refinancing decisions strategically.
Hybrid Mortgages: The Best of Both Worlds
Hybrid loans split your mortgage into two parts: one at a fixed rate and one at a floating rate.[3] This structure allows customization based on your preferences. For instance, you might fix 60% of your loan for stability while keeping 40% floating to benefit from potential rate decreases.
Hybrid mortgages offer flexibility without committing entirely to either fixed or floating terms. However, they involve more complex administration and may carry slightly higher costs than choosing a single loan type. This option works well for borrowers seeking a balanced approach to interest rate risk.
Bank Loans vs. HDB Loans: Key Differences
Singapore offers two distinct mortgage sources: bank loans for private properties and HDB loans for Housing and Development Board flats. Understanding these differences is crucial for your purchasing decision.
HDB Loans feature a fixed interest rate of 2.6%, significantly lower than bank loans.[1] The loan-to-value (LTV) ratio reaches 80%, meaning you only need a 10% down payment (split into two payments).[1] HDB loans are known for lenient repayment terms and lower risk, making them attractive for budget-conscious buyers. However, HDB loans are only available for HDB properties and come with strict minimum occupation periods.
Bank Loans for private properties currently range from 3.7% to 5.5% depending on the loan type and bank.[1] The LTV ratio is typically 75%, requiring a 25% down payment.[1] Bank loans offer greater flexibility, faster approval processes, and access to various rate structures (fixed, floating, and hybrid). They're suitable for private condos, landed properties, and commercial real estate.
For HDB BTOs (under construction), you can choose either an HDB loan or a floating-rate bank loan. For resale HDB flats or completed BTOs, you have access to the full range of options including HDB loans and fixed or floating bank loans.[2]
Comparing Current Bank Rates: January 2026
Bank rates fluctuate based on market conditions, your credit profile, and loan amount. Here's a snapshot of competitive offerings from major Singapore banks:
Fixed-Rate Leaders: Maybank and Standard Chartered currently offer the best 2-year and 3-year fixed rates for private properties.[2] Maybank's 2-year fixed rate starts at 1.65%, while Standard Chartered matches this rate and offers even lower rates for clients with priority banking relationships.[2] These banks don't require lock-in periods for funds, providing additional flexibility.
Floating-Rate Advantages: Standard Chartered and Maybank also lead in floating-rate competitiveness due to their low bank spreads and short lock-in periods (1 year for 3M SORA packages).[2] Shorter lock-in periods allow you to switch to different rate packages quickly if SORA rates increase, reducing long-term interest expenses.
Special Property Categories: For Build-to-Order (BTO) condos, DBS is currently recognized as the best option, offering competitive floating rates and flexible mortgage packages.[2] For loans exceeding S$1 million, banks typically offer cash rebates ranging from S$2,500 to S$2,800, providing additional savings.
At Homejourney, our bank rates comparison tool displays real-time rates from all major lenders, allowing you to compare DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and other partners instantly. You can filter by property type, loan amount, and rate preference to find options matching your specific situation.
Lock-In Periods and Early Repayment Penalties
Most home loans include lock-in periods during which early repayment or refinancing incurs penalties. Lock-in periods typically range from 1 to 3 years, with 2 years being most common.[2] Understanding these terms is essential for your financial planning.
Some banks offer flexibility within lock-in periods. For example, DBS allows conversion from fixed to floating rates anytime during the lock-in period, with 100% penalty waiver on sale.[5] Standard Chartered provides penalty-free conversion after 24 months and waives penalties entirely if you sell the property.[5] These features provide valuable flexibility if your circumstances change.
Before committing to any loan, clarify the exact lock-in terms, penalty structure, and conversion options. Homejourney's mortgage brokers can explain these details clearly and help you identify loans with terms that match your long-term plans.
Assessing Your Borrowing Power
Singapore's Total Debt Servicing Ratio (TDSR) framework caps your total monthly debt repayments at 60% of your gross monthly income.[1] This includes your mortgage, car loans, credit card debt, and other obligations. Most banks use this framework to determine your maximum loan amount.
Your down payment requirement depends on the property type and loan source. HDB loans require only 10% down, while bank loans typically require 25% down. Your credit score, employment stability, and debt history also influence approval chances and interest rates offered.
Homejourney's mortgage eligibility calculator helps you estimate your borrowing power instantly. Simply enter your income, existing debts, and desired property price to see how much you can borrow and which banks are most likely to approve your application. This transparency empowers you to search for properties within your realistic budget.
Making Your Decision: Key Considerations
Choose Fixed-Rate If: You prefer payment predictability, believe rates will rise, or want to lock in current favorable rates. Fixed rates work well for borrowers with tight budgets who can't absorb payment increases.
Choose Floating-Rate If: You can tolerate payment variability, expect rates to decline, or plan to refinance within a few years. Floating rates offer lower initial costs and maximum flexibility.
Choose Hybrid If: You want balanced exposure to both rate types or have specific financial goals requiring customized loan structures.
Choose HDB Loan If: You're buying an HDB flat and want the lowest possible interest rate with lenient terms. The 2.6% fixed rate is unbeatable for budget-conscious buyers.
Choose Bank Loan If: You're purchasing a private property, want flexibility in loan structure, or need faster approval processes.
Streamlining Your Application with Homejourney
Comparing rates across multiple banks and submitting separate applications is time-consuming and frustrating. Homejourney simplifies this process through our integrated platform.
One Application, Multiple Offers: Submit a single application and let banks compete for your business. Receive offers from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and other major lenders, then choose the best option.
Singpass Integration: Auto-fill your application in seconds using Singpass/MyInfo. This reduces paperwork, speeds up approval, and minimizes errors. Your personal and financial information is securely verified, giving banks confidence in your application.
Expert Guidance: Our Homejourney Mortgage Brokers provide personalized advice throughout the process. They explain rate structures, clarify terms, and help you understand which loan aligns with your financial situation. This human touch ensures you're making informed decisions, not just chasing the lowest rate.
Real-Time Rate Tracking: Monitor live 3M SORA and 6M SORA rates directly on our platform. Time your refinancing decisions strategically by understanding rate trends and market forecasts.
Visit our bank rates page to compare current offerings, calculate your eligibility, and start your application today. Our commitment to user safety means we verify all information and ensure transparent communication from every lender.
Frequently Asked Questions
Q: What's the difference between SORA and SIBOR?
A: SORA (Singapore Overnight Rate Average) replaced SIBOR as Singapore's primary benchmark rate from 2021 onwards. SORA is based on actual overnight lending transactions and is considered more stable and transparent than SIBOR, which was calculated from bank submissions. Most new loans now use SORA as the benchmark.[1]
Q: Can I refinance my home loan to get a better rate?
A: Yes, refinancing is possible after your lock-in period expires or, in some cases, with early repayment penalties. Many borrowers refinance when rates drop or when switching to a better-structured loan. Homejourney makes refinancing easier by comparing options from all major banks and handling the application process. However, factor in refinancing costs (legal fees, valuation) when calculating potential savings.
Q: What happens when my fixed-rate period ends?
A: Your loan automatically converts to a floating rate unless you choose to re-fix at the then-current market rate. Most banks notify you 2-3 months before expiration, giving you time to decide. You can refinance to another bank if better rates are available, though this incurs refinancing costs.
Q: How much down payment do I need?
A: HDB loans require 10% down payment (split into two payments), while bank loans typically require 25% down. Some banks offer higher LTV ratios (up to 80%) for well-qualified borrowers, reducing down payment requirements. Your credit score, income stability, and existing debts influence the down payment amount.
Q: Is a lower interest rate always the best choice?
A: Not necessarily. Consider the complete package: lock-in period, conversion flexibility, refinancing penalties, and customer service quality. A slightly higher rate with better terms and shorter lock-in period may serve you better than the lowest rate with restrictive conditions. Homejourney's brokers help you evaluate the total value, not just the headline rate.
Taking Your Next Steps
Choosing the right home loan is one of the most important financial decisions you'll make. At Homejourney, we believe informed buyers make better decisions. That's why we've created tools and resources to demystify the mortgage process and connect you with lenders offering the best terms for your situation.
For comprehensive guidance on home loan fundamentals, eligibility criteria, and application strategies, explore our complete home loans comparison guide. For detailed insights on fixed versus floating rates and approval tips, see our Types of Home Loans Singapore: Fixed vs Floating & Approval Tips ">fixed vs. floating rate guide.
Ready to find your ideal mortgage? Visit our bank rates page
