What Does It Mean?
Fixed-Rate Home Loan
A fixed-rate home loan locks your interest rate for a set period (commonly 1–3 years), so your monthly repayment stays constant regardless of market movements. It offers predictability and protection against rising rates, usually at a small premium over the prevailing floating rate. After the fixed period ends, the loan typically reverts to a floating rate.
Floating-Rate Home Loan
A floating-rate home loan has an interest rate that moves with a benchmark — in Singapore, most are pegged to 3-month compounded SORA plus a bank spread. Repayments fall when rates drop and rise when they climb. Floating packages usually start cheaper than fixed and often have no or shorter lock-ins, but expose you to rate volatility.
Lock-In Period
A lock-in period is the span (commonly 1–3 years) during which you are penalised — usually 1.5% of the outstanding loan — for redeeming or refinancing your mortgage. Fixed-rate packages almost always have a lock-in; some floating packages do not. Aligning the end of your lock-in with your refinancing plan avoids paying the penalty.
Key Differences
| Aspect | Fixed Rate | Floating Rate |
|---|---|---|
| Rate certainty | Fixed for 1–3 years | Moves with 3M SORA |
| Starting rate | Slightly higher | Usually lower |
| Protects against rate hikes? | Yes (during fixed period) | No |
| Benefits if rates fall? | No (until reversion) | Yes |
| Lock-in | Almost always | Sometimes none |
| Best for | Budget certainty, rising-rate outlook | Cost savings, falling/stable-rate outlook |
Neither is universally better — the right choice depends on your rate outlook and how much payment certainty you need. Many buyers split the difference or refinance when their lock-in ends.
Why It Matters
The fixed-versus-floating choice directly shapes your monthly outlay and your exposure to rate swings. Picking the wrong one for the rate cycle — or ignoring the lock-in — can cost thousands in extra interest or early-redemption penalties over a loan's life.
Where to Find This on ShiokNest
- Mortgage Calculator
- Loan Comparison Calculator
- Refinancing Calculator
Look for the tooltip icon next to this metric on ShiokNest for a quick reminder of its definition.
Official Sources
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Frequently Asked Questions
What happens when my fixed-rate period ends?
Is a lock-in the same as the fixed period?
This glossary article is auto-generated from ShiokNest's financial data and updated periodically. Rates and figures are current as of July 2026. Check official sources for the latest.