Comparing home-loan packages means looking beyond the headline year-1 rate. Evaluate the fixed or floating benchmark, the spread, how the rate steps up after the lock-in period ends, redemption penalties, and legal subsidies before choosing. Use the Loan Comparison Calculator to model total interest across the full lock-in window and pick the package that costs least over your actual holding period (as of 2026-06).
A home loan is likely the largest financial commitment you will ever take on, yet many borrowers compare packages solely on the first-year rate printed in the brochure. That number is almost always the most attractive rate the bank can offer — it drops after the lock-in period, and the spread often steps up by 0.2 to 0.5 percentage points. Understanding how to strip a loan package down to its real, total-interest cost over your holding period separates a genuinely competitive offer from one that is cheap upfront but expensive over time.
This guide walks through every lever inside a Singapore home-loan package — from benchmark choice and spread mechanics to lock-in penalties and HDB concessionary loan trade-offs — and shows you how to compare two packages apples-to-apples using a worked three-year example. By the end you will know exactly which inputs matter, which figures to ignore, and how to use the Loan Comparison Calculator and the Mortgage Calculator to produce a side-by-side cost breakdown in under five minutes.
The mortgage landscape in Singapore (as of 2026-06)
Singapore residential mortgages come in two broad categories: bank loans and the HDB concessionary loan. Bank loans can be fixed-rate or floating-rate. The HDB concessionary loan sits at 2.6% per annum (CPF Ordinary Account rate plus 0.1%), is payable using CPF or cash, imposes no lock-in period, and carries no prepayment penalty — details at HDB.gov.sg. It is available only to eligible flat buyers who have not previously taken an HDB loan.
Bank floating-rate packages are now pegged to SORA — the Singapore Overnight Rate Average — since SIBOR was discontinued at end-2024 per the Monetary Authority of Singapore (MAS). The most common variant is the 3-Month Compounded SORA, published daily by MAS. A floating package is typically quoted as "3M SORA + spread", where the spread is the bank's margin above the benchmark. Fixed-rate packages lock the all-in interest rate for a defined period — usually two or three years — before reverting to a floating rate.
CPF usage rules also affect your effective cost. CPF Ordinary Account savings can service loan instalments, and CPF accrued interest (currently 2.5% p.a.) is charged on withdrawals used for the property — this is recovered at sale, not annually. For a detailed breakdown of CPF implications, see CPF.gov.sg.
Fixed vs floating: which benchmark suits you
A fixed-rate package eliminates short-term interest-rate volatility. You know exactly what your monthly instalment will be for the lock-in period, which is valuable if your budget is tight or if you expect rates to rise. The trade-off is that fixed rates are usually priced 0.1 to 0.3 percentage points above the prevailing floating rate at origination, because the bank is absorbing the rate-risk premium. If SORA falls significantly during your fixed period, you pay above market.
A floating SORA-pegged package passes rate movements through to you immediately. When SORA is low, your instalment drops; when SORA rises, it rises with it. Borrowers who believe rates will remain flat or fall, or who intend to refinance before the lock-in ends, often prefer floating packages for their lower headline spread. The critical variable is the spread the bank adds to SORA — banks compete on this margin, and a difference of 0.2 percentage points compounds meaningfully over a three-year lock-in on a $1 million loan.
A third option sometimes offered is a board-rate package, where the rate is set at the bank's internal discretion. These have largely been replaced by SORA-pegged packages for transparency, but some legacy loans still reference board rates. Avoid new board-rate originations — there is no objective benchmark to anchor the rate.
Your mortgage broker sends you three loan packages. Bank A offers 2.80% fixed for 2 years, Bank B offers 2.60% fixed, and Bank C offers MAS SORASORA + 0.80% with no lock-in. Which one is actually cheapest over your holding period? The answer is not always the one with the lowest headline rate.
This calculator compares up to 3 mortgage packages side by side, factoring in lock-in periods, clawback penalties, subsidies, and post lock-in rates. It could save you tens of thousands of dollars over the life of your loan.
What This Calculator Does
Not all mortgage packages are created equal. Compare up to 3 loan offers side by side — fixed vs floating rates, lock-in periods, clawback penalties, and subsidies. Find the cheapest total cost of borrowing over your expected holding period. Could save you tens of thousands in interest.
You can find this calculator in the Calculators tab on ShiokNest. It updates results instantly as you adjust inputs — no waiting, no page reloads.
Why This Matters
The difference between the cheapest and most expensive mortgage on a $1.125M loan can exceed $50,000 over 10 years. Yet most buyers spend more time choosing their kitchen tiles than their mortgage package. This calculator matters because:
- Headline rates are misleading — lock-in terms, clawback, and post lock-in rates determine true cost
- 30 minutes of comparison shopping could save you $30K-$50K over your holding period
- It factors in subsidies and cashback that reduce your effective cost
What You Will Discover
After running this calculator with your personal numbers, you will know:
- Total cost of each loan package over your expected holding period
- Which package is cheapest factoring in lock-in and clawback terms
- How much you save by choosing the optimal package
Step-by-Step Guide
- 🏠 Navigate to Calculators — Click the "Calculators" tab in the ShiokNest navigation bar. All 26 calculators are grouped by purpose for easy access.
- 🔍 Select the calculator — Choose "How to Compare Mortgage Loan Packages" from the calculator list. You will see default values already loaded so you can explore immediately.
- 📊 Review the results — The calculator updates instantly as you change any input. A comparison table shows total interest, monthly payments, and overall cost for each loan package, highlighting the cheapest option.
- 🔄 Run what-if scenarios — This is where the real power lies. Change one variable at a time to see its impact. For example, try increasing the interest rate by 1% or extending your holding period by 5 years. Note how the results shift.
- 💾 Compare and decide — Run 2-3 different scenarios and note the results. This gives you a range of outcomes to base your decision on, rather than relying on a single projection.
Worked Example
Meet Karen, who has received mortgage offers from three banks for her $1.5M condo purchase. The rates look similar, but the devil is in the details:
| Feature | Bank A | Bank B | Bank C |
|---|---|---|---|
| Year 1-2 Rate | 2.80% (fixed) | 2.60% (fixed) | SORA + 0.80% |
| Year 3+ Rate | SORA + 1.00% | SORA + 1.20% | SORA + 0.80% |
| Lock-in | 2 years | 2 years | None |
| Clawback | 1.5% of loan | 1.5% of loan | None |
| Subsidy | $2,000 legal | None | $3,000 cash |
Bank B looks cheapest in Year 1, but its higher post lock-in spread (SORA + 1.20%) means it becomes the most expensive option from Year 3 onwards. Bank C has no lock-in and no clawback, giving Karen maximum flexibility to refinance. The Loan Comparison calculator adds up the total cost over her expected holding period to reveal which package truly costs the least.
Key insight: A 0.2% difference in interest rate on a $1.125M loan translates to about $2,250/year or $187/month. Over a 5-year holding period, that is $11,250 — well worth 30 minutes of comparison shopping.
Real-World Scenarios to Try
Here are some realistic scenarios you can plug into the calculator right now. Each one reflects a common situation Singapore property buyers face.
| Scenario | Settings to Try | What You Will Learn |
|---|---|---|
| Fixed vs floating | 2.80% fixed (2yr) vs SORA+0.80% | Whether the certainty of fixed rates is worth the slightly higher cost |
| Short vs long lock-in | 2-year lock-in vs no lock-in package | The value of flexibility to refinance or sell without clawback penalties |
| Low rate vs high subsidy | 2.60% rate vs 2.90% with $5K cashback | Whether upfront subsidies compensate for a slightly higher rate |
Expert Tips and Common Pitfalls
💡 Pro Tips
- Use realistic assumptions — Singapore condo appreciation has historically averaged 2-4% per year. Avoid overly optimistic projections. When in doubt, use 3% as a baseline.
- Look past Year 1 rates — Banks offer attractive teaser rates for the first 1-2 years. The post lock-in rate matters more if you plan to hold long-term.
- Factor in clawback penalties — If you might sell or refinance within 2-3 years, a lower-rate package with heavy clawback could cost more than a slightly higher rate with no lock-in.
- Negotiate — Banks have flexibility, especially for larger loans. Ask for better rates or additional subsidies.
⚠️ Common Pitfalls
- Ignoring refinancing costs — If you plan to refinance after lock-in, factor in legal fees ($2K-$3K) and the hassle of switching banks.
🤔 What-If Scenarios to Explore
Get the most value from this calculator by testing these scenarios:
- If you sell after 3 years, does the package with the lowest Year 1 rate still win?
- What if SORA rises by 1%? Which package is most resilient to rate increases?
- Run at least 3 scenarios — best case, base case, and worst case — to understand the full range of outcomes.
Related Calculators
Your property journey involves many interconnected decisions. These calculators work hand-in-hand with this one:
- How to Use the mortgage calculator
- How to Read the Borrowing Sensitivity Heatmap
- How to Check TDSR and MSR Affordability
Ready to Crunch Your Numbers?
Enter the details of 2-3 loan offers and see which one truly costs the least over your expected holding period. A few minutes here could save you tens of thousands.
This how-to guide is auto-generated using ShiokNest's calculator defaults. All worked examples use default values — adjust inputs to match your personal scenario for accurate results.
The hidden cost of the step-up spread
Banks commonly structure packages so the spread increases after the initial lock-in period. A typical structure might be: Year 1: 3M SORA + 0.70%; Year 2: 3M SORA + 0.80%; Year 3: 3M SORA + 0.90%; Year 4 onwards: 3M SORA + 1.20%. The year-1 spread is the number you see advertised. By year four, the effective rate may be 0.5 percentage points higher than the figure that originally attracted you.
This step-up is the single most important structural element to check before signing. Always request the full rate schedule across all years of the package term, not just the initial period. If a bank only provides year-1 and "thereafter" rates, ask explicitly for the year-by-year schedule.
Worked comparison: two packages over 36 months (as of 2026-06)
Assume a $800,000 loan, 25-year tenure, and that 3M Compounded SORA is 3.20% (illustrative, consistent with the rate environment as of mid-2026). Compare two packages:
Package A — Fixed, 2-year lock-in: All-in rate 3.70% for 24 months, then floating at 3M SORA + 1.00% (= ~4.20% at current SORA). Legal subsidy of $2,000 (clawed back if redeemed within 3 years). Prepayment penalty: 1.5% of redeemed amount if within 24 months.
Package B — Floating SORA: 3M SORA + 0.80% in Year 1 (= 4.00%), 3M SORA + 0.90% in Year 2 (= 4.10%), 3M SORA + 1.10% in Year 3 (= 4.30%). No legal subsidy. No prepayment penalty.
Monthly instalments over the 36-month window:
- Package A: ~$4,100/month in months 1–24 at 3.70%; rising to ~$4,300/month in months 25–36 at ~4.20%.
- Package B: ~$4,200/month in Year 1 (4.00%); ~$4,230/month in Year 2 (4.10%); ~$4,280/month in Year 3 (4.30%).
Total interest over 36 months: Package A pays roughly $3,600 less in interest during the fixed window but the post-lock-in rate at 4.20% is competitive. Package B has no legal subsidy, so there is no clawback risk, and the floating structure means the borrower benefits immediately if SORA falls. If you plan to refinance at month 30, Package B's no-penalty structure is materially more valuable — avoiding the 1.5% prepayment fee on an $800,000 loan saves up to $12,000. Use the Loan Comparison Calculator to plug in your own figures and Refinancing Calculator to model breakeven timing on a switch.
Legal subsidies and cash rebates: read the clawback terms
Many bank packages offer $1,500–$2,500 in legal subsidies or cash rebates to defray conveyancing costs. These are beneficial — but almost universally subject to a clawback clause if you refinance within 2 to 3 years. If you take a $2,000 subsidy on a 2-year lock-in and refinance at month 25 (within a 3-year clawback window), you repay the $2,000. Net cost: zero benefit plus the admin friction. Always check the clawback period against your intended holding or refinancing horizon.
Loan tenure and LTV interactions
Your maximum loan tenure is capped at 30 years (or up to 35 years for non-HDB properties under certain bank policies), subject to the borrower not exceeding age 65 at loan maturity. The Loan-to-Value (LTV) limit for a first bank housing loan is 75% of the property price or valuation (whichever is lower). A longer tenure lowers monthly instalments but raises total interest paid substantially — a 25-year vs 30-year difference on an $800,000 loan at 4% adds roughly $45,000 in total interest. Model the trade-off in the Mortgage Calculator before committing to a tenure. See also how district affects property values across District 15 and other areas if you are still choosing a location.
Step by step: how to compare loan packages
- Collect the full rate schedule for every package you are considering. Request the all-in interest rate for every year of the loan, not just the first-year or "initial period" rate. For floating packages, record the spread and the benchmark (3M Compounded SORA). For fixed packages, note the rate during the fixed period and the post-fixed reversion rate.
- Identify and record the lock-in period and prepayment penalty. The lock-in period defines how long you are committed to the bank at the penalty rate. The typical prepayment penalty is 0.75%–1.5% of the amount redeemed. If you may sell or refinance within the lock-in window, the penalty is a direct cash cost — include it in your comparison.
- Check every legal subsidy or cash rebate for its clawback period and conditions. Write the clawback deadline into your calendar at origination. If the clawback period extends beyond your likely refinancing date, discount the subsidy value accordingly.
- Enter both packages into the Loan Comparison Calculator. Input the loan amount, tenure, and the year-by-year rates for each package. The calculator produces a side-by-side total interest cost over the comparison window. Set the comparison horizon to match your planned holding period or refinancing date.
- Model the post-lock-in scenario. Most borrowers refinance when the lock-in ends. Use the Refinancing Calculator to estimate the net savings from refinancing Package A to a lower-spread package at month 25, after accounting for legal fees ($2,000–$3,000 typical) and any outstanding clawback obligation.
- Decide on fixed vs floating based on your rate view and budget flexibility. If your cash flow is tight and you cannot absorb a 0.5 percentage-point rate rise without stress, a fixed-rate package is worth the slight premium for the certainty. If you have buffer and believe SORA will be stable or fall, the lower initial spread of a floating package typically wins over a 36-month horizon.
- Compare against the HDB concessionary loan if you are eligible. At 2.6% p.a. with no lock-in or penalty, the HDB loan is meaningfully cheaper than most bank packages when bank rates exceed 3.5%. Use the Mortgage Calculator to compare total interest: enter 2.6% for the HDB loan and your best bank offer for the bank loan, keeping all other inputs identical.
- Verify MAS-published SORA before finalising any floating-rate decision. The current 3-Month Compounded SORA is published daily on the MAS interest-rates page. Add this spread to the bank's quoted margin to get the true all-in rate at signing. This figure changes daily — always use the most recent published value, not a rate quoted verbally weeks earlier.
- Negotiate on the spread, not just the headline rate. Banks have some discretion on the spread they offer, particularly for loan amounts above $1 million or for borrowers with strong credit profiles. A 0.1 percentage-point reduction in spread on a $1 million loan over a 3-year lock-in saves approximately $3,000 in interest. It is always worth asking.
- Document the final package terms before signing. Ensure the Letter of Offer matches exactly what was quoted: rate schedule year-by-year, lock-in period, penalty percentage, subsidy amount, clawback period, and any fee-waiver conditions. Discrepancies between verbal quotes and the signed document are the borrower's responsibility once signed.
Frequently asked questions
What is the difference between 3M Compounded SORA and a fixed mortgage rate?
3M Compounded SORA is a floating benchmark published daily by the Monetary Authority of Singapore, calculated as the compounded overnight lending rate over a 90-day window. Your instalment changes whenever the benchmark moves. A fixed mortgage rate is a contractual all-in rate locked by the bank for a defined period — typically two or three years — regardless of where SORA moves during that time. After the fixed period expires, the loan usually reverts to a floating SORA-pegged rate. Fixed rates eliminate short-term volatility but are priced with a slight premium to compensate the bank for the rate risk it absorbs on your behalf (as of 2026-06).
Should I choose the HDB concessionary loan or a bank loan?
The HDB concessionary loan at 2.6% p.a. is cheaper than most bank loans when bank rates are above roughly 3.2%, and it carries no lock-in period or prepayment penalty, making it easier to make lump-sum repayments or sell without penalty. The trade-off is that it is only available to eligible flat buyers who meet HDB's income ceiling and have not previously taken an HDB loan. Bank loans offer greater flexibility in loan amount and may be cheaper in low-rate environments. Compare your best bank offer against the HDB rate using the Mortgage Calculator — input 2.6% for the HDB scenario and your bank's quoted all-in rate for the bank scenario, keeping tenure and loan amount identical. Full HDB loan eligibility conditions are at HDB.gov.sg.
What happens if I need to sell my flat during the bank loan lock-in period?
If you sell or fully redeem your bank loan within the lock-in period, you will typically incur a prepayment penalty of 0.75% to 1.5% of the outstanding loan amount at the time of redemption. On an $800,000 outstanding balance, a 1.5% penalty equals $12,000. Some banks also require return of any legal subsidy or cash rebate provided at origination if redemption occurs within the clawback window, which may extend beyond the lock-in end date. Always read both the prepayment clause and the subsidy clawback clause carefully before signing. Factor potential penalty costs into your decision if there is any possibility you may need to sell within the lock-in window.
How do I find out the current 3M Compounded SORA rate?
The current 3-Month Compounded SORA is published daily on the MAS interest-rates page. MAS publishes both the current rate and historical series, which you can use to assess how much the rate has moved over the past 12 to 24 months. To calculate your all-in floating rate, add the bank's quoted spread to the current SORA figure. For example, if 3M SORA is 3.20% and the bank offers a spread of 0.80%, your all-in rate is 4.00%. This rate will change each time the bank resets the SORA component — typically monthly or quarterly depending on the package terms.
How many loan packages should I compare before deciding?
Comparing at least three to four packages from different banks gives you a realistic picture of the market. Focus on packages with the same benchmark type (all fixed, or all floating SORA) in the same comparison round to avoid mixing apples and oranges. For each package, collect the complete year-by-year rate schedule, lock-in period, penalty rate, legal subsidy amount, and clawback period. Enter each into the Loan Comparison Calculator and compare total interest over the window that matches your holding or refinancing plan. Mortgage brokers can accelerate the process by sourcing multiple term sheets simultaneously, but verify all quoted figures against the bank's formal Letter of Offer before making any commitment.