Home Loans

Gem Residences – Which is the Best Home Loan Package For Buyers?

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Peter Lin

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Growing up, I had quite a reputation as a ladies’ man. No, not in the official sense of the phrase, I’m no glorious ladykiller. My reputation was more one of – if you were a woman, chances are I had a crush on you. And if I actually got into a relationship with everyone I had a crush on, I would be pretty broke today – emotionally and financially. But the one thing I learnt through all that? It’s to be honest with your intentions when you’re interested in someone. Or in the case of this article, something.

Gem Residences, a private condominium at Toa Payoh, is launching today, and initial interest in the property has been off the charts since the showflat opened last week. There are several reasons for this. It’s the first private condominium to launch in Toa Payoh in almost a decade, it’s within walking distance from Braddell MRT station on the North South Line, and at an average price of $1,426 psf, it’s comparative to prices paid for other, older condominiums in the Toa Payoh area.

 

So how much is a unit going to cost at Gem Residences?

Despite the relatively low psf prices, buying a unit is still going to be a significant investment. Prices of the 578-unit project range from $578,000 for a one bedroom to about $1.9 million for the biggest unit.

So if you’re one of the thousands who have streamed into the Gem Residences showflat in the past couple of days and have officially expressed interest, then you’ll want to be honest with yourself about your intentions. Have you decided which is the best home loan package for you?

But if you decided yet, here’s our suggestion from among those currently available. The best home loan package right now is the DBS FHR18 fixed-deposit linked home loan package. Here are 2 reasons why.

 

1. Fixed spread throughout

Many home loan packages in the market offer you attractive rates for the first two to three years, and then, in the fourth year, the rates shoot up significantly. Many banks’ explanation for this is that because you’re no longer locked in, there is no penalty for looking for a new home loan rate. What they conveniently don’t mention is that you may not be able to find a good home loan rate to switch to then, and then you’re essentially trapped with the higher rates of your current home loan package.

The DBS FHR18 home loan package offers the same rate, FHR18 + 1.20%, throughout. So whether it’s the first year or the fifth, you’re not going to see your rates shoot up. The only other banks that offer a fixed spread throughout for their home loans are ANZ, Standard Chartered and Bank of China.

 

2. Fixed-deposit linked rates are more stable than SIBOR

In a strange twist of events that would be suitable for the Final Destination or SAW franchises, the threat of a rocketing SIBOR is still an ongoing one. That is, when the SIBOR (both 1-mth and 3-mth) started increasing past 1% over the past several months, many were predicting the start of a significant rise for the rate. Instead, the SIBOR stumbled and dipped, like a really bad porn movie, and never quite reached the climatic peaks we were expecting by now.

That said, it’s still foolish to think we’re going to be experiencing another golden age of SIBOR, when it stayed below 0.5% for more than four years. The SIBOR will rise, and it’s just a matter of when.

Fortunately, banks have introduced a new type of mortgage rate, a fixed-deposit linked rate, with DBS pioneering this product. For DBS, the mortgage rate is pegged to the 18-month fixed-deposit interest rates, hence the FHR18 name. The popularity of the FHR or Fixed Deposit Home Rate led to OCBC, UOB and now Standard Chartered jumping on the fixed-deposit linked rate bandwagon.

Unlike the SIBOR, fixed-deposit interest rates are less volatile, mainly because increasing them is essentially a cost to the bank, since they will need to pay more interest to customers depositing with them. This is especially true for local banks like DBS, which have large amounts of fixed deposits. That’s actually why the Standard Chartered fixed-deposit linked rate may not be as good as it sounds – but we’ll talk about that in a future article so follow us on Facebook!

 

Are you one of those planning to buy one of the 578 new units at Gem Residences?

We highly recommend the DBS FHR18 home loan package for new purchases, like Gem Residences. However, if you are buying one of the 578 new units, do compare the best home loan packages on our site or give our mortgage specialist a call directly at 9732 8433.

Image Credits: Gem Residences

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Peter Lin

I am the poster boy for reinventing one's self. I've been a broadcast journalist, technical writer, banking customer service officer and a Catholic friar. My life experiences have made me the most cynical idealist you'll ever meet, which is why I'm also the co-founder of a local pop culture website. I believe ignorance is not bliss, and that money is the root of all evil only if you allow it to be.

  • Haotang Song (Susan)

    Didnt you just said sibor is better in dbs may day article? I am confused.

    • Hi Susan, thanks for your question. The fact is that there are new home loan packages constantly being introduced so what may have been the best may not remain the best for long.

      In the DBS May Day article I mentioned that there were competitive SIBOR-based packages in the market, some of which have no lock-in period so the risk is lower. However, I also mentioned that the SIBOR is very volatile and has been expected to rise dramatically for a while now.

      Recently DBS has introduced a new home loan package that is a fixed rate home loan package. You can read about it here: http://blog.moneysmart.sg/home-loans/best-fixed-rate-home-loan-package-in-singapore-2016/

      Ultimately, if you’re looking for a new home loan or refinancing, the best is to give our mortgage specialist a call.