Home Loans

OCBC Home Loan Review Singapore 2018 – Which Mortgage to Choose from OCBC

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Peter Lin

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OCBC home loan packages have always shown a willingness to remain competitive and ensure that the housing loan packages they offer are among the best in the market. Recently, they also introduced the OCBC Home Rate, or OHR, a new way of calculating a housing loan interest rate that claims to be much more stable than SIBOR or even fixed-deposit linked home loan packages.

If you’re buying a new property and looking for an OCBC home loan, here are the best packages they offer, whether your property is uncompleted or completed.

 

OCBC Home Loan for an HDB BTO, Building under Construction, with a purchase price of $350,000, loan tenure of 25 years

Home Loan Package Estimated Monthly Instalment Notes
Year 1: OHR + 0.65%
Year 2: OHR + 0.70%
Year 3: OHR + 0.75%
Year 4: OHR + 0.80%
Thereafter: OHR + 0.90%
$1,143 Free change of interest rates package 6 months from TOP or if OHR increases

OCBC Home Rate (currently at 1%) uses the long term average of 1M and 3M Sibor to calculate interest rates

Year 1: 1-mth SIBOR + 0.60%
Thereafter: 1-mth SIBOR + 0.70%
$1,173

*updated as of 15 March 2018

All the above packages have no lock-in, 1.5% penalty for full prepayment during the first year, and cancellation fees applies for undisbursed loans.

For a building under construction, such as an HDB BTO flat, OCBC offers two home loan packages. It’s hard to tell which is better, though.

While the 1-month SIBOR-linked package has the more standardised spread of 0.60% for the first year and 0.70% thereafter, it is a SIBOR-linked package. That means it is extremely volatile and expected to rise in the coming months. If you apply right now, you will probably end up paying slightly more for the OCBC home loan SIBOR-linked package in the first few years.

On the other hand, the OHR-linked package has a spread that increases with each new year. If you are buying an uncompleted building under construction, consider packages that don’t change their rates too quickly each year. This is because the loan amount is disbursed in stages, so you don’t want to waste the better rate on a small disbursed amount.

That said, we still expect the OHR-linked package to be much more stable compared to the SIBOR-linked package. We explain why in our in-depth look at the OCBC Home Rate, or OHR.

If you’re the gambling type and believe you can beat the odds, the SIBOR-linked package should be the cheaper option assuming no drastic increases in SIBOR. If stability is what you’re looking for, then the OHR-linked package is the way to go.

For uncompleted private properties: The same two OCBC housing loan packages are available to uncompleted private properties.

 

OCBC Home Loan for a completed condominium unit, with a purchase price of $1,000,000, loan tenure of 30 years

Home Loan Package Estimated Monthly Instalment Notes
Year 1: OHR + 0.65%
Year 2: OHR + 0.70%
Year 3: OHR + 0.75%
Year 4: OHR + 0.80%
Thereafter: OHR + 0.90%
$2,828 Able to Partial Pay up to 50% of loan with no penalty
Year 1: 1.85%
Year 2: 1.85%
Thereafter: OHR + 0.90%
$2,897 1.5% penalty for full prepayment during first 2 years

OCBC Home Rate (currently at 1%) is the long term average of 1M and 3M Sibor over 12 years

Year 1: 1-mth SIBOR + 0.60%
Thereafter: 1-mth SIBOR + 0.70%
$2,917 1.5% penalty for full prepayment during first 2 years

Able to Partial Pay up to 50% of loan with no penalty

*updated as of 15 March 2018

All the above packages have a 2-year lock-in.

When it comes to completed properties, OCBC offers 3 home loan packages, catering to 3 different needs. Let’s look at each of them:

The first is based on the newly created OCBC Home Rate, or OHR.This is an innovative way of calculating the OCBC home loan interest rate, by claiming to be the “long-term average of 1-month and 3-month SIBOR”. Currently, OHR is at 1%.

The advantage is that the OHR loan packages are arguably the most stable especially in a rising SIBOR environment. Since OHR is a long-term average of SIBOR, OHR will rise much slower compared to SIBOR. The disadvantage, of course, is that OCBC has every right to change the definition of “long-term”. They probably won’t do it just yet, of course, but always keep in the back of your mind that they can.

The second is a 2-year fixed home loan rate at 1.85% for the first two years, followed by a thereafter rate of OHR + 0.90%. Honestly, 1.85% is a little steep compared to the other two floating rates. But what you’re paying for is the stability and security that a fixed rate home loan package provides. Do remember that the rate is only fixed for 2 years. After that, you’re automatically switched to an OHR + 90% rate.

The final OCBC housing loan package is a 1-month SIBOR package, with a relatively low spread of 0.60% in the first year and 0.70% thereafter. Because the 1-month SIBOR is volatile and could change on a monthly basis, it is quite a gamble to go with a SIBOR-linked home loan package. For example, among the three OCBC housing loan packages offered, this was the cheapest based on current rates last month, but in March it is the most expensive.

Our recommendation, therefore, is make your decision based on your risk appetite and your expected cashflow over the next two years. If you are a gambler at heart and don’t mind the risk of paying more down the road, go with the SIBOR-linked package. If your risk appetite is zero or you expect cashflow to be a problem and don’t want to risk paying more than you can afford, it might be better to go with the fixed rate.

For most people, however, we would recommend the OHR-linked rate, simply because we feel it’s the closest to a fixed rate you can get, and you’ll probably end up paying less in the first two years compared to the other two.

For completed HDB flats: The same OCBC housing loan rates are available for resale HDB flat purchases as well.

 

Should you go with an OCBC home loan package?

OCBC provides the most holistic selection of home loan packages in the market. Whether you want a SIBOR-linked package, one pegged to their new OCBC Home Rate or OHR, or a fixed home loan rate, the choice is yours. OCBC’s housing loan packages are also available to all properties, regardless of purchase price.

And while OCBC’s offerings are not THE cheapest in the market right now, they’re definitely among the top 5, and one should expect them to remain competitive in the years ahead.

Are you interested in applying for an OCBC home loan? Speak to one of our mortgage specialists to find out which bank is offering the best home loan in Singapore for your particular needs.

Looking for home loans from another bank? Here are the other home loan packages we’ve reviewed.

Best Home Loans Singapore (2018) – Most Affordable Housing Loans Reviewed

DBS Home Loan Reviews Singapore 2018

UOB Home Loan Reviews Singapore 2018

BOC Home Loan Reviews Singapore 2018

Maybank Home Loan Review Singapore 2018

Citibank Home Loan Review Singapore 2018

Standard Chartered Home Loan Review Singapore 2018 *COMING SOON*

Keep updated with all the news!

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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.