First, I consider the risks:Originally Posted by fisho
1. From 2013, Sibor rates might increase significantly when the Fed's commitment to keep interest rates low expires. http://economicsnewspaper.com/world-...013-55148.html
2. From 2015, the bank reserve requirement will increase. This may cause banks to increase the spread %.
http://www.mas.gov.sg/news_room/pres...ted_Banks.html
Based on the risks, I will choose package 1 - which I think is UOB's package.
- No legal fees if you use their tie-up law firm. This saves you at least 1K upfront. Unless you have a trusted lawyer that you want to use, this is a good deal. (In loan documents, the banks will always state that you have to pay all the legal fees and you have no idea how much it will cost you.)
- No pre-payment/redemption charge. Should interest rates increase significantly, you can pay down the loan with no penalty charges.
- Lowest rate among all for yr 4 onwards (small difference in rates from yr 1 to yr 2 result in small difference in interest amount in dollar because it's uncompleted property). You'll see the full effect of any interest rate difference in yr 3 and yr 4. If you choose package 2 with lock-in, and you want to re-finance in yr 4 (approx 2015), all the banks might have increased their spread to more than 1% so you might have no choice but stick with 1% spread. But of course if they reduce it, you can re-finance. With package 1, it's 0.625% from yr 4. You only pay 0.025% on the amount drawn for some certainty in 2015.