Comparing a 3.37% 20-year fixed quote on a S$1.253m purchase

M

measureTheCairn

Buyer
The fees changed my view of this quote more than the rate itself. The purchase is about S$1,253,000, and the offer is 3.37% fixed over 20 years, but the final pricing also reflects the amount financed and the applicable loan-to-value band.

I’m unsure which comparison period is most useful. Should I model the monthly payment and remaining balance for the years I am likely to hold the loan, then run a separate full-term case? Portability also matters, and I want to see the cost of paying down or leaving early rather than assuming a future refinance will solve everything.
 
Using your likely holding period makes sense, although I would not rely on that case alone. Build one comparison around the expected refinance or sale date and another around keeping the mortgage for all 20 years.

For each lender, include the monthly payments, upfront and unavoidable charges, and balance still owed at the chosen date. The first version tests near-term affordability; the second shows whether the deal remains acceptable if refinancing never becomes attractive. Early-exit charges can then be added only to scenarios where you actually leave.
 
Also run a second version in which you keep the loan for the full 20 years. That exposes whether the cheaper-looking option only wins because refinancing is assumed. I would keep early-repayment costs separate in the table, since they matter only under particular exit scenarios.
 
Is 20 years both the fixed period and the full loan term, or does the rate reset while the loan continues? Also, what loan amount and arrangement fee sit behind the quote? The S$1,253,000 purchase price alone is not enough to compare it because the loan-to-value tier affects how much is actually financed.
 
Good point. The monthly payment comparison also needs to use the same loan amount and repayment term. Otherwise a lender can appear cheaper simply because the illustration assumes a different deposit or schedule. I would ask each lender for figures using identical inputs before comparing totals.
 
I would not assign much value to portability until the exact conditions are clear. A portable loan may still be awkward if the replacement property, timing or new borrowing amount differs. Early repayment is easier to model: calculate the cost of selling or refinancing at a few plausible dates rather than treating it as a yes-or-no feature.
 
There is a trade-off between the cheapest expected cost and comfortable monthly affordability. Even if the 3.37% option is not the absolute lowest on paper, a long fixed period may have value if the payment fits without depending on future rate moves. But confirm whether there is any rate-reset risk after the stated fixed period.
 
I would push back on using the full 20-year cost as the main answer. It is a useful stress case, but it can overemphasise costs far beyond the likely decision horizon. Compare at several dates instead—perhaps the earliest penalty-free exit, your expected holding period and the full term. The important part is not quietly assuming refinancing will be cheap or available.
 
A simple spreadsheet should settle most of this. Give each offer columns for loan amount, fixed rate, monthly payment, upfront fees, cumulative payments, remaining balance and exit cost at each chosen date. Add one scenario with no refinancing and another with refinancing costs left blank until you have a defensible figure. That should make the broker's assumption visible rather than letting it drive the result.
 
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