How do I compare home loan packages effectively?
To compare home loan packages effectively, look beyond the headline rate and evaluate the effective interest rate over your intended holding period, total interest cost, lock-in period and penalties, post-promotional rates, legal subsidies, and prepayment flexibility. A package with a slightly higher rate but full legal subsidy may be cheaper overall than one with a lower rate and no subsidy. Weighing all these factors together gives you a true picture of each package's value for your circumstances.
Last updated: 22 Apr 2026
Comparing home loan packages requires looking beyond the headline interest rate to evaluate the total cost and flexibility of each option. A systematic approach ensures you select the package that truly offers the best value for your circumstances.
Start with the effective interest rate, which accounts for any promotional or tiered rates over the full lock-in period and beyond. A package offering 2.5% for the first year and 3.5% from the second year onward may be more expensive overall than a flat 3.0% for three years, depending on the lock-in period and your plans.
Calculate the total interest cost over your intended holding period, not just the monthly instalment. If you plan to refinance after the lock-in period, focus your comparison on the total interest paid during the lock-in years. If you intend to hold the loan for the full tenure, the long-term rate trajectory matters more.
Examine the lock-in period duration and the associated penalty. A two-year lock-in with a 0.75% penalty gives you more flexibility than a three-year lock-in with a 1.5% penalty. Factor in the probability that you may want to refinance or sell within the lock-in period.
Check the terms after the lock-in period ends. Many packages revert to a less competitive rate after the promotional period, such as the bank's board rate. If the post-promotional rate is significantly higher and you fail to refinance in time, the initial savings could be eroded.
Look at the legal and valuation subsidies offered. A package with a slightly higher rate but a full legal subsidy of S$2,500 to S$3,000 may net out to be cheaper than a marginally lower rate with no subsidy.
Evaluate prepayment flexibility. Can you make partial prepayments during the lock-in period without penalty? What is the annual cap on penalty-free partial prepayments? These terms matter if you plan to make additional payments.
Consider the bank's overall service quality and responsiveness. A smooth loan processing experience, clear communication, and accessible customer service can save you time and stress.
Cashew simplifies this process by presenting a side-by-side comparison of eligible packages from multiple banks, highlighting the total cost, key terms, and suitability for your specific profile, so you can make an informed decision with confidence.