Key Questions to Ask the Bank Before Taking a Home Loan

INTRODUCTION

For most peo­ple, buy­ing a home rep­re­sents the most expen­sive pur­chase of a life­time and would need long term financ­ing to achieve.

This guide focuses on home loans meant for owner occu­pa­tion.  A home loan or mort­gage is a term loan, secured on the prop­erty that you buy. The lend­ing bank will have first charge on the prop­erty, fol­lowed by the CPF Board if CPF sav­ings have been used to ser­vice the loan or as down­pay­ment or both.

THE BASICS

What to bear in mind

• As a gen­eral guide, your monthly home loan instal­ments and other long-term debts such as car loan or hire pur­chase com­mit­ments should not be more than 35% of your gross monthly income
• Allow for con­tin­gen­cies includ­ing inter­est rate increases over the term of the loan¹
• Find out your CPF With­drawal Limit² if your CPF sav­ings are used in the pur­chase
• Note the bank charges over­due inter­est if instal­ment pay­ments are late
• Note also that if you fail to pay your instal­ments, the bank can recall the loan and repos­sess your prop­erty for sale
• The bank may make you a bank­rupt if the sales pro­ceeds from your prop­erty are less than the out­stand­ing loan and inter­est payable, and you are unable to repay the shortfall

Prop­erty eli­gi­ble for Home Loans

• HDB flats
• Pri­vate prop­er­ties already com­pleted
• Pri­vate prop­er­ties under construction

Loan tenor

The dura­tion of the loan is known as the loan tenor or repay­ment period.

Cat­e­gories of Home Loans

The two broad cat­e­gories are:
• Fixed rate loans
• Float­ing or vari­able rate loans

What’s the difference?

Noti­fi­ca­tion³

a. Changes to Inter­est Rates

Banks must inform you in advance (usu­ally 30 days) before they change the inter­est rate on your home loan.

b. Changes to Loan Terms and Conditions

Banks must inform you in advance (usu­ally 30 days) before they change or vary the terms and con­di­tions of your loan agreement.

You too need to notify the bank and obtain its con­sent when you seek to vary the loan agree­ment, such as by repay­ing or refi­nanc­ing your loan.

Ask the bank what noti­fi­ca­tion is required for any change ini­ti­ated by you.

Shop Around – Don’t Stop at Two

• Shop around and find the pack­age that best fits your finan­cial circumstances
• Do not be enticed into mak­ing hasty deci­sions based on adver­tise­ments head­line rates or gifts
• Com­pare fea­tures like:
  • inter­est rates
  • lock-in period and fees
  • can­cel­la­tion fees
  • bank sub­si­dies for fees for val­u­a­tion, legal and con­veyanc­ing ser­vices and fire insurance
• If you are con­sid­er­ing refi­nanc­ing, do check the pre­vail­ing inter­est rate after the lock-in period and com­pare it with the rate you are cur­rently paying
• When brows­ing on the Inter­net for home loans, note that some of the infor­ma­tion may not be the most recent. Always talk to your bank on the lat­est prod­uct features

WHAT TO ASK THE BANK

Now that you know the basics, the fol­low­ing are some key ques­tions you should ask the lend­ing bank before decid­ing which loan to take. The ques­tions are sup­ple­mented by easy-to-understand expla­na­tions, high­light­ing com­mon fea­tures of a home loan.

ELIGIBILITY

1a. Am I eli­gi­ble for a home loan?

Banks typ­i­cally apply eli­gi­bil­ity cri­te­ria on bor­row­ers.  These eli­gi­bil­ity cri­te­ria include:
• min­i­mum income
• min­i­mum and max­i­mum age
• res­i­dency status

Banks may also set a min­i­mum loan quan­tum. This means that you must obtain a home loan of at least this amount.

1b. Am I eli­gi­ble if I am self-employed or do not have a reg­u­lar income?

The answers depend on the cri­te­ria the bank applies.

INTEREST RATES

2a. Inter­est Rates Under a Fixed Rate Loan

How long will the inter­est rates remain fixed?  Is the sub­se­quent inter­est rate bench­marked against any ref­er­ence rate?  If so, what is the ref­er­ence rate?

For fixed rate loans, inter­est rates are fixed and guar­an­teed in the first few years. Sub­se­quently the inter­est rates will be vari­able and typ­i­cally bench­marked against a ref­er­ence rate (See Ques­tion 3).

The ref­er­ence rate may be:
• deter­mined by fac­tors set by the bank or
• bench­marked against a pub­licly avail­able finan­cial indi­ca­tor, like the Sin­ga­pore Inter­bank Offer Rate (SIBOR)⁴, Sin­ga­pore Swap Offer Rate (SOR)⁵ or inter­est rate paid by the CPF Board on CPF Ordi­nary Accounts

The fixed rate period can be con­sid­ered a pro­mo­tional period as the rates in this period are gen­er­ally lower than the sub­se­quent vari­able rate.

2b. Inter­est Rates Under a Float­ing or Vari­able Rate Loan

Is the inter­est rate bench­marked against any ref­er­ence rate?  If so, what is the ref­er­ence rate?

Like fixed rate loans, the inter­est rates under float­ing rate loans are typ­i­cally bench­marked against a ref­er­ence rate.

The ref­er­ence rate may be:
• deter­mined by fac­tors set by the bank or
• bench­marked against a pub­licly avail­able finan­cial indi­ca­tor, like the Sin­ga­pore Inter­bank Offer Rate, Sin­ga­pore Swap Offer Rate or inter­est rate paid by the CPF Board on CPF Ordi­nary Accounts

Often, the vari­able rate for the first few years is lower than the sub­se­quent vari­able rate. This lower vari­able rate can be con­sid­ered a pro­mo­tional rate, with a dis­count or lower pre­mium on the ref­er­ence rate in the first few years of the loan.

Exam­ples:

Table 1

While the dis­counts and pre­mi­ums typ­i­cally can­not be changed, the bank may be able to change the ref­er­ence rate at any time. See Ques­tion 3 for fac­tors that affect the ref­er­ence rate for your loan.

2c. When will the bank start charg­ing inter­est on a home loan?

Banks will start charg­ing inter­est only from the date the home loan is first dis­bursed. They will not charge inter­est from any other dates e.g. let­ter of offer date. Your bank will let you know when the loan is dis­bursed as well as the monthly instal­ment to make or the inter­est you have to pay from the fol­low­ing month.

REFERENCE RATES

3. What fac­tors can affect the ref­er­ence rate for my loan?  How often can the bank change the ref­er­ence rate dur­ing the loan tenor?   Is the ref­er­ence rate spe­cific to this loan? How much notice must the bank give me before a change in inter­est rate can take effect?

Ref­er­ence rates dif­fer from bank to bank. Within one bank, ref­er­ence rates may dif­fer from one loan pack­age to another.

The pub­licly avail­able finan­cial indi­ca­tors adopted as the bench­mark for the ref­er­ence rate are usu­ally not deter­mined by any indi­vid­ual bank. For exam­ple, the Sin­ga­pore Inter­bank Offer Rate (SIBOR) and Sin­ga­pore Swap Offer Rate reflect mar­ket con­di­tions, rather than the actions of a sin­gle bank.

A bank may also cre­ate its own ref­er­ence rate for its loans, tak­ing into con­sid­er­a­tion a slew of fac­tors such as:

• pre­vail­ing mar­ket con­di­tions such as the bank’s busi­ness and fund­ing costs at the time the loan is taken
• spe­cific loan details like:
  • inter­est rate struc­ture (e.g. fixed or vari­able rate)
  • loan tenor
  • type of property
  • prop­erty devel­op­ment sta­tus (i.e. whether com­pleted or under construction)
  • per­cent­age of financ­ing required

For loans whose ref­er­ence rates are deter­mined by the bank, the bank can usu­ally change the ref­er­ence rate at any time.

Under the Code of Con­sumer Bank­ing Prac­tice, banks are required to inform you in advance (usu­ally 30 days) before any change in the ref­er­ence rate can take effect. How­ever, for loans where the dates for the fix­ing of the inter­est rate have been pre­de­ter­mined and mutu­ally agreed between the bank and the cus­tomer, e.g. loans bench­marked against a mar­ket index like SIBOR, the notice period for any rate change does not apply. Banks should nev­er­the­less explain the reason(s) for the change in rates.

EFFECTIVE INTEREST RATE

4. What is the Effec­tive Inter­est Rate (EIR⁶ ) for the whole loan tenor?

The EIR reflects the cost of inter­est expressed on an annual basis that you have to bear through­out the loan tenor. The lower the EIR, the lower the inter­est cost over the loan tenor.

The EIR may be higher than the adver­tised rate for the loan for a par­tic­u­lar period e.g. the first 3 years, as the adver­tised rate typ­i­cally reflects the inter­est charged for a par­tic­u­lar period only.

For instance, you take out a $500,000 30-year home loan with the fol­low­ing inter­est rate sched­ule (assum­ing the cur­rent ref­er­ence rate is 5%):
• Year 1 inter­est rate:  Ref­er­ence rate minus 3% p.a = 2% per annum (p.a)
• Year 2 inter­est rate: Ref­er­ence rate minus 2% p.a= 3% p.a
• Year 3 inter­est rate: Ref­er­ence rate minus 1% p.a= 4% p.a
• Year 4 onwards: Ref­er­ence rate= 5% p.a

Assum­ing inter­est is com­puted on a monthly-reducing basis and that there is no change in the ref­er­ence rate, the EIR over the 30 years is 4.62 % p.a.  If there are no changes made to the loan or to the ref­er­ence rate, you would be effec­tively pay­ing an inter­est charge of 4.62% p.a. over 30 years.

The EIR serves as a com­mon denom­i­na­tor allow­ing you to com­pare loan pack­ages of dif­fer­ent inter­est rates and tenors. When study­ing dif­fer­ent loan pack­ages, it is use­ful to com­pare both:
(a) interest rates in the ini­tial years when pro­mo­tional rates (i.e. usu­ally dis­counts on ref­er­ence rates) are charged by the bank or when the inter­est rate is fixed
(b) the EIR which reflects the inter­est cost through­out the loan tenor. You can ask the bank for the EIR of your loan

Points to note about the EIR:

• It is com­puted based on pre­vail­ing inter­est rates, loan disbursement(s), and monthly instal­ments over the entire tenor of the loan
• It will be revised if there are changes to your loan, includ­ing changes in inter­est rates.  So ask the bank for an updated EIR for the remain­ing tenor of your loan when there are changes to your loan
• It can­not be ascer­tained for a prop­erty under con­struc­tion where the tim­ings of the loan draw downs can­not be determined

REPAYMENTS

5. Under the instal­ment plan for the home loan, is inter­est com­puted on a monthly-reducing, annual-reducing or other basis? How does inter­est com­puted for this loan com­pare with that com­puted on another basis?

Repay­ment of a home loan is usu­ally made in monthly instal­ments. Each instal­ment con­sists of two parts: prin­ci­pal repay­ment and inter­est payment.

The instal­ment depends on:
• the loan prin­ci­pal
• loan tenor
• the inter­est rate
• how inter­est is computed

The two com­mon meth­ods of inter­est com­pu­ta­tions are:
• Monthly-reducing (or monthly-rest) basis whereby:

• Annual-reducing or annual-rest basis:

Note: The more often inter­est charges are com­puted, the lower the amount of inter­est paid over the loan tenor. It means that the total inter­est payable on a monthly-reducing loan is lower than the total inter­est payable on an annual-reducing loan.

6. What is the instal­ment payable each month or each year? How much goes into pay­ing inter­est and how much into pay­ing the prin­ci­pal? Can I get a loan repay­ment sched­ule for this loan?

Ask the bank for key infor­ma­tion (as sum­marised in Table 2 below) on the home loan you are con­sid­er­ing. It will help you bet­ter under­stand how much you have to pay each month as well as the inter­est payable in the ini­tial years — when you enjoy pro­mo­tional rates — and over the entire loan tenor.

Table 2

*Note: The above table assumes that pro­mo­tional rates (dis­counts on the ref­er­ence rates) are offered in the first 3 years, and that there are no changes to the ref­er­ence rates in those 3 years.

Refer to the loan repay­ment sched­ule (also known as an amor­ti­sa­tion table) for more details.  Banks will pro­vide such a sched­ule for the loans they offer in hard copy or soft copy on the bank’s website.

This repay­ment sched­ule will indicate:

(a) your monthly instal­ments through­out the loan tenor. This will help you assess whether you can afford to take the loan.  As a gen­eral guide, your monthly instal­ment on your home loan and other long term loans should not exceed 35% of your monthly gross income

(b)  how much of the monthly instal­ment goes towards pay­ing the prin­ci­pal and how much towards pay­ing inter­est, and the total amount of inter­est payable for the whole loan tenor. The monthly instal­ment for a loan with a longer tenor will be smaller than one with a shorter tenor. How­ever, you pay more inter­est on a loan with a longer tenor or big­ger principal

© when the loan would be paid off.  If you are using your CPF to pay your home loan, it is pru­dent to pay off your mort­gage by the CPF with­drawal age of 55 due to reduced CPF con­tri­bu­tion rates after 55

When con­sid­er­ing dif­fer­ent loan pack­ages, always com­pare their repay­ment sched­ules.  Check the total amount of inter­est payable dur­ing the ini­tial years where pro­mo­tional rates or fixed rates are offered, and the total inter­est payable over the tenor of the loan.

Repay­ment sched­ules
• are com­puted based on pre­vail­ing inter­est rates, assumed dates of loan disbursement(s), out­stand­ing bal­ances and loan tenor
• will be revised if there are changes to your loan, includ­ing changes in inter­est rates or loan tenor or both. Ask the lend­ing bank for an updated repay­ment sched­ule when­ever there are changes to your loan

You may also wish to dis­cuss with your bank the options for reduc­ing the amount of inter­est payable or pay­ing off the loan ear­lier.  For instance, you can con­sider:
• short­en­ing the loan tenor
• increas­ing your monthly pay­ments
• reduc­ing the loan quan­tum by pay­ing off part or all of it early

Please refer to Ques­tions 8 and 10 on what to ask on revis­ing your monthly pay­ments and mak­ing prepayments.

7.  Will I be pro­vided state­ments of my home loan account?

Banks pro­vide an annual state­ment of your home loan, detail­ing trans­ac­tions like:
• inter­est charges
• monthly instal­ments paid
• pre­pay­ments made
• total inter­est paid dur­ing the year

Banks may also pro­vide interim state­ments upon request, although some may charge for the service.

8. Can I change the monthly instal­ment pay­ment amount dur­ing the tenor of the loan?  Would I need to pay any fees or charges? What are the terms and conditions?

Some home loans offer you the flex­i­bil­ity to change the monthly instal­ment pay­ment amount dur­ing the loan tenor. How­ever, do not be attracted by a loan pack­age merely because of repay­ment flex­i­bil­ity. Ask your bank:
• if there are any fees or charges involved
• the amount of notice needed before a change can be effected
• the min­i­mum pay­ment amount acceptable

Although these facts are usu­ally set out in the loan agree­ment, it is best to find out beforehand.

SUBSIDIES &OTHER FEATURES

9a. What are the other key fea­tures of this loan and are they sub­ject to change?

Some home loan pack­ages are more com­plex than they appear at first glance.  Here are some exam­ples:
• One por­tion of the loan car­ries a fixed inter­est rate while the other por­tion has a vari­able rate
• Loans with off­sets: the inter­est earned on a deposit account with the bank goes towards off­set­ting the inter­est payable on the home loan
• Loans where the monthly loan pay­ment is a per­cent­age of the prop­erty value

Read the bank’s mar­ket­ing brochure and terms and con­di­tions care­fully to under­stand how the spe­cial fea­tures apply. These fea­tures may be sub­ject to change which will can­cel or reduce the appar­ent attrac­tive­ness of the loan as pack­aged and marketed.

Ask if the bank has the right to change these fea­tures and the options avail­able if you do not want the pro­posed changes.

9b. What value-adds does this loan pro­vide?  Must I repay these value-adds if I pay off my loan ear­lier or refi­nance it?

Besides attrac­tive rates, home loans may come with other value-adds like:
• legal fee sub­sidy
• free fire insur­ance
• free valuation

It is worth not­ing, how­ever, that you may have to repay all or some of these value-adds if you repay the whole loan before the lock-in or pre­pay­ment period expires (see Ques­tion 10). Read the loan terms and con­di­tions care­fully to under­stand how this works for the loan you are considering.

9c. Will I bet­ter off if I use the ser­vices of the law firm or insur­ance com­pany rec­om­mended by the bank, even if no sub­sidy is offered?

Gen­er­ally, you may ben­e­fit from economies of scale and pay lower charges if you use the lawyer or insurer rec­om­mended by the lend­ing bank. You may wish to com­pare fees or pre­mi­ums charged by other law firms or insur­ance com­pa­nies before mak­ing a decision.

PREPAYMENT

10. How long is the lock-in period and what is the pre­pay­ment fee?
How much notice must I give the bank if I want to pay off part or the whole loan early?

You may want to make lump sum pay­ments (or pre­pay­ments) dur­ing the tenor of the loan. You must inform the bank in advance before you make such payment.

Banks may impose penal­ties or fees when you:
• make a pre­pay­ment with­out giv­ing advance notice
• set­tle the out­stand­ing loan in full before the expiry of a cer­tain period (com­monly known as the “lock-in period” or “pre­pay­ment period”)
• make a pre­pay­ment dur­ing the lock-in  period which results in the out­stand­ing prin­ci­pal falling below a stip­u­lated min­i­mum balance

Check the terms and con­di­tions of the home loan or check with the bank about its pre­pay­ment rules:
• before tak­ing a loan
• when­ever you wish to make a pre­pay­ment if you already have a loan

FEES AND CHARGES

11. What are the fees and charges applic­a­ble to the loan?

Fees and charges are levied for:
• pro­cess­ing the loan appli­ca­tion
• not tak­ing the loan after accept­ing the loan offer
• late pay­ment
• chang­ing the loan tenor
• switch­ing to a dif­fer­ent loan pack­age dur­ing the tenor of an exist­ing loan
• pre­pay­ing a por­tion or the full loan dur­ing the lock-in period
• restruc­tur­ing the loan

Ask the bank for a sched­ule of fees and charges applic­a­ble to the loan you are inter­ested in. Ask for the fees payable dur­ing the lock-in period and the fees after the lock-in period so that you could explore refi­nanc­ing pos­si­bil­i­ties after the lock-in period if the inter­est rate is in your favour.

DOCUMENTATION & TERMS AND CONDITIONS

12. What loan doc­u­men­ta­tion will I be pro­vided with?

Loan doc­u­ments pro­vided by the bank include:
• the let­ter of offer
• terms and con­di­tions gov­ern­ing the home loan
• other doc­u­ments such as sched­ule of fees and charges

Do’s and don’ts con­cern­ing loan doc­u­ments:
• To avoid mis­un­der­stand­ing, do not rely solely on ver­bal com­mu­ni­ca­tions given by bank staff. Obtain writ­ten doc­u­men­ta­tion where pos­si­ble
• Always take note of the fine print relat­ing to inter­est rates, fees, terms and con­di­tions, as well as the value-adds (e.g. legal sub­sidy) of the home loan
• Review all doc­u­ments before sign­ing them
• Ask the bank staff or your lawyer to high­light crit­i­cal clauses that you should take spe­cial note of
• Ask for an expla­na­tion if you are not sure how cer­tain terms and con­di­tions will apply. These could relate to:

• The right of the bank to
  • require the bor­rower to pay all or part of the out­stand­ing home loan with­out prior notice given to con­sent received from the borrower
  • can­cel the loan with­out prior notice given to or con­sent received from the borrower
  • debit any of the borrower’s sav­ings or deposit accounts main­tained with the bank to set­tle the out­stand­ing amount due under the home loan
  • rely on a “jointly and sev­er­ally liable” clause in the loan agree­ment for a home loan taken out by two or more bor­row­ers.  Note that if one bor­rower dies, dis­ap­pears or is declared bank­rupt before the loan is paid off, the clause enables the bank to claim the out­stand­ing amount from the other borrower(s)
  • take cer­tain actions when the value of the prop­erty is less than the out­stand­ing loan (this sit­u­a­tion is called “neg­a­tive value” or “neg­a­tive equity”)

13. What if the writ­ten loan terms and con­di­tions dif­fer from what has been dis­cussed or provided?

Raise the mat­ter with the bank if you dis­cover any discrepancies.

14. What should I do if I have con­cerns about changes pro­posed by the bank to the terms and con­di­tions of my home loan?

Make sure you under­stand why the changes are being made. Talk to a bank staff if you are unsure how the change will affect you, or if you are not happy with the change. Do so before the new term or con­di­tion takes effect. If the bank agrees to any vari­a­tion to its pro­posed changes to the terms and con­di­tions, such vari­a­tion should be put in writing.

REFINANCING

15. What is refi­nanc­ing? What are the pro­ce­dures and costs involved if I decide to refi­nance the loan?

Refi­nanc­ing is when you switch to a new home loan either with your exist­ing bank or another lender. Note that switch­ing to a new loan with lower inter­est rates at your exist­ing bank is called re-pricing or conversion.

Review your home loan once every few years to see if you can get a bet­ter deal by refi­nanc­ing, par­tic­u­larly so after your lock-in period. Ask your exist­ing bank for re-pricing options, before check­ing with other banks.

Before refi­nanc­ing, con­sider if you are bet­ter off:
• stick­ing to your cur­rent loan pack­age
• con­vert­ing to a dif­fer­ent loan pack­age with your exist­ing bank or
• tak­ing up a refi­nanced loan pack­age with a dif­fer­ent bank

Ask your cur­rent bank whether:
• you will incur a fee for ter­mi­nat­ing your exist­ing loan
• you can con­vert the loan to one which is more attrac­tively priced
• fees will be imposed on such con­ver­sion
• there will be a lock-in period for the new loan and if so what is the lock in period and charges involved.

Ask the bank whose refi­nanc­ing pack­age you are con­sid­er­ing to show how you will be bet­ter off with the refi­nanced package

Com­pare:
• an updated repay­ment sched­ule for your cur­rent loan pack­age with that of the refi­nanc­ing pack­ages you are con­sid­er­ing and check the inter­est payable
• the adver­tised rates and EIR for your cur­rent loan pack­age with those of the refi­nanced loan pack­ages you are considering

Note that the instal­ment amounts, inter­est pay­ments and EIR will change once there are changes to the loan.

• Before com­mit­ting to a refi­nanced or con­verted loan package:
• Read the terms and con­di­tions and under­stand what the new pack­age offers
• Find out the CPF Hous­ing With­drawal Limit applic­a­ble to you when you refi­nance your loan:
  • If you refi­nance a prop­erty bought before Sep­tem­ber 2002, note that you will be sub­ject to the CPF Hous­ing With­drawal Limit pre­vail­ing as at the date of the let­ter of offer pro­vided by the refi­nanc­ing bank
  • If you refi­nance a prop­erty bought after Sep­tem­ber 2002, you will be sub­ject to the CPF Hous­ing With­drawal Limit pre­vail­ing as at the date you bought the property

Check the CPF Board web­site reg­u­larly for updates on the Board’s rules on housing.

DEFAULT

16. What hap­pens if I default on my monthly instal­ment pay­ment for my home loan?

If you default on your monthly instal­ment, the bank can:
• declare “an event of default” and recall the loan
• charge you a higher rate of inter­est
• sue you for the loan out­stand­ing or ini­ti­ate fore­clo­sure (or both)  to sell your prop­erty to recover the out­stand­ing loan bal­ance and unpaid inter­est.  The bank can also sue you for any remain­ing sums unpaid if the sales pro­ceeds from the prop­erty  is insuf­fi­cient to pay off the out­stand­ing loan
• bring bank­ruptcy pro­ceed­ings against you

To avoid such sit­u­a­tions, you should:
• Not com­mit your­self to a loan pack­age that you can­not afford
• Con­tact your bank imme­di­ately for help when  you face an unfore­seen finan­cial sit­u­a­tion (e.g. sud­den job loss) and find it dif­fi­cult to meet your monthly instal­ments
• Not wait until you default on your repayments

Now that you know more about the intri­ca­cies of tak­ing a loan for your new home, do use this knowl­edge to make your jour­ney to home-ownership a smooth one!

Note: ADAPTED FROM MONEYSENSE.GOV.SG

1. Refer to the Mon­ey­SENSE Work­sheet on “Buy­ing a Home and Tak­ing a Home Loan” at www.moneysense.gov.sg. The work­sheet helps you assess afford­abil­ity before buy­ing a home.

2. Refer to the CPF Board’s web­site (www.cpf.gov.sg) to work out your CPF With­drawal Limit. Once you reach the limit, you will have to pay the loan instal­ments fully in cash.

3. The Code of Con­sumer Bank­ing Prac­tice, issued by the Asso­ci­a­tion of Banks in Sin­ga­pore (ABS), requires banks to give noti­fi­ca­tion before imple­men­ta­tion of any changes to the terms and con­di­tions, inter­est rates, fees and charges.

4. SIBOR is the rate at which banks bor­row from one another.

5. SOR is SIBOR plus lend­ing costs incurred by banks. SIBOR and SOR are pub­lished in the Busi­ness Times.

6. In finan­cial terms, the EIR is the inter­nal rate of return com­puted based on the loan disbursement(s) and monthly instal­ments over the entire tenor of the loan.

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