mortgage protection insurance singapore

How Mortgage Loan Works?

Individuals and businesses use mortgages to buy real estate without paying the entire purchase price up front. Over a specified number of years, the borrower repays the loan, plus interest, until they own the property free and clear. Bank are also known as "liens against property" or "claims on property." If the borrower stops paying the mortgage, the lender can foreclose / Auction on the property.

For example, in a residential mortgage, a home buyer pledges their house to the bank or other lender, which then has a claim on the property should the buyer default on paying the mortgage. In the case of a foreclosure, the lender may evict the home's residents and sell the property, using the money from the sale to pay off the mortgage debt.

Use our free mortgage insurance calculator to check on your refinancing of mortgage loan, new mortgage loan, total debt servicing ratio (TDSR), personal finance ratio and financial health check.

Types Of Fire Insurance

Most home fire insurance in Singapore only covers the building - providing coverage for damages to structure, permanent fixtures and fittings caused by risks such as fire and burst water pipes.

However, most homeowners should purchase home content insurance during the tenure of their mortgage in case of accidents like, an electrical fire breaking into your bedroom damaging things like your flat screen TV, designer bed, electronics, watches and jewelry, flooding, or theft. By having a home fire mortgage insurance in Singapore, costs will be reduced in these kinds of situations.

Home content insurance also covers your family's legal liability as a result of accidents in your home - even if they occur when you're not there. For instance, if your kitchen stove explodes while you're overseas, and your neighbour sues you for damages to their property, you're covered.

mrta insurance singapore

Why You Need MRTA?

A Mortgage Reducing Term Assurance (MRTA) mortgage policy takes care of your mortgage payments in the event of your death or, in some cases, a terminal illness or disability.

While not all loan lenders require to take up MRTA insurance in Singapore, it provides homeowners with a peace of mind with its assurance of a lump sum to pay off any outstanding home loan in the event of an unexpected mishap.

Do consider getting adequate mortgage insurance to ensure that the family is financially protected, regardless of what happens.

Different Rate Packages


A constant rate maintained over the lock-in period, usually ranging from 1 to 5 years, depending on your lock-in period. It is safe and not affected by the market. With fixed interest rates, it will be easier for you to manage your cash flow since your payments are the same throughout.

However, at the end of your lock-in period, your home loan interest rate will likely increase or change to a floating rate.

The Fixed Deposit Home Rate (FHR)

Fixed Deposit Home Rate (FHR) is a form of board rate which is fixed by the bank, instead of external market conditions. The FHR rate pegs your home loan to the bank's fixed deposit rates.

FHR rates also have a number next to them, most commonly FHR12 and FHR36. Again, this refers to the interest rate period - whether you are given the 12-month fixed deposit rate (FHR12), or the 36-month fixed deposit rate (FHR36).

If the bank were to raise its fixed deposit rates, they would also have to pay out more to everyone who deposited money with them. The bank cannot hide any intent to jack up interest rates as the bank has to advertise its fixed deposit rates, so you can always see it coming before deciding on refinancing.

Singapore Interbank Offered Rates (SIBOR)

Singapore Interbank Borrowing Offer Rate (SIBOR) is a transparent interbank borrowing rate that allows consumers to know exactly what the interbank market interest rate is and the interbank cost of borrowing. The rate is administered by the Association of Banks in Singapore (ABS).

There are four SIBOR tenures: 1, 3, 6, and 12-month with most banks in Singapore offering home loans or commercial industrial mortgages. A longer term tenure typically comes with a higher interest rate.

Each business day, the 20 banks that form the ABS panel submit at a rate based on the estimation of funds they could borrow on the interbank market. After removing the top and bottom quartiles, SIBOR is then set as the average of the remaining submissions.

The banks charge a certain bank margin spread above the prevailing SIBOR for the final aggregate mortgage rate, for example, 3-month SIBOR + 1%.

Singapore Overnight Rate Average (SORA)

Singapore Overnight Rate Average is defined as the volume-weighted average rate of borrowing transactions in the unsecured overnight interbank SGD cash market in Singapore. The rate is administered by the Monetary Authority of Singapore (MAS).

During each business day in Singapore, reporting banks provide data on all eligible transactions traded and booked in the window between 8am and 6.15pm (both timings inclusive). MAS conducts thorough data validation checks and computes SORA by taking the volume-weighted average rate of all eligible transactions. SORA is then published on the MAS website the next business day at 9am.

Other benefits of SORA include the fact that it has been published since 2005, which means there is a long historical time series that market participants can analyse and use to model trends for risk management, asset-liability pricing and trading purposes. However, SORA options are very limited at the moment, which is why SIBOR-pegged home loans are still worth considering.

Swap Offer Rate (SOR)

Swap Offer Rate is a benchmark pegged to the spot and foreign exchange rates of SGD and USD. As far as home loans are concerned, it is more or less obsolete, as those who previously had SOR home loan packages have since seen their loans converted to SORA packages.

Until 2017, SOR was one of the major alternatives to SIBOR. It was also used in combination with SIBOR to determine interest rates in some home loan packages. SOR is very dependent on the US economy and tends to be more volatile than SIBOR, although it generally trends in the same direction as SIBOR.

Given the uncertain future of the US economy, it's probably a good thing home loans are no longer pegged to SOR.

The banks charges a certain bank margin spread above the prevailing SOR Rate for the final aggregate mortgage rate (example 3M SOR + 1%).

The Difference Between Fixed Term And Reducing Term Mortgage Insurance

Fixed Term

Fixed term mortgage insurance

Your insurance coverage stays the same throughout the policy term. The payout can be used to cover your outstanding mortgage and other liabilities.

Reducing Term

Reducing term mortgage insurance

Your insurance coverage reduces over time to match your remaining mortgage. The payout can only be used to cover your outstanding mortgage.

Let Us Analyse And Evaluate

NIIUCAPITAL is one of the best mortgage insurance in Singapore. Let us analyse and evaluate your home fire insurance, fire mortgage insurance, and/or mortgage loan insurance in Singapore together with you for a customised plan that suits your needs and avoids being over or under-insured.


Analyse & Evaluate

Meet our friendly broker at your convenience to analyse and evaluate your needs.


Develop & Propose

Our broker will then develop and propose an unbiased recommendation with comprehensive comparison tables.


Review & Submit

We would then review and submit the loan application forms and necessary documents.



After getting the green light, our broker brings you the final loan agreement for signing.



Approval of the loan will be ready in 3 working days.


Annual Review

Your journey with NIIU Mortgage continues with our customer service support and annual reviews.


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