How to select a housing loan

Someone asked for my advice on how to select a housing loan.

My preference is:

* choose a loan with the interest rate linked to an external benchmark, such as the swap offer rate

* choose a flexible loan that you can break off at any time

This is the best way to ensure that you get a good deal. As the lender has to compete with other providers, they will offer you the best rate, and keep it competitive all the time.

The external benchmark may fluctuate, but this should not bother you. You are repaying the loan over 20 years or longer. So, the interest rate should average out to a level that is lower than a "locked in rate".