Lock in periods exist because banks offer more attractive rates or subsidies in exchange for a borrower staying with them for a minimum period, and the penalty compensates the bank if that commitment is broken early.
A no lock in package removes this restriction, letting a borrower refinance at any time, but such packages usually come with a slightly higher headline rate to compensate the bank for the reduced commitment. Choosing between locked and no lock in packages should depend on whether a sale or refinance within the lock in window is realistically likely, not on the headline rate alone.
As a package's lock in period nears its end, it becomes worth actively comparing current market rates, since staying on the bank's reversion rate after lock in expires is rarely the cheapest option available.
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Book a free 30 minute callWinfred Quek is an Associate Marketing Consultant at Crestbrick Pte Ltd (CEA Licence No. L31010886H). CEA R073319H. This page is for general information only and does not constitute financial, investment, or legal advice. Verify current figures with IRAS, HDB, CPF Board, or MAS before making any decision.