A home loan uses reducing-balance amortisation: each month you pay interest on the outstanding balance plus some principal, so the monthly instalment stays level while the interest portion shrinks over time. A longer tenure lowers the monthly payment but increases total interest; a higher rate raises both.

In Singapore most packages are floating (SORA-pegged) or fixed for an initial period, after which the rate resets. Banks also stress-test your eligibility at a medium-term rate floor of 4% even if your actual rate is lower, so the loan you qualify for may be smaller than the loan you can nominally afford at today's rate.