Financing HDB Resale Flat: HDB Loan or Bank Loan?

What is the difference between the two and when you should opt for either one?

If you are purchasing an HDB flat, you can choose to finance your flat with a housing loan from HDB or a bank that is regulated by the Monetary Authority of Singapore (MAS). If you first finance your flat with HDB, you can refinance your housing loan to a bank in the future. Meanwhile, if you go with the latter, you are not allowed to refinance your housing loan with the former.

While HDB concessionary rate has remained at 2.6% for decades, recent housing mortgage rate hovers between 1.3-1.6%. Loan-to-Value ratio for HDB loan is 90%, while bank’s LTV is 75% for first housing loan. LTV is a percentage amount borrowed over the lower amount of either the transaction price or value of the property. HDB requires no cash down payment, while banks require 5% cash down payment. HDB is widely known to be more lenient in terms of late payment while banks have the right to foreclose your property if you default on 3 consecutive months of installment.

If you prefer to borrow more and do not prefer to fork out any amount of cash, you shall opt for HDB loan. You may still refinance your housing loan to a bank in the future when you can afford to reduce your outstanding loan amount and would like to enjoy savings on interest. However, if you would like to enjoy saving on interest from the beginning, and you can afford to borrow less and fork out the 5% cash for down payment, you should opt for bank loan.

 

 

 

 

 

 

Source: Central Provident Fund (CPF)

At Pinnacle Estate Agency, we strongly believe in sharing our real estate knowledge to the public.⁠ For more content like this article, check out our Singapore Property Guides.

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Pinnacle Estate Agency (CEA Licence No.: L3010718G) is the leading real estate agency in Singapore providing unparalleled personalised services, effective real estate marketing strategies, and Singapore property guides to everyone. Our real estate services include sale and leasing of HDB resale flats, private residential properties i.e. apartments & condominiums, and commercial properties e.g. HDB shophouses, private shophouses, retail shops, offices, and industrial properties.

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We also tap on our co-broking networks of more than 30,000 real estate agents in Singapore. With maximum eyeballs reached, it significantly increases probability that our clients’ properties will be sold fast and at higher price than those of their neighbours’

At Pinnacle, we strongly believe in imparting all our real estate knowledge to everyone. Everyone can explore guides on buying, selling, renting, and investing properties, mortgages, and legal issues in our Singapore Property Guides section of our website https://pinnacle.sg/singapore-property-guides at no cost. Every guide is meticulously written by our KEO, Mr. Sumitro Ong himself.

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