Higher interest but more flexibility or lower interest but less flexibility?

HDB loan or Bank loan?, that’s the question which many HDB buyers have to consider when buying their HDB.Greetings from PropertyWiki!

Today we look at one of the biggest decisions in your purchase of your HDB property, that’s choosing between the HDB loan, or the private bank’s loan.

Here are the key factors to note:

  • What’s the amount needed to pay in Cash
  • CPF to use (For Locals and PR)
  • Loan eligibility
  • Loan Interest Rate
“Which loan, which to choose?”

HDB loans can entitle you up to 90% of purchase price for new HDB properties (BTO) and can be lower for resale price (Depending on its age). For private bank loan on the other hand, will only cover up to 75% of purchase price (This is similar to private properties)

So the details above are important because they will tell you clearly how much cash to prepare – (To cover the remaining amount to complete the full payment of the property.

Illustration wise:

  • HDB Loan = 10% [Cash] + 90% [HDB loan] + 3% Buyer’s Stamp Duty (+5% ABSD for PR) [Cash]
  • Private Loan = 25% [Cash] + 75% [Private bank loan] + 3% Buyer’s Stamp Duty (+5% ABSD for PR) [Cash]

*Note: To know how Buyer’s Stamp Duty works, click here

Now, for those who thinks you’re never going to be able to buy a home in Singapore? Don’t forget your CPF! (Thank god for the forced savings, yeah?) Your CPF Ordinary Account.