Housing Scene

3 FAQs about Housing Loans, Answered

A housing loan is a long-term financial commitment that requires careful consideration. But don’t sweat it! This month, we answer 3 common questions about housing loans for HDB flats.

“Should I choose a housing loan from HDB or a bank?”

First, understand the differences between housing loans from HDB and financial institutions (FIs) like banks. Head over to HDBSpeaks to learn more – including the differences in eligibility conditions, interest rates, and option to refinance the loan. You can also tap on the budget calculator on the HDB Flat Portal to get an estimate of housing loans from HDB and participating FIs, before deciding on a housing loan that’s the best fit for you.

“Should I service my housing loan with CPF or cash?”

If you service your housing loan with your CPF Ordinary Account (OA) savings, you will have more cash for your monthly expenses and other goals. Still, you may want to consider retaining some savings in your OA, as they can help with future mortgage payments in times of emergency, or be kept as savings for retirement.

Also keep in mind that your contributions to your OA decrease as you get older, and there are limits to the amount of CPF savings you can use. This means you may need to use more cash to service your monthly instalments in your later years, or when your CPF housing limit is reached.

“Should I pay off my housing loan ASAP, or maximise the loan repayment period?”

Stretching your loan repayments over the maximum tenure means paying smaller monthly instalments, but it also means you are paying more interest over time.

To save on interest payments, you can consider making a partial or full redemption of the outstanding loan, or increasing your monthly instalments to shorten your loan period. Check out our Mortgage Interest Calculator via My HDBPage (‘My Flat > Purchased Flat > Financial Info > Other Related Services’) to calculate the potential interest saved.

If you would like to make partial or full redemption of your housing loan from HDB, you can submit your request via My HDBPage (‘My Flat > Purchased Flat > Financial Info > Other Related Services > Redemption of Housing Loan’), with no penalty. For early repayment of housing loans from financial institutions, check on the terms and conditions with your loan provider.