Should I apply for a housing loan from HDB or from banks?
Flat buyers who need a housing loan can obtain one from HDB if they meet the eligibility conditions, or from a bank that is regulated by the Monetary Authority of Singapore.
Difference in loan interest rates
The HDB concessionary interest rate is pegged at 0.1% above the prevailing CPF Ordinary Account interest rate. It is reviewed quarterly, in line with the CPF interest rate revisions.
On the other hand, the interest rates and accompanying terms offered by banks are more susceptible to fluctuations, as they are driven by the banks’ business strategies and overall market conditions. For instance, some banks may offer loan packages with low promotional interest rates for the first few years with a lock-in period, after which the interest rate could be revised in line with the prevailing market conditions.
Choose a financially sustainable option
Those who have taken up an HDB loan, can also later refinance the loan with a bank without any penalty. However, they cannot refinance the loan with HDB subsequently.
In deciding whether to finance their homes with an HDB loan or a bank loan, flat buyers should study their options carefully and decide on a loan package that best suits their needs over the long term.