Buying Your New Home

"The best investment on earth is earth"

Latest
Mortgage
Rate

Updated 26 August 2020

NEW PURCHASE

SIBOR

1.05%

FIXED RATE

1.28%

FD-LINKED

BOARD RATE

1.45%

SORA

1.29%

NEW PURCHASE (BUC)

SIBOR

1.05%

FD-LINKED

BOARD RATE

1.45%

SORA

1.29%

NEW PURCHASE

SIBOR

1.05%

FIXED RATE

1.28%

FD-LINKED

BOARD RATE

1.45%

SORA

1.29%

Updated at:26/06/2022

Everyone dreams to own a piece of the earth and behind every property purchase story is the taking out of home loans. After all, home loans make this hefty investment a more affordable financial commitment.

At FinanceGuru, let our mortgage specialists help you calculate your loan eligibility, offer you sound advice and have you all ready to embark on your journey towards purchasing a place to call your own.

Everyone dreams to own a piece of the earth and behind every property purchase story is the taking out of home loans. After all, home loans make this hefty investment a more affordable financial commitment. At FinanceGuru, let our mortgage specialists help you calculate your loan eligibility, offer you sound advice and have you all ready to embark on your journey towards purchasing a place to call your own.

Mortgage Loan

Buying Your New Home


Property ownership is a significant milestone in life. It is a symbol of success. It is a lifetime commitment. It is also likely to be your most expensive purchase. We can help you make it one of your best investments. Together, let us build your dream home.

To start, we need to consider the type of loan that you will take out – either an HDB loan or a bank loan. They vary in several aspects, so having a good understanding of both is essential in deciding which of the two to go for.

Mortgage Loan

Buying Your New Home


Property ownership is a significant milestone in life. It is a symbol of success. It is a lifetime commitment. It is also likely to be your most expensive purchase. We can help you make it one of your best investments. Together, let us build your dream home.

To start, we need to consider the type of loan that you will take out – either an HDB loan or a bank loan. They vary in several aspects, so having a good understanding of both is essential in deciding which of the two to go for.

Key Information Breakdown

HDB Loan Bank Loan
Percentage of loan
Up to 90%
Up to 75%
Loan Tenure
Up to 25 years
Up to 30 years
Interest Rate
Floating
Floating / Fixed
Loan Refinancing
Can refinance to bank loan
Cannot Refinance to HDB loan
CPF Usage
Keep up to $20,000 in the Ordinary Account
Keep up to any amount
Cash Required
-
Minimum 5% cash required
Early Repayment Penalty
-
May incur up to 1.5% early repayment penalty

Key Information Breakdown

HDB Loan Bank Loan
Percentage of loan
Up to 90%
Up to 75%
Loan Tenure
Up to 25 years
Up to 30 years
Interest Rate
Floating
Floating / Fixed
Loan Refinancing
Can refinance to bank loan
Cannot Refinance to HDB loan
CPF Usage
Keep up to $20,000 in the Ordinary Account
Keep up to any amount
Cash Required
-
Minimum 5% cash required
Early Repayment Penalty
-
May incur up to 1.5% early repayment penalty
For HDB loans, the interest rate is currently 2.6%. The HDB Loan Interest Rate is pegged to our CPF Ordinary Account interest rate + 0.1%, which translates to 2.5% + 0.1% = 2.6%. This rate has been as such for the past 16 years and does not seem to be changing anytime shortly. Hence, should you take out an HDB loan, you will essentially be paying the same amount every month.

For Bank loans, you can pick between fixed and floating rates. Fixed rates are very stable, whereas floating rates are variable. Whether to opt for fixed rates or floating rates depends on what you want and which suits your needs best. Are you a risk-averse person who doesn’t mind paying more for peace of mind? Or are you someone who prefers to go with the market flow and perhaps reap certain savings along the way?

For HDB loans, you can take out a loan of up to 90% if the remaining lease of the property can cover the youngest buyer until at least age 95, even if the remaining lease of the flat is less than 60 years. (Otherwise, the Loan-to-Value limit of 90% will be pro-rated.) As for the remaining 10%, you may use the monies in your CPF Ordinary Account.

For Bank loans, you can only take out a loan of up to 75%, which means that you have to pay a higher down payment sum – the remaining 25% – by your efforts, of which 5% has to be in cash. Individuals who prefer not to fork out cold, hard cash to pay for their property may then choose to take out an HDB loan.

If the stars align and you hit the jackpot, you may be eager to repay your home loan as soon as possible. HDB will give you the green light anytime without any penalties, but banks? Not so. For banks, it will depend on whether the bank loan which you had signed up for comes with any penalty for early redemption. If yes, you will have to spend a fraction of your winnings paying the penalty sum which would typically be 1.5% on the amount redeemed.

In the past, property owners had to fully make use of the balances in their CPF Ordinary Account when taking out an HDB loan. Today, property owners can keep up to $20,000 in their CPF Ordinary Account.

On the other hand, property owners taking out a bank loan have the option of choosing not to touch their CPF savings at all and leave the funds in the CPF Ordinary Account to earn the accrued interest.

Should you purchase a new HDB flat after selling the existing one, and choose to take up a second HDB loan, you will have to allocate up to 50% of the cash proceeds from the sale of the old HDB flat to purchase the next flat. Conversely, should you purchase a new HDB flat after selling the existing one, and choose to take up a bank loan, there are no restrictions on how much of the cash proceeds you have to set aside for the purchase of the next flat.

Overall, these factors of consideration have to be taken into account when buying your new house. You will have to evaluate your lifestyle choices, your approach to risk management, and your financial status to determine the first step of your property purchase story.

Sounds too complex for you to make a choice between HDB loan or Bank Loans, contact our team of Mortgage Specialists to assist you with making the right choice to suit your needs.

question-sign-hand-drawn-outline copy

Why A Mortgage Broker

A Mortgage Broker is a financial expert who is proficient at handling the home loan process. Armed with vast financial knowledge, a Mortgage Broker is well-positioned to serve you in maximising your financial goals. A Mortgage Broker can:

Home loan
question-sign-hand-drawn-outline copy

Why A Mortgage Broker

A Mortgage Broker is a financial expert who is proficient at handling the home loan process. Armed with vast financial knowledge, a Mortgage Broker is well-positioned to serve you in maximising your financial goals. A Mortgage Broker can:

Home loan
NEW PURCHASE

SIBOR

FIXED RATE

FD-LINKED

BOARD RATE

SORA

Updated at: 26/06/2022