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Should you consider for a HDB or a Bank Loan?

Should you consider for a HDB or a Bank Loan?

Purchased your new HDB flat and torn between a HDB or a Bank loan? What factors should you consider before deciding which to go for?

Let’s help you to understand further to pros and cons between the two different types of mortgage loans for your HDB

What are the pros in getting a HDB loan?

1. Stability

At least for the last 15 years, HDB interest rate has not changed and is at 2.6% - no fluctuations, no surprises. However, if you have taken HDB loan twice, then you will need to take up your HDB loan through a bank.

2. Loan-to-valuation (LTV) Ratio

You can take up the loan based on 90% of your purchased or valuation price. The 10% down payment can be fully utilized from your CPF Ordinary Account. This allows you to have more liquid funds to get your renovation and appliances done.

3. Partial Repayment

HDB loan has no lock-in period. If you have extra funds be it CPF funds or liquid funds and you decide to payoff part of the loan, you can do it anytime with no partial repayment fee.

What are the pros in getting a bank loan?

1. Lower Interest Rates

Bank loan interest rates are subjected to market conditions and there is a possibility of fluctuation. Looking at the past history of last 7 years, bank interest rate has been hoovering between 1.3% - 2.4%. With 2 choices of floating interest rates and fixed rates, you can decide if you want to fix your rate for the next 2 - 3 years.

2. Partial Repayment

There are certain interest rate packages that allows you to make partial repayment even though you are lock-in for a certain period with no partial repayment fee. This allows flexibility to reduce your loan commitment.

Should you take a HDB or a Bank loan depends on your financial abilities and financial planing. If you are willing to risk the interest rate fluctuations, taking a bank loan will cost you lesser interest in a long run.


Want to know which bank is offering as low as 1.35%? Speak to our Mortgage Gurus today! They are excited to share and analyse various interest rate options with you! 

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