HDB Loan vs Bank Loan: Which option is better for you?

While their future home would not be ready until many years later, Mr and Mrs Lim are getting more serious in their financial planning and one of the considerations is whether to take the loan from HDB itself or any of the major local banks.

So Mr Lim has decided to take it upon himself to do a comparison of the 2 options.

However, before you can even consider taking on a HDB loan, do check that you are actually eligible for it.

Also, being an existing DBS Multiplier customer (getting a home loan through DBS fulfils another of the condition and ups to the interest on your savings to 3.5%), Mr Lim will be using the DBS rates as a base comparison. Please make sure to check with your own bank for prevailing rates.

Comparison HDB Loan DBS Home Loan
Interest Rate 2.6% p.a. (Prevailing CPF rate of 2.5% + 0.1% p.a.) FHR8 + 1.45% p.a. (Prevailing 8-month fixed deposit rate can be found here)
Maximum Loan Up to 90% of purchase price or market value, whichever is lower Up to 80% of purchase price or market value, whichever is lower
Downpayment 10% of purchase price or market value, whichever is lower 20% of purchase price or market value, whichever is lower
CPF & Cash Upfront 10% CPF + no minimum cash payment 15% CPF + minimum 5% cash payment
Late Payment Penalty 7.5% p.a. Overdue interest computed as 5% above DBS Prime Rate on the overdue amount
Early Repayment No penalties. 1.5% penalty for early repayment within commitment period (typically 3 years)

Some additional pointers to consider in your decision:

24 June 2018

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