HDB Loans in Singapore | Buying HDB Flats with HDB Loans

Home Loans | Property | Real Estate | Singapore

If you are purchasing an HDB flat in Singapore, you may be able to obtain an HDB concessionary loan. Also known as an HDB loan. Before applying for an HDB loan, read our comprehensive guide to everything you need to know and how much it will cost you. In this blog, we tell you about HDB loans in Singapore.

Things to Know for HDB loans in Singapore:

HDB Loan Interest Rate

The current interest rate on HDB loans is 2.60 percent. It’s been stuck at 2.60 percent for a long time. Why is this the most pressing question on the minds of many Singaporeans? Because it is quite high. In comparison, bank loan interest rates have not risen above 2% in nearly a decade. However, HDB loan interest rates have remained constant, which is often appreciated by homeowners.

Imagine not knowing in advance how much your monthly home loan repayment will be! You’d have no idea how much to set aside. Those who have an HDB loan know exactly how much they have to pay each month, and it will be the same today as it was five years ago. That does not mean that the HDB loan interest rate will never change. It is always 0.1 percent higher than the CPF Ordinary Account interest rate. The CPF Ordinary Account interest rate cannot currently fall below 2.50 percent, so if the HDB loan interest rate changes, it can only rise, never fall.

Kinds of HDB Flats

HDB BTO flats are typically significantly less expensive than resale flats. A four-room BTO flat in Sengkang can be purchased for as little as $252,000. While a four-room resale flat in the same area can be purchased for around $405,000. So, if you want to get an HDB loan, you’ll need to put down $25,200 instead of $40,500. That is a significant difference.

However, you will need to ballot for an HDB BTO flat, which usually has twice as many applicants as available units. If you are fortunate enough, you may have to wait up to four years for the flat to be completed. And a lot can happen in four years. Resale flats, on the other hand, can be purchased in a matter of months after the seller’s negotiations are completed. HDB recently announced a compromise option for the sale of balance flats. These are either unsold units or sold units that were returned to HDB for whatever reason.

HDB Loan Downpayment

The downpayment for an HDB loan is 10% of the purchase price. This amount can be paid in cash or with a withdrawal from your CPF Ordinary Account. As a result, downpayment plays a significant role in determining the cost of an HDB loan. Assume you are purchasing a flat through the Fiancé/Fiancée Scheme. If you and your partner check your CPF Ordinary Account and find that you only have $30,000 in there, you should probably look for an HDB flat that costs less than $300,000. In case you choose a more expensive apartment, you will have to pay the remainder of the downpayment in cash.

Before choosing a flat, it’s always a good idea to figure out how much of a downpayment you can afford. The first decision you must make when purchasing an HDB flat is whether to purchase a new HDB flat (also known as a Build-To-Order flat, or BTO) or a resale HDB flat. There are several factors to consider in this decision, with the downpayment always being the most important.

Size & Location of HDB Flats

After deciding on the type of HDB flat, you must decide on the location and size of the HDB flat. Again, how much of a downpayment you can afford should assist you in making your decision. When it comes to cost, location is important. Housing estates in Singapore are classified as mature or non-mature. With mature estates being at least 20 years old. Mature estates typically include a plethora of convenient amenities such as schools, medical facilities, supermarkets, etc. As a result, mature estate flats will be significantly more expensive than non-mature estate flats.

Of course, it goes without saying that size is important as well. A larger flat will cost you more than a smaller one, sometimes twice as much! For instance, a 3-room resale flat in Bedok can cost around $300,000, while a 5-room resale flat in Bedok can cost $586,000. These are important factors to consider before taking up HDB loans in Singapore.

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