Buying a home in Singapore sounds easy when you’re touring showrooms and talking to realtors. Until funding. It feels like you’re back in school cramming for an Economics exam with all the financial jargon, pros and disadvantages, and paperwork. Check out the home loan Singapore comparison.
Who Gives Singapore Home Loans?
You can borrow from HDB (an “HDB loan”) or any Singapore bank (a “bank loan”). Consider three criteria before deciding:
Eligibility Your monthly household income must be below S$14,000 (S$7,000 for singles, S$21,000 for extended families) to qualify for an HDB loan. In the last 30 months, you can’t have owned private property. You’ll need a bank loan otherwise.
Can you afford the down payment? You can borrow 85% of your home’s worth with an HDB loan but only 75% with a bank loan. If you choose a bank loan, you must have at least 25% of the selling price in cash. Use DBS’ My Home Planning Tool to calculate your down payment.
Do you wish to use CPF savings? Most of your CPF OA funds will go toward the down payment for an HDB loan. (Your OA can hold up to S$20,000.) After subtracting the down payment, HDB will give you a loan. A bank loan lets you make the down payment in cash if you wish to leave your CPF funds alone.
HDB loans are attractive to young, cash-strapped people. Some home buyers borrow from a bank to minimize future home loan payments and keep more CPF savings for retirement.
What’s The Best Mortgage Rate?
The property loan interest rate Singapore for HDB loans is 2.6% p.a. (based on the prevailing CPF interest rate of 2.5% + 0.1%) and hasn’t changed in years.
Bank loans include varied lending packages and interest rates. Bank loans provide lower rates than 2.6%. Large sums can be saved. It could boost your savings account interest.
Each Bank Offers Several Mortgage Programs.
· Fixed mortgage
· Floating rate (based on the bank’s fixed deposit rate or SORA)
· Rate float (the bank comes up with an interest rate that may change at any time)
Floating-rate loans feature lower interest rates than fixed ones; therefore, homeowners may choose them.
DBS also offers a Two-in-One Home Loan, which allows the borrower to have a portion of the loan amount under a fixed rate package for peace of mind and the remaining loan amount under a floating rate package.
Bank Loans May Have Cheaper Rates Than HDB Loans.
You must monitor your interest rate, which expires after two or three years. You may need to reprice (with the same bank) or refinance your mortgage (pick another bank for your mortgage). Even though you started with an HDB loan, you can refinance to a bank loan at reduced rates.
You can only obtain 75% or 85% with questioning. The lender will check your TDSR when you apply for a loan. TDSR is the portion of your income that goes toward debts like vehicle and student loans. TDSR plus mortgage can be at most 55% of total monthly income.
