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Bank Loan vs HDB Loan (2020)


Which is better, taking up your house loans with HDB or through banks? Many house owners have a hard choice when making a decision to apply for home loans. Especially for first time home owners, applying a new mortgage loan seems like absorbing endless amount of information. End of the day, everyone is looking for the best package with the lowest interest repayment.

Therefore, when making a decision between a bank loan or HDB loan often lands one in dilemma. The obvious low interest decision is to get a bank loan as it range between 1.3 to 2.4 percent. Which is much lower compared to the HDB loan at 2.6 percent. However, HDB loans usually offer higher maximum loan and assurance to owners as it is by the government scheme.

So, should the lower interest bank loan be a better alternative? In short, yes a bank loan is definitely more attractive for bigger mortgage loan amounts. This is because the lower interest can be sum up to so much more cost savings. Even with these savings there might be some owners which give it a miss as there are some criteria for application.

Bank Loan Eligibility (Interest rates about 1.3 – 2.4%)

  • Good credit score with Credit Bureau Singapore.
  • Minimum loan – usually $100,00 or more.
  • Any nationality with intent to buy property in Singapore can apply.

Let’s take a look at HDB loan (Interest rates 2.6%)

  • One of both applicant to be Singaporean.
  • Income limit of both party must not exceed $14,000.
  • Single applicant income should not exceed $6,000.
  • Maximum application per person is 2 times.
  • Do not own any private property or have sold on in the past 30 month before HDB loan application.

If HDB loan is not ideal then why are there still so many house owners with HDB loan package? There are a few reasons why people still choose HDB loans over bank loans. As early repayment does not comes with a penalty which in comparison a bank charges penalty for prepayment. Furthermore, HDB is more lenient on late payments and Singapore citizens can apply for assistance if they face any challenges on repayment.

Since a house is an important asset, there will be a big group of people choosing security over savings. Hence, this is the reason why many owners in Singapore choose to finance their home loans with the HDB. However, if you are disciplined and well organized with your housing plan, you should definitely choose a bank loan.

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