HDB Home Loans 101

  HDB Home Loans 101


HDB flat buyers have had the opportunity to get home loans from commercial banks ever since the 1st of January 2003 opening of the public housing loan market to the private sector. After this change, banks and financial  Student Loans With Low Interest institutions have embarked on a journey of competition among themselves, each offering the “best” loan packages. Because of the fierce competition, borrowers in Singapore have had amazing benefits.

However, it’s easy to get confused by the enormity of choices you have as a potential HDB home loan borrower, but there are several things to look out for, that any prudent borrower must take into account before deciding which bank or financial institution to get the loan from.

First of all, the interest rates are crucial. When it comes to rates, they can either be variable or fixed. Fixed rates generally offer more stability, but as soon as the lock-in period is over, your loan package will turn into a floating rate loan package. Floating rates will follow the daily reference rates in Singapore, which are the SIBOR (Singapore Interbank Offered Rate) or SOR (Swap Offer Rate). These last two are very important, because most loan packages offered by banks or other financial institutions are pegged to one of them.

Moreover, in order to offer a loan, a bank has to set aside a large lump of money in return for a very competitive rate of interest, which also involves a lot of paperwork. Because of this, most banks or financial institutions that act as lenders will impose a penalty on those who repay their loans fully within the first few years. The penalty is normally 1% of the outstanding housing loan amount if the loan is paid off within the first two years.



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