Singaporeans will go to at least three different retailers to compare the specifications, price and freebies offered on a television or fridge before making a purchase. However, when it comes to the biggest financial decisions of their lives, they simply leave it to their property agent or take a HDB loan. Wanting to make a difference, the founders of Singapore Mortgage Advisory decided to embark on an educational and awareness campaign to help you save money.
For the purpose of this article, we take a look at the recent Dakota Crest, King George’s Heights House that is going for SGD 700,000.00
Here is short comparison for you below:
HDB LOAN:
It is a loan for Singaporeans at a fixed interest rate of 2.6% and various restrictions such as:
Only for HDB flats.
One buyer must be a Singaporean.
- Monthly income must not exceed $14,000 or 21,000 with extended families.
- Monthly income must not exceed $7,000 for singles buying a 5 room or smaller resale flat or two-room new flat in a non-mature estate under the Single Singapore Citizen (SSC) Scheme.
- Must not own any private property (residential) in Singapore or overseas.
- Must not have taken more than two HDB loans.
- Have not disposed of any private property (residential) within thirty months before the loan application.
BANK LOAN:
- You will have lesser restrictions. Banks will run a credit check to see if you can afford the loan. It is that simple.
- 5% cash down payment
- No early repayment/ repayment with penalties
If you’re afraid of floating rates and prefer a more stable fixed rate; here are some projections for you.
What is the difference you asked ?
What does this mean ?
The total interest for bank loan will be: $36,102 ($435,122) and the total interest for HDB loan will be $71,708 ($504,748)
Total cash flow savings will be $35,980
The Question; Should you get an HDB Loan or a Bank Loan ?
We would say, if you have the 5% cash to spare, you should take a bank loan. If you do not, then a HDB loan will be suitable for you. Once you collect your keys, call us to refinance a bank loan.