Buying a HDB flat for the first time can be an intimidating experience. It’s probably the first big ticket purchase in your life that will take the next couple of decades to pay off, so you’d definitely want to rake in as much savings as you can.
Perhaps you have not really thought about what kind of loan to take up. If you don’t already know, you have a choice between taking up a HDB or bank loan, as long as you are eligible for them.
You might want to hold on to your cash and pay off your home loans using your CPF, but did you know that taking up a bank loan allows you to pay less interest? This is because bank interest rates are lower as compared to the CPF Ordinary Account (OA) interest rate which home loans are pegged to.
And while the down payment required to take up a bank loan may be higher – at 20%, with at least 5% paid in cash as compared to 10% with a HDB loan, fully payable with your CPF –you get to enjoy greater flexibility in retaining your savings in your CPF OA. Conversely, upon the collection of keys to your new home, HDB will wipe out your CPF OA balance to reduce the loan quantum required for you to service.
In the following infographic, we run through the main factors to consider while taking up a home loan for your HDB flat, and the main differences between taking up a HDB loan and a bank loan.
To find out more about taking up a bank loan vs. a HDB loan, refer to our full guide at Ultimate Guide On Singapore Home Loan
This is a guest post from Redbrick Mortgage Advisory.
The team at Redbrick Mortgage Advisory has more than 60 years of banking experience and is proficient in structuring and sourcing for the best financing terms for both residential and commercial real estate in Singapore, Malaysia, USA, UK, Japan, Thailand and Australia.
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