If you’re looking to purchase a property in Singapore, deciding on what kind of loan you want to take out is just as important as choosing the property you want to purchase (or invest in if you’re fortunate enough to have the capital). The type of home loan you choose is important because unless you’re Paris Hilton or have received a tidy inheritance – you’re going to have the cash on hand to buy a $300,000 to $1,000,000+ property without a home loan. So is it smarter to go with a Housing and Development Board (HDB) loan or a bank loan to purchase that property? Read on to find out. What are HDB loans and who qualifies for one? An HDB concessionary loan is meant to provide financing for the purchase of HDB flats including resale flats, Build-to-Order (BTO) flats, Design, Build and Sell Scheme (DBSS) flats and Executive Condominiums (EC). Here are some key features present in the HDB concessionary loan: Although the eligibility criteria can vary by HDB property type, in general, you’ll need to fit the following criteria to qualify for an HDB concessionary loan:*Take note that the CPF rate is reviewed every year, so your HDB loan interest rate may change in the future.
- At least one buyer must be a Singapore citizen at least 21 years at the time of application
- The buyers’ gross monthly household income must not exceed S$10,000 (S$12,000 for EC) or S$15,000 for extended families
- You must not have taken two or more HDB concessionary loans previously
- You must not own any private residential property
- You must not have sold any private residential property within 30 months of your HDB concessionary loan application
Keep in mind that if you do not fit the criteria needed to take out an HDB loan, you’ll have no choice but to select a bank home loan for your property purchase. How do HDB loans compare to bank loans? Choosing between an HDB or bank loan can be a tough decision. That’s because each home loan type has its own strengths and drawbacks that might be good for one property buyer but not another. In the end, your choice depends on selecting the loan that best suits your financial capacity for purchasing the property you desire. For example, if you really want to purchase a 4-bedroom BTO flat but your gross monthly income exceeds S$10,000, but is less than S$12,000 – you might want to consider purchasing an EC with an HDB or bank loan instead. When it comes to HDB and bank loans, there are several key differences you should recognise before making your choice (first-time home buyers):
*For more information about CPF Housing Grant, visit the HDB InfoWEB.
Now that you have a better idea of how HDB and bank loans differ, it should be easier to recognise which type of home loan is right for you. Unfortunately, taking out a home loan can be a complex and frustrating process, especially for first-time home buyers – due to the the government’s numerous housing regulations and changing housing market conditions. Thankfully, you can get the answers you need from experienced home loan specialists and find the best possible home loan package for free by visiting our Home Loan Comparison Page.
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