HDB Loan vs Bank Loan

[Dennis Ng]

someone commented:"I am always wary about housing loan by bank. Lots of peopleg ot tricked into taking up bank loan for HDB. Initially very low interest rate, now it is going up."

Reply by Dennis:

there're 2 types of loans granted by HDB.

1. Concessionary rate loans - interest rate is pegged at 0.1% above what CPF Ordinary account pays out.

2. Market rate loans - this is pegged to commercial bank rates, currently this rate is 3.5%.

in my opinion, anyone having a HDB concessionary rate loans should never, never switch to a bank. In the last 3 years, banks' interest rates were as low as 1%, and there're consumers who approach us to switch to a bank. We explained to them that the low 1% interest rate is an anormaly, due to 50 year record low interest rates in U.S.A.

You see we would rather turn away business than to accede to "consumers' request becos of their ignorance".

3 years later, our view have been proven right. U.S interest rates have now gone up to 4.25% and Singapore housing loan interest rates is about 3% compared to 1% 2 years ago. Those consumers who becos of our advice didn't make the mistake of switching their HDB concessionary rate loan to a bank are now so thankful of our service that they tell their friends about us, that if anyone want any info/advice about housing loan, they should talk to us since we do not charge any fee and the discussion is on a no-obligation basis. You can email us at info@HousingLoanSG.com
and visit our website: http://www.HousingLoanSG.com

Putting things in perspective, back in 1990s, housing loan interest rate in Singapore is about 6%. Thus, current interest rate of about 3% is not high actually. It only appears high due to the abnormally low interest rate of 1% 2 years ago.

By the way, we have also been quoted for comments by the media when they need info/advice on loans and Financial Planning. eg. Straits Times, The Edge, Lianhe ZaoBao, Lianhe WanBao, Asia Financial Planning Journal, Executive Inc and Capital Radio 95.8 FM and UFM 100.3

[Tristan]

May I know what are the qualification of applying housing loan through HDB? How about for PR, foreigner, work permit holder and EP holder?

Will it be possible to borrow 100% loan to buy a HDB?
If not, how much is the minimum amount of money to pay and how much can a buyer borrow i term of percentage?

I am currently a PR. What will happen if I borrow money with bank or HDB as a PR now but no longer PR after 10 years?

Wait for your reply.

Mr. Tristan

[Dennis Ng]

Dear tristan,

you asked:"May I know what are the qualification of applying housing loan through HDB? How about for PR, foreigner, work permit holder and EP holder?"

My reply: you can only apply a loan from HDB provided at least 1 of the 2 owners is a Singaporean, if both owners are PRs, you need to borrow from bank.

Other than that, the combined income of the 2 owners must not exceed $8,000; each person entitled to only getting loan from HDB twice.

Will it be possible to borrow 100% loan to buy a HDB?
My reply: No. If you qualify to bororw from HDB, max loan is 80%. If you borrow from bank, max is 90%.

If not, how much is the minimum amount of money to pay and how much can a buyer borrow i term of percentage?
My reply: if you borrow from HDB, the initial 20% can be paid entirely through CPF. If CPF not sufficient, can use cash.

if borrow from bank, min cash is 4%, you can use 6% from CPF and borrow max 90% loan. From 1 Jan 2006 onwards, min cash is 5%, 5% from CPF.


I am currently a PR. What will happen if I borrow money with bank or HDB as a PR now but no longer PR after 10 years?

My reply: according to HDB rules, a HDB flat must be owned by at least 2 PRs. Even 2 PRs. (eg. brothers) owned a flat jointly. If 10 years later, one brother no longer PR, they have to sell the HDB flat. Unless, the remaining brother (still a PR) get married and the flat partial ownership can be transferred from the out-going brother (no longer PR) to the remaining brother's wife.

So depending on your case, you might have to just sell the HDB flat when you give up your PR in Singapore in 10 years' time.

If you want to ask further questions in private, you can email us at info@HousingLoanSG.com or call Dennis at 6737 8801 (O)