Bank Loan Vs HDB Loan: Which Should You Go For?

The excitement of finally getting your own private space is definitely one electrifying experience and something that many have dreamt about for years. However, the journey to receiving the keys to your brand new home is definitely no easy-breezy one, for there seems to be a whole lot of information for you to pick up. It all may seem very overwhelming, and you don’t know where to begin. There’s one big dilemma you may have; should you go for a bank loan or a HDB loan? Well, we’re here to help you make a more informed choice! Scroll down our article to read on about the differences between the two types of loans; we’ve summarized the key information that will help you see things in a clearer light.

Bank Loan vs HDB Loan


HDB Loan

Bank Loan


Interest Rate



Averages around 1.30% – 2.40%, depends on which bank, and what benchmark is used


CPF or Cash

At least 5% is in cash, the rest can be used from CPF


Maximum Loan

New flats: 90% of purchase price

Resale flats: 90% of the lower of Resale Price and Market Valuation


75% of purchase price

Penalty for Late Payment

7.5% p.a.

Depends on which bank, but banks are generally more strict than HDB

Eligibility for Loans

HDB Loan

To be eligible, the following conditions must be met:

  • At least one of the buyers is a Singaporean Citizen
  • Have not taken up two or more housing loans from HDB before
  • Average gross monthly household income should be below $12,000
  • For singles buying a 5-room or smaller resale flat, or a 2-room new flat in a non-mature estate: Average gross monthly household income should be below $6,000
  • Does not own or have disposed of any private residential property in the past 30 months before the date applied for a HDB Loan Eligibility Letter

Bank Loan

To be eligible, you should have a credit score deemed satisfactory by the banks.


The Singapore Interbank Offered (SIBOR) rate is a measure used by banks to determine your home loan. It refers to the daily interest rate at which banks in Singapore offer to lend unsecured funds of a reasonable amount to other banks. A minimum of 12 to a maximum of 20 banks will submit their rates to the Association of Banks (ABS) in Singapore, which tabulates the SIBOR rate before 11 a.m. Singapore time each business day. The SIBOR rate is mainly affected by the US Fed Rate and the liquidity of the Singapore banking sector. The following table shows the latest SIBOR rates for the different duration of periods.



Swap Offer Rate (SOR)












Mortgage Repayment Calculator

Should you decide to make a partial repayment towards your home mortgage, you’ll find this useful! Simply plug in the loan amount, interest rate, and loan term into a calculator tool online; try PropertyGuru’s Mortgage Repayment Calculator — which will tabulate the details of your loan repayment, and help you better visualize what your remaining payments will sum up to be.

Using results from a community’s poll on the choice of home loans their members have taken and recommend, here’s a summary of some of the most informative responses that may benefit you:

  • John Lee recommends the HDB loan for a hassle-free experience that will give you peace of mind in the future, as he finds that bank loans bring about uncertainty, where there is the possibility of unfavorable fluctuations in the interest rates.
  • Anastasia Wong also went for the HDB loan, where she reasons that the legal fees for HDB loans are lower than that of bank loans. She also adds that for HDB loans, there is the advantage of ending the loan anytime you wish. This would not be the case for bank loans, which differ from one bank to another.
  • Jason Lim reckons that a HDB loan is preferable. He says if you’re looking to buy a BTO and take a HDB loan, that’s 5% to secure it, and another 5% payment at keys collection. For banks, you’ll be looking at about 10% payment, followed by another 10% at keys collection, which is obviously not as ideal. He advises going for the longest-term HDB loan available, as this will enable you to have more cash on hand, which can be used for investment purposes.
  • Reza Mohamed went for a Bank loan, saying that future interest rate fluctuations can be nullified since you could simply refinance to another bank that offers a more attractive rate. He did so, by making a switch from OCBC to POSB. However, he continues to say that banks don’t allow refinancing for loan amounts below $100,000, which is something you’ll need to take into consideration.
  • Yang Xi Chen says that he would go for a HDB loan, as he likes how the downpayment of 10% can be made with his CPF. To add on, going for a HDB loan gives him the choice to refinance with banks offering lower interest rates, after he has made his six months of payment. 

Buying a HDB flat and dealing with the many issues that come along with it is understandably going to feel very overwhelming since it is a big-ticket purchase that will make quite a dent on your income. We hope that this article can act as a starting point, and will help you make a more informed choice on the type of loan most suitable for yourself. Overall, it’s most important that you consider what mode of payment you prefer; cash or CPF, or whether you’re looking for a more convenient transaction process! It would be helpful for you to make use of calculator tools that are available online, such as the HDB loan calculator and PropertyGuru’s mortgage repayment calculator. 


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