Issue 291

Copyright 2011-2016 www.propwise.sg. All Rights Reserved.

CONTENTS
p2

FROM THE

EDITOR

The Ultimate Guide to Getting an HDB

Welcome to the 291st edition of the

Singapore Property Weekly.

Home Loan in Singapore

Hope you like it!

p13

Resale Property Transactions

Mr. Propwise

(December 5 December 9)

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SINGAPORE PROPERTY WEEKLY Issue 291

The Ultimate Guide to Getting an HDB Home

Loan in Singapore
By Lucas Leow (guest contributor)

A real estate purchase is easily one of the

biggest financial commitments we will
undertake in our lifetime. We then spend the
next 20 to 30 years contributing a portion of
our salary to the repayment of the mortgage.
The good news is that you have the choice of
getting an HDB or bank home loan in
Singapore when you purchase an HDB flat.
There is no hard and fast rule that places one
above the other but you have to weigh the
options and make the choice wisely
depending on your financial situation. Weve
made an infographic of the process click
here to see it or read on to get a detailed
explanation.

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SINGAPORE PROPERTY WEEKLY Issue 291

Home loan Singapore 101
The common misconception is that the
monthly installments for home loans are
calculated the same way as a car loan,
personal cash loan or renovation loan. It is
actually not true.

this guide in its entirety and you will not go

wrong!
HDB or Bank Loan?

Car loans or personal loans charge interest

using the flat add-on method. This can be
defined as: loan amount x interest rate /
number of months for the loan tenure =
monthly installment.

Determining the right home loan type can be

tricky. It boils down to thinking about your
priorities and what is more important to you.
How do you feel about using cash to pay off
your monthly mortgage payment? Do you
have sufficient cash to make a 5% down
payment, or would you rather use your CPF
for a 10% down payment instead?

On the other hand, home loan monthly

repayments are based on a loan amount
amortized over the loan tenure, and interest is
computed based on a diminishing balance
each month. Hence, the thought process is
more compliated. The type, length and
interest rate you end up with for your home
loan can make or break your finances. Read

Perhaps you are a couple looking to purchase

your first marital home soon, and youre
looking to pay off your property loan as soon
as possible. Or perhaps you are expecting a
child, and by the looks of it, you want to
spend as little cash on the house as possible,
as you are expecting your household
expenses to increase in the months to come.

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SINGAPORE PROPERTY WEEKLY Issue 291

These considerations may be tedious to go
through, but it is necessary to do so, to
ensure that you get the best out of your
housing loan, one that fits your priorities and
your needs.
HDB Loan Financing Quantum
Most Singaporeans who own or who are
looking to purchase an HDB flat would usually
choose to take up a loan from HDB as their
first option. Why is that so? Taking up an HDB
loan allows you to finance up to 90% of the
purchase price or current market value of the
flat, whichever is lower.
While many people also think that the HDB
loan interest rate is fixed at 2.6% per annum,
that is actually not true. The HDB loan
interest is pegged to the prevailing CPF
ordinary account (OA) interest rate, plus a

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margin of 0.1%. So this means that it is still

possible for HDB to change their interest rate
based on the market situation. For example,
in the first half of 1999, the CPF OA interest
rate went up to 4.41%. Consequently, the
HDB loan interest rate was almost twice as
much as it is now. It is important to
understand the risks involved when going into
any type of loan and be prepared for the
potential fluctuations.
HDB Loan Payment

When taking up an HDB loan, applicants

have several payments to make. Here are
some of them:
1. Monthly loan instalment
The monthly instalment of the loan is due on
the first day of each month until the loan is
fully redeemed.

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SINGAPORE PROPERTY WEEKLY Issue 291

This applies to payment methods not made
via CPF or GIRO, such as via cash, NETS,
cheque, eNETS Debit, ATM/phone/internet
banking, or through any AXS payment
channel.
2. Arrears payment
Arrears payments can be paid through CPF,
cash, cheque, or through electronic payment
methods.
3. Late payment charge

For every monthly instalment not paid within

the month, a late payment charge will be
imposed at the end of the month.
4. Capital repayment
Capital repayments can be made either in
parts or in full and applicants have to give
HDB one months advance notice in writing.

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Partial capital repayments can either be made

to shorten the loan tenure with no changes
made to the monthly instalment amount, or
with revised monthly instalments after partial
capital repayment has been made. For partial
capital repayment, the minimum amount for
each repayment is $500 if the loan
commencement date was before 1 April 2012,
or $5,000 with increments in multiples of
$1,000 if loan commencement date was on or
after 1 April 2012.
For a full capital repayment, payment can be
made via cash, cheque, GIRO and CPF.
There is also an additional conveyance fee
that will be imposed on the total discharge of
mortgage (TDM), which can be paid by cash,
cheque, GIRO or CPF.

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SINGAPORE PROPERTY WEEKLY Issue 291

TDM Fees (inclusive of 7% GST) are as
follows:

Refinancing an HDB Loan

HDB homeowners are allowed to refinance
their housing loan from an HDB loan to a
bank loan. However, once this has been
done, the process cannot be reversed (i.e.
you cannot refinance from a bank loan back
to an HDB loan).
A Singaporean permanent resident is
required to take a bank loan when purchasing
a property. In the event that he/she
subsequently obtains Singapore Citizenship,
they will not be allowed to refinance to an
HDB housing loan.

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SINGAPORE PROPERTY WEEKLY Issue 291

HDB Loan Eligibility

3. Household Status

Here are some conditions that applicants

need to meet in order to qualify for an HDB
loan (updated as of 2016/17 on HDBs
website):

Applicant(s) must not have taken at least two

HDB loans. If he/she has taken one HDB
loan, the last property owned must not be a
private residential property.

1. Citizenship

4. Ownership/Interest in Property

At least one of the applicant(s) must be a

Singapore Citizen

Have not disposed of any private residential

properties within 30 months before the loan
application. Private residential properties
include, but are not limited to: HUDC flats,
properties obtained by gifts, inherited as a
beneficiary, private properties or properties
owned or obtained through nominees.

2. Income Ceiling
Total household income must not be more
than $12,000 for families or $18,000 for
extended families. For singles under the
Single Singapore Citizen (SSC) scheme, the
average gross monthly income cannot be
more than $6,000 for those buying a 5-room
(or smaller) resale flat or a 2-room new flat in
a non-mature estate.

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The applicant must not own more than one

market/hawker stall or commercial or
industrial
property.
If
one
of
the
aforementioned properties are owned, the
applicant must be operating the business
without additional sources of income.
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SINGAPORE PROPERTY WEEKLY Issue 291

5. Must not own any private properties in
Singapore or overseas
6. The remaining lease of the property must
not be less than 60 years. Otherwise, the loan
application may be rejected or the loan
amount may be reduced.
CPF Usage for HDB Loans
Upon Temporary Occupation Permit (TOP)
and during 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.
Bank Loans
A housing bank loan is more straightforward
and less restrictive. It gives you more
flexibility when applying for a loan, as no
income ceiling applies. There are two types of
loan packages offered by banks: floating and
fixed rate packages.
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Currently, bank rates are offered at between

1% to1.38% for floating rates packages and
between 1.68% to 2% for fixed rates
packages.
Fixed rates means your interest rate will not
change for a period of one to five years and
usually a penalty will be imposed for early
redemption during the same period at which
the rates are fixed.
Floating rates, also known as variable rates,
are usually more volatile. Most floating rates
do not come with a lock-in period. There is a
variety of floating rates available with each
financial institution, and are as follows:

SIBOR

SIBOR stands for the Singapore Interbank

Offered Rate. It is the most common rate
used for home loans, based on the interest
rates used by banks in Singapore and the
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SINGAPORE PROPERTY WEEKLY Issue 291

rate they charge one another when they
borrow among themselves.

SOR

The Swap Offer Rate (SOR) is more volatile

than SIBOR, because it involves foreign
exchange rates between the US Dollar and
Singapore Dollar. Its volatility means that you
can either end up saving more or paying
more, depending on your luck.

Board rates

Board rates are determined internally by each

bank. While it is usually lower at onset, the
rates can change unpredictably.

Fixed deposit pegged rates

These are fixed deposit rates, with

strategically chosen references. Instead of
the 6 to 12 months FD rates that most are
more familiar with, the more obscure 18, 36,
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and 48-month rates are used. While most

people believe these are more stable and
transparent, they are ultimately still subject to
the banks discretion. Different banks have
also came out with their versions of deposit
pegged mortgage packages.
Most people favour fixed rates over floating
rates as it is more stable and gives you a
sense of security. However, its stability comes
in exchange at a higher loan interest rate, so
risk-takers would usually be the ones who opt
for floating rates.
There is also the question of whether to opt
for a shorter or longer loan tenor. In general,
a longer loan tenor helps in hedging risks and
securing better financing options, thus making
it a more attractive choice. For further
explanation, check out our advice on longer
loan tenor.
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SINGAPORE PROPERTY WEEKLY Issue 291

HDB Loan vs Bank Loan: The Differences

3. Early repayment

There are many reasons why people can

prefer one over the other, and vice versa. It is
up to the applicant(s) and their finances:

When
taking
up
an
HDB
loan,
applicants/homeowners are not subjected to
early repayment penalties. On the other hand,
if applicants were to redeem their bank loans
early, they would be subjected to early
repayment penalties between 1.5% to 1.75%.

1. Interest rate differences

Currently, the HDB lending rate is applied at
around 2.6%, pegged to the CPF ordinary
account (OA) interest rate with a 0.1%
margin. Conversely, bank lending rates are
applied between 1% to 1.68%.

2. Financing quantum
Taking up an HDB loan offers a larger
financing quantum of up to 90%, as
compared to taking up a bank loan. Bank
loans are usually only able to finance up to
80% of the purchase price, or current market
value of the property, whichever is lower.

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4. Late payment
HDB charges any late loan payment fees at
an interest rate of 7.5% per annum. On the
other hand, banks impose a late payment fee
of about 24% per annum, subject to a
minimum amount of $50.
5. Cash down payment

HDB loans do not require any form of cash

down payment; the 10% down payment can
be paid with your CPF.

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SINGAPORE PROPERTY WEEKLY Issue 291

When taking up a bank loan, there is a
minimum of 5% cash down payment required.
For further elaboration on each of the above
items and more, check out our guide on
deciphering home loan fine print to make sure
you know what you are getting into.
Apart from these factors, you also have to
consider your loan eligibility based on the
total gross monthly income spent on debt
repayments. Thats where you might have
heard of the terms Total Debt Servicing Ratio
(TDSR) and Mortgage Servicing Ratio (MSR),
where a borrower can only spend up to 60%
of his/her gross monthly income on total debt
repayments, and up to 30% of his/her gross
monthly income on mortgage repayments
respectively.

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Conclusion
Taking up a home loan package is not a onesize-fits-all approach. There is no perfect
loan package that will suit everyone, as we
all have different priorities when managing
our finances. Between choosing an HDB or a
bank loan, each loan type has its pros and
cons when comparing various factors such as
the loan financing quantum, loan tenure,
interest rate, cash down payment, etc.
If you are on a budget constraint and do not
want to blow too much cash on the down
payment, then the only option would be to opt
for the HDB housing loan. On the other hand,
if you consider yourself more cost sensitive
and want to have control over the total
amount of interest you will be paying, then
take a bank loan into consideration.

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SINGAPORE PROPERTY WEEKLY Issue 291

But whos to say you cant do both? Sure, you
can. You can first take an HDB housing loan
and make some of your loan repayments with
your CPF. Once you feel you are able to
comfortably service a monthly mortgage
payment with cash, then you can make the
switch to a bank loan.

The only drawback though, is that once you

have converted your housing loan from an
HDB loan to a bank loan, the process is
irreversible and you will not be able to go
back to HDB to take a loan.

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Before joining Redbrick, Lucas was working

in one of the largest property development
companies in Singapore, focusing on
industrial and landed properties. Interacting
with the SME towkays and seasoned property
investors intrigued him and made him want to
learn more about the financial aspects of real
estate. He then progressed on as a mortgage
specialist in a large offshore bank in
Singapore, and subsequently brought along
the knowledge and experience hes gained to
Redbrick.

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SINGAPORE PROPERTY WEEKLY Issue 291

Non-Landed Residential Resale Property Transactions for the Week of Dec 5 Dec 9
Postal
District
2
4
9
9
9
9
9
9
9
9
9
10
10
10
10
10
10
10
10
10
10
10

Project Name
ICON
TERESA VILLE
THE ORCHARD RESIDENCES
OUE TWIN PEAKS
OUE TWIN PEAKS
OUE TWIN PEAKS
THE METZ
MARTIN PLACE RESIDENCES
MARTIN PLACE RESIDENCES
URBANA
RESIDENCES @ KILLINEY
TOMLINSON HEIGHTS
NASSIM PARK RESIDENCES
GRAMERCY PARK
ARDMORE II
LEEDON RESIDENCE
GRAMERCY PARK
CYAN
D'LEEDON
CYAN
PARVIS
THE LEVELZ

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Area
(sqft)
581
1,356
2,465
1,055
549
570
1,496
1,421
1,421
1,012
2,368
4,047
3,466
1,970
2,024
2,110
2,013
1,959
635
1,313
1,701
990

Transacted
Price ($)
938,000
1,460,000
7,650,000
2,965,000
1,504,600
1,540,900
3,740,000
2,800,000
2,700,000
1,800,000
3,650,000
12,200,000
10,400,000
5,455,200
5,300,000
5,120,000
4,730,550
4,000,000
1,130,000
2,275,000
2,820,000
1,550,000

Price
Tenure
($ psf)
1,614
99
1,076
FH
3,104
99
2,811
99
2,741
99
2,701
99
2,500
FH
1,971
FH
1,900
FH
1,779
FH
1,541
FH
3,014
FH
3,001
FH
2,769
FH
2,619
FH
2,427
FH
2,350
FH
2,042
FH
1,779
99
1,732
FH
1,658
FH
1,565
FH

Postal
District
10
10
10
10
11
13
14
14
15
15
15
15
16
16
17
18
19
19
19
19
19
20

Project Name
THE TRIZON
JERVOIS REGENCY
D'LEEDON
D'LEEDON
EVELYN MANSIONS
BLOSSOMS @ WOODLEIGH
ROYCE RESIDENCES
ROYCE RESIDENCES
THE ATRIA AT MEYER
SPRING @ LANGSAT
THE MAKENA
LAGUNA PARK
BAYSHORE PARK
PALMWOODS
LOYANG TOWNHOUSES
DOUBLE BAY RESIDENCES
KOVAN REGENCY
BARTLEY RESIDENCES
A TREASURE TROVE
RIVER ISLES
CHUAN PARK
SKY VUE

Area
(sqft)
2,153
1,033
3,789
4,908
893
1,195
420
463
1,044
474
1,507
1,615
1,292
861
1,938
635
893
1,098
1,206
1,475
1,173
678

Transacted
Price ($)
3,080,000
1,280,000
3,650,000
4,500,000
1,350,000
1,420,000
580,000
550,000
1,402,000
608,000
1,890,000
1,200,000
1,100,000
700,888
1,380,000
630,000
1,150,000
1,350,000
1,220,000
1,300,000
838,000
1,202,300

Price
Tenure
($ psf)
1,431
FH
1,239
FH
963
99
917
99
1,511
FH
1,188
FH
1,382
FH
1,188
FH
1,343
FH
1,284
FH
1,254
FH
743
99
852
99
814
99
712
946
992
99
1,287
99
1,230
99
1,012
99
882
99
714
99
1,773
99

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SINGAPORE PROPERTY WEEKLY Issue 291

Postal
District
20
20
21
22
22
23
23
23
23
27

Area
(sqft)
CLOVER BY THE PARK
1,216
FAR HORIZON GARDENS
1,195
HIGHGATE
1,249
PARC OASIS
1,227
LAKEHOLMZ
1,518
HAZEL PARK CONDOMINIUM 1,324
THE PETALS
1,302
REGENT GROVE
1,259
MAYSPRINGS
1,528
EUPHONY GARDENS
883
Project Name

Transacted
Price ($)
1,540,000
890,000
1,260,000
1,080,000
1,220,000
1,380,000
1,085,000
847,888
1,008,088
640,000

Price
Tenure
($ psf)
1,266
99
745
99
1,009
FH
880
99
804
99
1,042 999
833
FH
673
99
660
99
725
99

NOTE: This data only covers non-landed residential resale property

transactions with caveats lodged with the Singapore Land Authority.
Typically, caveats are lodged at least 2-3 weeks after a purchaser
signs an OTP, hence the lagged nature of the data.

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