A Beginner’s Guide to HDB Loans (Property Cooling Measures Update), Money News | SehndeWeb

1. Who can apply for an HDB loan?


The first thing to ask yourself before taking out an HDB loan is whether you qualify for the loan. Here are the main eligibility conditions to meet if you are a first-time HDB loan applicant:









HDB Loan Eligibility Requirements
Citizenship At least one buyer is a citizen of Singapore
household income Maximum $14,000 for families, $21,000 for extended families, $7,000 for singles
Private property Not own or have disposed of private property in the past 30 months
Commercial property Maximum 1 market/hawker stall or commercial/industrial property


Note: If you own a market/hawker stall or commercial/industrial property, you must operate the business yourself and NOT derive income from other sources.


If you meet all of the above requirements, you must apply for the HDB Loan Eligibility Letter (HLE). You must do this before booking a new apartment with HDB or obtaining an option to buy from a seller of resale apartments. Fortunately, the HLE letter is valid for 6 months, so there is no excuse.


Applying for an HLE is a simple and straightforward process that you can complete from the HDB website.


2. What is the HDB loan interest rate?


The HDB loan interest rate is currently 2.60%. (It stayed at 2.60% for several years.)


Why is this the main question for many Singaporeans? Because it’s quite high. By comparison, interest rates on bank loans have not exceeded 2% for almost a decade.


However, HDB loan interest rates haven’t changed at all, and this kind of stability is often appreciated by homeowners. Imagine that you do not know in advance the amount of your monthly mortgage repayments! You wouldn’t know how much to set aside. Those with an HDB loan know exactly what they are paying each month, and it will be the same today as it was five years ago.


However, this does not mean that the HDB loan interest rate will never change – it is still 0.1% higher than the CPF regular account interest rate. Currently, the CPF ordinary account interest rate cannot go below 2.50%, so if the HDB loan interest rate changes, it can only go up, never go down.


3. What is HDB Loan Down Payment?


However, on December 16, 2021, the Singapore government stealthily increased the down payment on the HDB loan to 15% at midnight, surprising the country. It was part of a new wave of property chilling measures aimed at discouraging citizens from buying properties only to rent them out for passive income.


How will this HDB loan down payment change affect you? Not much. just pay more money only.


Everything else remains the same. The HDB loan amount can be paid in cash or from your ordinary CPF account. But 15% is really no joke for some of us trying to make ends meet. Therefore, this 15% down payment should be a determining factor in deciding whether you should take out an HDB loan.


Assuming you are buying an apartment under the Fiancé/Fiancée Scheme. If you and your partner are looking at your regular CPF account and only have $30,000 combined, you should probably look for an HDB apartment that costs no more than $200,000. Choosing a more expensive apartment means that you will have to pay the rest of the deposit in cash.


It’s always a good idea to know how much down payment you can afford before choosing an apartment. This is because you can compromise on renovation or furniture costs when buying an apartment, but you can never compromise on the down payment unless you win the top prize at Toto. .


ALSO READ: HDB concessional loan: Know your eligibility and how to apply for HLE


4. Type of HDB apartment – ​​new or resale


Your first decision when choosing an HDB apartment to buy is between a new HDB apartment (aka a Build-To-Order, or BTO apartment), or a resale HDB apartment. There are several factors to consider in this decision, always keeping the down payment in mind.








Type of apartments HDB Advantages Disadvantages
Apartments built to order (BTO) Cheaper Standby time up to six years
Resale apartments Short waiting time More expensive
Sale of apartments Libra Sold at BTO price

Short waiting time

Limited units to choose from


HDB BTO apartments are generally significantly cheaper than resale apartments. A 4-room BTO apartment in Sengkang can cost as little as $283,000, while a 4-room resale apartment in the same area can cost around $510,000. So if you’re considering getting an HDB loan, you’re looking at a down payment of $42,450 versus $76,500. That’s quite a significant difference.


However, you will need to vote for an HDB BTO apartment, typically competing with twice as many applicants as there are units available. Assuming you are lucky enough to get a BTO, then you will have to wait up to six years for the apartment to be ready. Believe me, a lot of fights, quarrels, breakups and babies can happen in 6 years.


Resale apartments, on the other hand, can be snapped up within days, once negotiations with the seller are complete.


However, an intermediate option was launched by HDB – the sale of Balance Flats. These are units that are either unsold or sold and returned to HDB for any reason. They are often significantly cheaper than a resale apartment, and you don’t have to wait years to move in, unlike a BTO HDB. Of course, the main disadvantage is that you have a limited choice of options – ie in an entire block there may only be one or two units that you can buy.


5. HDB flat location and size


Once you have decided on the type of HDB apartment, your next decision is the location and size of the HDB apartment. Again, the amount of down payment you can afford should help you in your decision.


Location matters when it comes to cost. In Singapore, housing estates are divided into mature and non-mature, with mature housing estates being at least 20 years old. Mature estates are usually equipped with many convenient amenities such as schools, medical facilities, supermarkets, etc. Thus, apartments in mature developments will be significantly more expensive than those in non-mature developments.


For example, a 4-room resale apartment in Bukit Batok (a non-mature area) can cost around $549,999, while a 4-room resale apartment near Clementi (a mature area) can cost around $558,000. $.


Of course, it goes without saying that size also matters. A larger apartment will cost you more than a smaller one, sometimes up to twice the price!


For example, a 3-room resale apartment in Bedok can cost around $468,000, while a 5-room resale apartment in Bedok can cost you $750,000.


6. Cost of buying a new BTO or HDB apartment


Apart from the main cost of the apartment, there are other costs involved. Many of these costs are independent of whether you take out an HDB loan or a bank loan.













Article Rising Payment method
HDB Apartment Online Application $10 credit or debit card
Option fees Up to $2,000, depending on apartment size NETS
Stamp duty Based on sale price, e.g. $4,200 for $300,000 fixed Cash or CPF
Legal fees At least $257, depending on sale price Cash or CPF
Deposit 15% of the purchase price Cash or CPF
Investigation costs Up to $375, depending on apartment size Cash or CPF
Home Protection Plan Annual premium Varies by buyer and type of loan CPF
Fire insurance plan five-year bonus Up to $7.50, depending on apartment size Check


Note that the option fee will be refunded to you if you finalize the purchase of the apartment, but forfeited if you do not. Think of it as a deposit.


7. Cost of buying an HDB resale apartment


Here is the cost and fees of buying an HDB resale apartment. Again, many of these costs are incurred whether you take out an HDB loan or a bank loan.












Article Rising Payment method
Resale Application Administration Fee Up to $80 Credit or debit card or GIRO
Value Request Processing Fee $120 Credit or debit card or GIRO
Stamp duty Based on sale price, e.g. $4,200 for $300,000 fixed Cash or CPF
Legal fees At least $257, depending on sale price Cash or CPF or NETS
Deposit 15% of purchase price Cash or CPF
Home Protection Plan Annual premium Varies by buyer and type of loan CPF
Fire insurance plan 5 year bonus Up to $7.50, depending on apartment size Check


Note that for legal fees, it depends on whether or not you want HDB’s lawyers to act for you. In any case, you will have to pay transfer fees, stamp duties, registration and miscellaneous.


ALSO READ: 5 Common Financing Problems For HDB Upgraders And How To Solve Them


This article was first published in MoneySmart.

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