All You Need To Know About HDB Loan Vs Bank Loan

By Ted Chong (Guest Contributor)

Buying a HDB flat for the first time can be an intimidating experience. It’s probably the first big ticket purchase in your life that will take the next couple of decades to pay off, so you’d definitely want to rake in as much savings as you can.

Perhaps you have not really thought about what kind of loan to take up. If you don’t already know, you have a choice between taking up a HDB or bank loan, as long as you are eligible for them.

You might want to hold on to your cash and pay off your home loans using your CPF, but did you know that taking up a bank loan allows you to pay less interest? This is because bank interest rates are lower as compared to the CPF Ordinary Account (OA) interest rate which home loans are pegged to. There are a number of differences and hence several reasons why one should be preferred over the other. Here are the parameters that vary:

Distinguishing between HDB Loan and Bank Loan

• While the HDB lending rate is 2.6%, bank lending rates vary between 1% and 1.68%.

• If you take up a HDB loan, your financial quantum will extend up to 90%, while, if you take up a bank loan, it will be capable of financing a maximum of 80% of the cost price, or the property’s present market value, depending upon which is lower.

• Late payment fees are charged at 7.5% per annum interest rate. The same is charged by banks at about 24% per annum interest rate.

• Cash down payment is not required in case of HDB loans. Through your CPF you can pay the 10% down payment. However, bank loans call for a cash down payment of at least 5%.

In the following infographic, we run through the main factors to consider while taking up a home loan for your HDB flat, and the main differences between taking up a HDB loan and a bank loan.


To find out more about taking up a bank loan vs. a HDB loan, refer to our full guide at

The team at Redbrick Mortgage Advisory has more than 60 years of banking experience and is proficient in structuring and sourcing for the best financing terms for both residential and commercial real estate in Singapore, Malaysia, USA, UK, Japan, Thailand and Australia.


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About the Author

Gerald Tay Author, entrepreneur, professional investor and loving father, runs with a tongue-in-cheek approach to property investment - and himself. He is widely regarded in the industry as 'The Common-Sense' Investor. Gerald writes with passion and straight-forwardness, disclaiming wild claims and impractical investment strategies behind lies and ignorance pervasive in the property industry for vested interests. His well-known statement, "All I did is to value my investments with science, logic and common sense.'

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