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Applying for HDB Loans in Singapore – The Ultimate Guide to How Much It Will Cost You

applying for hdb loan singapore guide

Peter Lin

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If you’re buying an HDB flat in Singapore, you often have the option of taking an HDB concessionary loan, better known as an HDB loan. Before you apply for an HDB loan, read our ultimate guide to everything you need to know and all that it will cost you.

Contents

  1. Are you eligible for an HDB concessionary loan?
  2. What is the HDB loan interest rate?
  3. What is the HDB loan downpayment?
  4. Type of HDB flat – new or resale
  5. Location and size of HDB flat
  6. Cost and fees of buying a new HDB flat
  7. Cost and fees of buying a resale HDB flat

 

1. Who can apply for an HDB loan?Eligibility for HDB Loan Guide Who Can Apply

The first thing to ask yourself before you take up an HDB loan is whether you are eligible for the loan. Here are the main eligibility conditions you need to meet if you’re a first-time applicant for the HDB loan:

HDB Loan Eligibility Conditions
Citizenship At least one buyer is a Singapore citizen
Household income Maximum $12,000 for families, $18,000 for extended families, $6,000 for singles
Private property ownership Must not own or have disposed of private property in the last 30 months
Commercial property ownership Maximum 1 market/hawker stall or commercial/industrial property

Note: If you own a market/hawker stall or commercial/industrial property, you have to be operating the business yourself and NOT earning income from any other sources.

If you meet all the above requirements, you should apply for the HDB Loan Eligibility letter (HLE). You need to do this before you book a new flat from HDB or obtain an Option to Purchase from a resale flat seller. Fortunately, the HLE letter is valid for 6 months, so there’s no excuse.

Applying for a HLE is an easy, straightforward process that you can do from HDB’s website.

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2. What is the HDB loan interest rate?

HDB Loan Interest Rate Guide

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

Why is this the main question on many Singaporeans’ minds? Because it’s pretty high. In comparison, bank loan interest rates have not exceeded 2% in almost a decade.

However, HDB loan interest rates have not changed at all, and that kind of stability is often appreciated by homeowners. Imagine not knowing ahead of time how much your monthly home loan repayment is going to be! You wouldn’t know how much to set aside. Those on an HDB loan know exactly what they’re paying each month, and it’ll be the same today as it was five years ago.

However, that’s not to say the HDB loan interest rate will never change – it is always 0.1% higher than the CPF Ordinary Account interest rate. Currently, the CPF Ordinary Account interest rate cannot go lower than 2.50%, so if the HDB loan interest rate changes, it can only increase, never decrease.

HDB Loan vs Bank Loan Interest Rate Guide

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3. What is the HDB loan downpayment?

HDB Loan Downpayment Guide

The HDB loan downpayment is 10% of the purchase price.

This amount can be paid in cash or from your CPF Ordinary Account. As a result, the downpayment is a huge deciding factor in deciding the cost of an HDB loan.

Assuming you are buying a flat under the Fiancé/Fiancée Scheme. If you and your partner check your CPF Ordinary Account and you only have $30,000 combined in there, then you should probably look for an HDB flat that costs no more than $300,000. Choosing a more expensive flat means you will need to pay the rest of downpayment by cash.

It’s always a good idea to find out how much downpayment you can afford to pay, before choosing a flat. That’s because you can compromise on a lot of costs when choosing a flat, but you can never compromise on the downpayment, unless you win first prize in Toto.

How Much Downpayment HDB Loan Guide

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4. Type of HDB flat – new or resale

Types of HDB Flat HDB Loan Guide

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

Type of HDB flats Advantages Disadvantages
Built-to-Order (BTO) flats Cheaper Waiting time of up to 4 years
Resale flats Short waiting time More expensive
Sale of Balance Flats Sold at BTO prices

Short waiting time

Limited units to choose from

HDB BTO flats are usually significantly cheaper than resale flats. A 4-room BTO flat in Sengkang can cost as little as $252,000 while a 4-room resale flat in the same area can cost around $405,000. So if you’re planning to get an HDB loan, you’re looking at a downpayment of $25,200 vs $40,500. That’s a pretty significant difference.

However, you will need to ballot for an HDB BTO flat, usually competing with twice as many applicants as there are available units. Assuming you’re lucky enough, you then have to wait as long as 4 years for the flat to be ready. Trust me, a lot can happen in 4 years.

Resale flats, on the other hand, can be snapped up in a matter of months, once negotiations with the seller are complete.

Recently, a compromise option was released by HDB – the Sale of Balance Flats. These are units that are either unsold or sold and returned to HDB for whatever reason. They are often significantly cheaper than a resale flat, and you don’t need to wait for years before moving in, unlike an HDB BTO. Of course, the main disadvantage is you are given limited options to choose from – that is, in an entire block there may only be one or two units you can buy.

 

5. Location and size of the HDB flat

Cost of HDB Flat Based On Location and Size HDB Loan Guide

Once you’ve decided on the type of HDB flat, your next decision is the location and size of the HDB flat. Again, how much of a downpayment you can afford should help you with your decision.

Location matters when it comes to cost. In Singapore, housing estates are divided into mature and non-mature, with mature estates being at least 20 years old. Mature estates usually come with lots of convenient amenities like schools, medical facilities, supermarkets and so on. Thus, flats in mature estates will be significantly more expensive than those in non-mature estates.

For example, a 4-room resale flat in Bukit Batok (a non-mature estate) can cost around $391,000, while a 4-room resale flat in nearby Clementi (a mature estate) can cost around $521,500.

Of course, it also goes without saying that size does matter as well. A larger flat will cost you more than a smaller one, sometimes as much as two times the price!

For example, a 3-room resale flat in Bedok can cost around $300,000 while a 5-room resale flat in Bedok can set you back by $586,000.

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6. Cost of buying a BTO or new HDB flat

Other than the main cost of the flat, there are other costs involved. Many of these costs are regardless of whether you’re taking an HDB loan or a bank loan.

Item Amount Payment mode
Online application for HDB flat $10 Credit or debit card
Option fee Up to $2,000, depending on flat size NETS
Stamp duty Based on selling price, e.g. $4,200 for $300,000 flat Cash or CPF
Legal fees At least $257, depending on selling price Cash or CPF
Downpayment 10% of purchase price Cash or CPF
Survey fees Up to $375, depending on flat size Cash or CPF
Home Protection Scheme annual premium Varies depending on buyer and loan type CPF
Fire Insurance Scheme 5-year premium Up to $7.50, depending on flat size Cheque

Note that the option fee will be refunded to you if you complete the flat purchase, but forfeited if you do not. Think of it like a deposit.

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7. Cost of buying a resale HDB flat

Here are the cost and fees of buying a resale HDB flat. Again, many of these costs are incurred, regardless of whether you’re taking an HDB loan or a bank loan.

Item Amount Payment mode
Resale application admin fee Up to $80 Credit or debit card or GIRO
Request for Value processing fee $120 Credit or debit card or GIRO
Stamp duty Based on selling price, e.g. $4,200 for $300,000 flat Cash or CPF
Legal fees  At least $257, depending on selling price Cash or CPF or NETS
Downpayment 10% of purchase price Cash or CPF
Home Protection Scheme annual premium Varies depending on buyer and loan type CPF
Fire Insurance Scheme 5-year premium Up to $7.50, depending on flat size Cheque

Do note that for the legal fees, it depends on whether to you wish to have HDB’s lawyers acting for you or not. Either way, you will need to pay conveyancing fees, stamp duty, registration and miscellaneous.

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HDB Loan Guide Infographic Summary

 

Further reading on home loans:

Home Loans in Singapore – The Complete Guide to Property Loans

Best Home Loans Singapore (2018) – Most Affordable Housing Loans Reviewed

HDB Loan vs. Bank Loan: Which is Better?

 

Header image credit: Muhd Asyraaf

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Peter Lin

I am the poster boy for reinventing one's self. I've been a broadcast journalist, technical writer, banking customer service officer and a Catholic friar. My life experiences have made me the most cynical idealist you'll ever meet, which is why I'm also the co-founder of a local pop culture website. I believe ignorance is not bliss, and that money is the root of all evil only if you allow it to be.