Home Loans

DBS Home Loan Review Singapore 2019 – Which Mortgage to Choose from DBS

Peter Lin

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DBS home loan rates are some of the most unique on the market today. They do not offer any SIBOR-linked rates, preferring to focus completely on the DBS Fixed Home Rate, or FHR. This is not surprising since they pioneered the concept of fixed deposit-linked home loan packages, which turned out to become one of the most popular in Singapore today.

If you’re buying a new property and looking for an DBS home loan, here are the best packages they offer, whether your property is uncompleted or completed.

 

DBS home loans for an HDB BTO under construction

For a building under construction, such as a HDB BTO flat, DBS offers two home loan packages, differentiated by the loan amount. If you are able to loan more than $500,000, you’ll be able to enjoy a preferential rate.

Type of BUC home loans Home loan package
Floating rate for BUC

(minimum loan amount $500,000)

Year 1:  1.95% (FHR8 + 1.275%)
Year 2: 1.95% (FHR8 + 1.275%)
Year 3: 1.95% (FHR8 + 1.275%)
Thereafter: 1.95% (FHR8 + 1.275%)
Floating rate for BUC

(minimum loan amount $100,000)

Year 1:  2.125% (FHR8 + 1.45%)
Year 2: 2.125% (FHR8 + 1.45%)
Year 3: 2.125% (FHR8 + 1.45%)
Thereafter: 2.125% (FHR8 + 1.45%)

*updated as of 31 January 2019

The rates are linked to fixed deposits, pegged to DBS’ 8-month fixed deposit interest rate, otherwise known as the Fixed Home Rate or FHR8. Currently, FHR8 is 0.675% per annum.

If you are borrowing a minimum of $1,00,000, your interest rate is FHR8 + 1.45%, which makes it 2.125%. If you are borrowing for more than $500,000, the interest rate stands at 1.95%

Being pegged to such a short-term fixed deposit interest rate means we won’t be expecting the bank to raise it too drastically. In fact, at 0.675%, it is already three times of what it was last year.

Another advantage of this home loan package is that the rate is maintained throughout at either FHR8 + 1.275% or FHR8 + 1.45%. For buildings under construction, you should consider packages that don’t change their rates too quickly each year. This is because the loan amount is disbursed in stages, so you don’t want to waste the better rate on a small disbursed amount.

There is no lock-in period, so your main concern should be the cancellation fee – a penalty for switching home loans while the building is still under construction.

For uncompleted private properties: The same DBS housing loan package is offered to uncompleted private properties.

 

DBS FHR8 fixed and floating home loans 2019

*Swipe left to see full table 

Bank DBS Home Loans for completed properties
Type of loan Floating rate
(2 years)
*Min $100,000
Floating rate
(2 years)
*Min $800,000
No Lock-in Fixed rate
(2 years)
Fixed rate
(3 years)
Fixed rate for resale HDB only
(5 years)
Year 1 2.255%
(FHR 8 + 1.58%)
2.20%
(FHR 8 + 1.525%)
2.575%
(FHR 8 + 1.90%)
2.68% 2.88% 2.40%
Year 2 2.255%
(FHR 8 + 1.58%)
2.20%
(FHR 8 + 1.525%)
2.575%
(FHR 8 + 1.90%)
2.68% 2.88% 2.40%
Year 3 2.255%
(FHR 8 + 1.58%)
2.20%
(FHR 8 + 1.525%)
2.575%
(FHR 8 + 1.90%)
2.68%
(FHR 8 + 2.005%)
2.88% 2.40%
Year 4 2.255%
(FHR 8 + 1.58%)
2.20%
(FHR 8 + 1.525%)
2.575%
(FHR 8 + 1.90%)
2.68%
(FHR 8 + 2.005%)
2.88%
(FHR 8 + 2.205%)
2.40%
Thereafter 2.255%
(FHR 8 + 1.58%)
2.20%
(FHR 8 + 1.525%)
2.575%
(FHR 8 + 1.90%)
2.68%
(FHR 8 + 2.005%)
2.88%
(FHR 8 + 2.205%)
2.40%

In 2019, FHR8 has significantly increased (as much as 3 times!), so overall interest rates have hiked up.

For completed properties, DBS offers 3 home loan packages and it’s interesting to see how they stack up against each other. Let’s take a look:

DBS floating rate home loan 2-year lock-in (minimum $800,000): If you borrow a minimum of $800,000, you have a slightly better rate of FHR8 + 1.525%. The spread is better than the 1.58% interest rate of the lower-end floating rate home loan, where you only need to borrow a minimum of $100,000. FHR8 is currently at 0.675%, which means that based on current rates, this home loan package offers 2.2%, among the lowest in the market today. The catch is that there is a 2-year lock-in period and a prepayment penalty of 1.5% on the outstanding loan amount.

DBS floating rate home loan no lock-in: If you are super FOMO and afraid that something better will come along, you might want to go for the no lock-in rate, which is also linked to DBS FHR8 but has a spread of 1.90% for the first year and thereafter, making the overall rate 2.575%. Although you pay 0.375% more than the first package, y0u won’t be locked in and there is no prepayment penalty to worry about. By paying a little more, you have the freedom to jump ship as soon as possible.

DBS fixed rate package of 2 years: Usually for fixed rate packages, you pay a little more for the stability and security of a fixed rate. Currently, the 2-year fixed rate package stands at 2.68%, while the 3-year fixed rate package stands at 2.88%. In your third year, you have the choice of going with a fixed rate or switching to a floating FHR8 + 2.005 % package thereafter. Either way, you will be locked-in for 3 years, so do take note of that. Of course, because you’re enjoying the stability and security of a fixed rate for at least 2 years, you’ll have to pay a little more.

That said, even by fixed rate standards, this package is not among the cheapest in the market, so only go for it if you don’t like any surprises in your monthly repayments.

For completed HDB flats: The same DBS housing loan packages are available for resale HDB flat purchases as well.

 

Illustration: Financing a $1 mil private property or HDB resale flat

The below is calculated with a purchase price of $1,000,000, a loan tenure of 30 years and 20% downpayment. Since the loan amount is 75% of purchase price, we are calculating the below estimated monthly instalments by using loan amount of $750,000.

Type of home loan Home loan package Estimated monthly instalment Notes
DBS floating rate home loan 2-year lock-in 2.255% (FHR8 + 1.525%) $2,868 2-year lock-in
2 years partial or full repayment 1.5% penalty
DBS floating rate home loan no lock-in 2.575% (FHR8 + 1.90%) $2,993 No penalty for partial or full prepayment
DBS fixed rate package of 2 years Year 1: 2.68%
Year 2: 2.68%
Year 3: FHR8 + 2.005%
$3,034 No lock-in
No penalty for partial or full prepayment

*updated as of 1 January 2019

 

Should you go with a DBS home loan package?

DBS was one of the first banks to do away with SIBOR-linked rates altogether, soon after the runaway success of the DBS Fixed Home Rate. Their decision to do so seems fairly prophetic, as a rising SIBOR will ensure that many home buyers will want to refinance out of a SIBOR-linked home loan package.

While DBS isn’t offering the lowest rates in the market today, they have proven in previous years that they are perfectly capable of being competitive when they choose to be. This can only be good for property buyers in Singapore.

Another reason to go with a DBS housing loan is the benefits you can earn with the DBS Multiplier Account, or the POSB Cashback Bonus. With either of these Bank and Earn schemes, you can either raise your savings account interest rate, or earn cashback simply by crediting your salary into DBS/POSB and taking up a DBS home loan.

Are you interested in applying for an DBS home loan? Speak to one of our mortgage specialists to find out which bank is offering the best home loan in Singapore for your particular needs.

 

Looking for home loans from another bank? Here are the other home loan packages we’ve reviewed.

Best Home Loans Singapore – Most Affordable Housing Loans Reviewed

OCBC Home Loan Reviews Singapore

UOB Home Loan Reviews Singapore

BOC Home Loan Reviews Singapore

Maybank Home Loan Review Singapore

Citibank Home Loan Review Singapore

Standard Chartered Home Loan Review Singapore

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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.