Home Loans

DBS Home Loan Review Singapore 2018 – Which Mortgage to Choose from DBS

dbs-mbfc-header

Peter Lin

0 Comments

0
Shares

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 Loan for an HDB BTO, Building under Construction, with a purchase price of $350,000, loan tenure of 25 years

Home Loan Package Estimated Monthly Instalment Notes
Year 1:  FHR8 + 1.45%
Thereafter: FHR8 + 1.45%
$1,140 2-year lock-in

No penalty for partial or full prepayment

Cancellation fee applies for undisbursed loan

Required to buy Mortgage Insurance from bank

*updated as of 15 March 2018

For a building under construction, such as an HDB BTO flat, DBS only offers one home loan package. It is a fixed deposit-linked home loan rate, pegged to DBS’ 8-month fixed deposit interest rate, otherwise known as the Fixed Home Rate or FHR8. Currently, FHR8 is 0.20%, making the total interest rate a competitive 1.65% for now.

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 0.20%, it is already the highest interest rate offered by a local bank for an 8-month period.

Another advantage of this home loan package is that the rate is maintained throughout at 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.

Although there is a 2-year lock-in period, this is largely cosmetic, as 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 Home Loan for a completed condominium unit, with a purchase price of $1,000,000, loan tenure of 30 years

Home Loan Package Estimated Monthly Instalment Notes
Year 1:  FHR8 + 1.45%
Thereafter: FHR8 + 1.45%
$2,819 2-year lock-in

2 Years Partial or Full repayment 1.5% penalty

Year 1: 1.85%
Year 2: 1.85%
Year 3: 1.88% or FHR8 + 1.68%
Thereafter: FHR8 + 1.68%
$2,897 3-year lock-in

1.5% penalty for partial or full prepayment during first 3 years

Year 1:  FHR8 + 1.75%
Thereafter: FHR8 + 1.75%
$2,937 No lock-in

No penalty for partial or full prepayment

*updated as of 15 March 2018

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:

The first is a floating rate home loan package linked to DBS FHR8 with a spread of 1.45% for the first year and thereafter. As we said earlier, FHR8 is currently at 0.20%, which means that based on current rates, this home loan package is 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.

This means that if you take up this home loan package, you should be prepared not to refinance for at least 2 years. It also means you should hope that a better home loan package doesn’t launch during this time. But if you are super-FOMO, then the second DBS floating rate home loan package is for you.

This second floating rate home loan package is also linked to DBS FHR8 but has a spread of 1.75% for the first year and thereafter. Why would you pay 0.30% more than the first package? Because you won’t be locked-in and there is no prepayment penalty to worry about. This home loan package is best if you believe that in this competitive home loan market, there’s always something better coming along, and you’re willing to pay a slight premium for the freedom to jump ship as soon as possible.

The third home loan package from DBS is a fixed rate package of at least 2 years. I say “at least”, because in your third year, you have the choice of going with a fixed 1.88% or switching to a floating FHR8 + 1.68% 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.

 

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 (2018) – Most Affordable Housing Loans Reviewed

OCBC Home Loan Reviews Singapore 2018

UOB Home Loan Reviews Singapore 2018

BOC Home Loan Reviews Singapore 2018

Maybank Home Loan Review Singapore 2018

Citibank Home Loan Review Singapore 2018

Standard Chartered Home Loan Review Singapore 2018

Keep updated with all the news!

Tags:

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.