Personal Finance

Which Bank Housing Loan Is Best For You?

January 3, 2023

With the ever-increasing interest rates and stringent policies regarding home loans, you may often find yourself confused and overwhelmed with the jargon surrounding the real estate market in Singapore.

Picture this: You are able to afford a downpayment for your first home, and it is the right time to finally be a homeowner.

But when you do some research on owning your first home in Singapore, the monthly mortgage payments make you reluctant to take this next big step.

In order to choose the best housing loans in Singapore, it is imperative that you do your research and understand the basics of how a mortgage loan works in Singapore.

This knowledge will then help you answer the question: Which bank housing loan is best?

Here’s all that you need to know about which bank housing loan is best in Singapore.

Types Of Home Loans

The type of property that you plan to own dictates the type of home loan that you qualify for. It is one of the most deciding factors for the type of mortgage loan that you can apply for in Singapore, among other factors.

Here is a summary of the type of housing loans that are readily available for homeowners in Singapore, and how to qualify for them.

HDB Housing Loan

A HDB housing loan is perhaps the top choice for most first-time homeowners in Singapore. It has some of the most lenient lending policies, when it comes to the best housing loans in Singapore.

It also requires you to pay next to nothing in cash if you have plenty of savings in your CPF Ordinary Account (OA).

But the most defining feature of a HDB housing loan is that you can only apply for it if you are looking to buy public housing, that is, a HDB flat. You may even opt for a bank loan if you are buying a HDB flat, and might be a better option in some scenarios.

But as far as a HDB loan is concerned, you need to buy a HDB flat in order to qualify for it.

Bank Loans

The traditional route for all financial needs and loans, is a good old reliable bank. You can opt for a bank loan even if you are buying an HDB flat.

And if you are planning to buy a private property, then you are only eligible to apply for a bank loan, of which there are plenty options to choose from, depending on your risk appetite,  and state of your finances.

Here’s a tip: If your home is still under construction, you can still pay for and own it. But choose a bank loan that does not have a lock-in period so that you can refinance the loan when the interest rate falls.

Home Loans For HDB And Private Properties

If you just can’t decide between a HDB or bank loan for your first home in Singapore, we have prepared a rundown of both types of home loans available.

HDB Home Loans

The HDB home loan is a concessionary loan for Singaporeans. The interest rate for a HDB loan is 2.6%, which is slightly higher than typical bank home loans.

In addition, HDB loans come with a set of restrictions and prerequisites such as:

  • You can only use it for HDB flats that are completed or still under construction
  • At least one of the home buyers must be a Singaporean
  • The average monthly income for singles, families, and extended families must not exceed $7,000, $14,000 or $21,000 respectively
  • You must not have taken out more than two HDB loans previously
  • You must not own a private property in Singapore or overseas
  • You cannot own or dispose of any property within 30 months of applying for an HDB HLE letter
  • You must not own more than one market or hawker stall property or commercial or industrial property
  • If you own a hawker stall or commercial property, you have to be running a business there and it must be your only source of income

Bank Housing Loan

So which housing loan is best? To answer that, you have to know how it works.

A bank loan typically has less criteria than an HDB loan – the bank mostly wants to run a credit check and that’s about all.

A bank housing loan has typically less stringent policies than an HDB loan. But most banks require a thorough credit check before they approve any loan applications.

But the most defining feature of a bank housing loan is its interest rate, which is significantly lower than that of a HDB loan, for both fixed and floating interest rates.

Currently, a bank home loan interest rate ranges anywhere from 1.8-2.2%. It is worth noting the fixed interest rates are revised every two to three years.

HDB Loan Vs Bank Loan

The different policies, interest rates and the loan-to-value (LTV) ratio are some of the defining features of a HDB loan, as compared to a bank housing loan.

Some other differences between the two are:

  • An HDB loan enables you to pay your downpayment of 20% using your CPF OA, while a bank requires a 5% downpayment in cash, while the other 20% can be paid from your CPF OA. That means you are looking at least a $15,000 amount in cash to be paid as downpayment for a moderate property in Singapore if you choose a bank loan.
  • HDB’s interest rate is high at 2.6%, but it seldom changes. But note that a lower fixed bank loan interest rate, at say 1.8%, is subject to change every two to three years with a fixed loan package.
  • If you are looking for consistency and less disruption to your monthly cash flow, then opt for a HDB loan. With a high but stable interest rate, little prepayment penalties, zero cash downpayment and less stringent late payment policies, a HDB loan is a great choice for those on a tight budget.
  • Banks will penalise you for early loan payoffs. On the other hand, you will not be penalised for repaying a HDB loan early. In fact, HDB loans do not have a lock-in period.
  • HDB loans are also lenient when it comes to late payments, while banks will penalise you if you fail to pay back your loan on time each month.

Fixed Home Loan Rates Vs Floating Home Loan Rates

When you opt for a bank loan, there are a number of different home loan packages that you can choose from, depending on the interest rates, terms, and loan tenure.

While this may seem confusing at first, it is important that you understand the pros, cons and repercussions of all the options available at your disposal to make a conscious decision that would benefit you in the long term.

Choosing between a fixed home loan rate and a floating home loan rate is one such decision that can impact your finances significantly.

Fixed Home Loan Rate

As evident from its name, this type of housing loan comes with a fixed interest rate that is maintained for about two to three years.

It is helpful when you need to plan out your expenses and loan payments for each month, and suitable for those with limited income looking for consistency and stability.

These rates are higher than floating interest rates, but the upside is that they will not increase for about three years.

Floating Home Loan Rates

This type of home loan is influenced by market fluctuations. It is pegged to the Singapore Interbank Offer Rate (SIBOR), Singapore Overnight Rate Average (SORA), and the Board Rate or Fixed Deposit Home Rate (FHR).

A floating interest rate is suitable if you are comfortable with taking risks, as a dip in market interest rate means more savings.

On the other hand, any increase may mean a bad month because you would then be paying a higher interest rate on your home loan.

How To Get A Bank Home Loan

Apply for a home loan from a bank in these three steps:

Determine The Maximum Loan Amount You Qualify For

Start by determining how much you would get from the bank from your mortgage loan application. Your maximum amount depends on your Total Debt Servicing Ratio (TDSR) or the Mortgage Servicing Ratio (MSR).

The TDSR, which should be less than or equal to 55%, is the amount of debt you pay relative to your income. Use a TDSR calculator to see how much you can borrow.

The MSR refers to the maximum percentage of your gross monthly income that you can direct towards servicing your property loans. The MSR limit is 30% of your monthly gross income. It is only applicable to the purchase of HDB flats and executive condominiums.

Obtain The In-Principle Approval

Next, obtain the In-Principle Approval (IPA) if you want to get your mortgage loan in Singapore from a bank, or a HDB Loan Eligibility (HLE) letter if you prefer a HDB loan.

The IPA and HLE are the letters that the respective institutions issue. They indicate the maximum loan amount you can access.

Submit Your Application

After getting the IPA, you have a 30-day window to pay for the Option To Purchase (OTP) that you will present to purchase the HDB or private property.

Within 21 days after getting the IPA or six months for the HLE letter, make the downpayment to have the loan approved and submitted before the OTP expires.

How To Choose The Best Home Mortgage Loan In Singapore

Here are some key factors that you need to consider when making your decision to ensure that you choose the best home loan in Singapore for you.

Type Of Loan

There are two main types of home mortgage loans – fixed rate loans and floating rate loans.
Choose the type of loan that best suits your needs and circumstances.


Some home mortgage loans allow you to make early repayments without penalty, while others do not.
Others also allow you to make partial repayments, while some require you to make full monthly repayments. Hence, you should choose a loan that can offer the flexibility you need.


Various fees apply for a mortgage loan. These include the application, valuation, and legal fees, and stamp duty. Compare the different loan fees and choose the one with the lowest fees.

Interest Rate

One of the most important factors to consider when choosing the best mortgage rates in Singapore is the interest rate.
Compare home loans with different interest rates and choose the one that offers the lowest rate. A lower interest rate will result in you paying less interest over the life of the loan, saving you money.

Repayment Tenure

The repayment tenure is the number of years you will need to repay the loan. A longer repayment tenure will result in lower monthly repayments, but you will end up paying more interest over the duration of the loan tenure.
Conversely, a shorter repayment tenure will result in higher monthly repayments, but you will pay less interest over the life of the loan.
Choose a repayment tenure that you are comfortable with and that you can afford.

Which Bank Has The Best Floating Home Loan?

BankFirst Year Interest RateLock-In Period
Citibank 1M SORA2.21% + 0.78% per annum2 Years
Citibank 3M SORA1.60% + 0.78% per annum2 years
DBS 3M SORA1.60% + 1.00% per annum2 years
DBS FHR61.40% + 1.30% per annum2 years
DBS FHR6 (no lock-in)1.40% + 1.75% per annumNA
Maybank 1M SORA2.21% + 0.80% per annum1 year
Maybank 3M SORA1.60% + 0.80% per annum1 year
OCBC 1M SORA / Eco-Care Home Loan (1M SORA)2.21% + 0.98% per annum1 year
OCBC 3M SORA / Eco-Care Home Loan (3M SORA)1.60% + 0.98% per annum1 year
Standard Chartered HDB Bridging Loan (3M SIBOR)2.68% + 2.00% per annumNot specified
UOB 3M SORA1.60% + 0.70% per annum2 years

Here we have compiled a list* of the best banks with the lowest floating interest rates in Singapore

*Information correct at time of publication 

How To Choose The Best Home Mortgage Loan

For most homebuyers, the most deciding factor is the interest rate, as it shapes up most of the cost involved in purchasing a home.

Other factors to consider are bank loan and HDB loan policies, your credit score, and the flexibility that your loan provider allows you for refinancing your home loan.

Before applying for any loan, ensure that you understand all of the terms and conditions associated with the product. Shopping around can also help you compare different offers from various lenders, and gain access to exclusive promotions or discounts.

Research different banks’ interest rates, repayment periods, penalty fees, and processing charges. Check out a lender’s reviews to make sure it offers helpful advice and guidance throughout the loan process.

Make sure that your current income and lifestyle will give you enough money left over at the end of the month to manage your loan repayments with ease. Consider all these factors before making a decision so that you can find the best home loan solution in Singapore that fits all your needs.

We, at GS Credit, have made it simple for homeowners to know which bank housing loan is best. Consult us for any housing loan questions you may have or apply for a loan now.

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