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  • Writer's pictureSamantha Foo

HDB Loan vs Bank Loan 2024: 3 key differences Downpayment requirement, interest rate and locked-in period.

Deciding between an HDB loan and a bank loan is far from a straightforward choice. Your financial situation and personal preferences will undoubtedly play a significant role in guiding you and your partner to choose the loan that aligns with your needs.

exciting decision to apply for an HDB flat
Exciting decision

After making the exciting decision to apply for an HDB flat, the next crucial step is to weigh the options between an HDB loan and a bank loan. Affording the downpayment is one aspect, but the real challenge lies in managing the monthly mortgage repayments, considering the substantial additional cost attributed to accumulated interest.

In the current climate of high-interest home loans, selecting the right one for your situation is paramount. Think of it like shopping for a new pair of shoes – you must explore various options to find the perfect fit that not only suits you but also comes at the most reasonable price. Given the multitude of banks offering different home loans with variable or fixed interest rates and diverse lock-in periods, navigating this terrain might be overwhelming.

So, let's delve into a comprehensive exploration of both HDB loans and bank loans, uncovering their respective advantages and drawbacks to equip you with the knowledge needed for an informed decision.


1) Downpayment Requirements: Let's begin with the crucial aspect of downpayment requirements.

HDB Housing Loan:

  • Downpayment: A minimum of 20% of the purchase price, payable through CPF Ordinary Account (OA), cash, or a combination of both.

  • Maximum Loan Amount: Up to 80% of the purchase price for new flats; for resale flats, it is 80% of the resale price or market valuation, whichever is lower.

  • Use of OA Savings: Utilize available OA savings before HDB loan approval, with the flexibility to retain up to $20,000 for future needs.

Bank Housing Loan:

  • Downpayment: 25% of the purchase price, with 5% in cash and the remaining 20% in cash or CPF OA savings.

  • Maximum Loan Amount: Up to 75% of bank valuation or purchase price, whichever is lower.

  • Use of OA Savings: Flexibility to set aside CPF and pay the bank loan with cash.

2) Interest Rates: Understanding the impact of interest rates is crucial in making an informed decision.

An HDB housing loan offers a concessionary fixed interest rate of 2.6% per annum, providing stability and predictability. In contrast, bank housing loans offer floating or fixed rates, subject to market fluctuations. Choosing between stability and potential savings depends on your risk appetite.

3) Lock-in Period - Stability or Flexibility? Consider the implications of lock-in periods on your financial flexibility.

HDB Housing Loan:

  • No lock-in period, allowing early repayment without penalties. Refinancing with a bank is an option at any time.

Bank Housing Loan:

  • Typically, a lock-in period of one to three years with penalties for early repayment or refinancing within this period.

HDB loan vs Bank loan 3 key differences
3 key differences

4) Refinancing Options: Explore the possibilities of refinancing based on your loan type.

HDB Housing Loan:

  • Refinancing to a bank housing loan is possible with the bank's approval, but once switched, reverting to an HDB housing loan is not an option.

Bank Housing Loan:

  • Refinancing into an HDB housing loan is not possible. Options include repricing with the same bank for potentially lower rates or refinancing with another bank for better terms.


In making the choice between an HDB housing loan and a bank housing loan, it is crucial to meticulously assess your financial standing, risk tolerance, and future objectives. An HDB housing loan assures stability and favorable interest rates, whereas a bank housing loan presents flexibility and the prospect of lower interest rates down the road. Ultimately, the optimal decision hinges on your unique circumstances and financial priorities. For personalized guidance tailored to your circumstances, we invite you to refer to Walter and Samantha. We will be here to ensure that your real estate needs are met, providing expert assistance every step of the way.

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