Rank

Bank Loans

(80% and 90%)

Yr 1

Yr 2

Yr 3

Costs: Yrs 1+2+3

Phone Numbers

   1

HDB            (90%)

2.6

2.6

2.6

7.8

1800-866-3060

  2

Maybank     80%

                    (90%)

3.18

(3.68)

3.38

(3.88)

  3.48

 (3.98)

   10.04

    (11.54)

1800-629-2265

   2

Current Linked Account: click here

3 to 3.25

3 to 3.50

3 to 3.75

9 to 10.5

Phone: click here

   3

Citibank     80%

                  (90%)

3.25

(4.0)

3.50

(4.25)

3.75

(4.50)

10.5

(12.75)

1800-225-5225

   3

OCBC        80%

                  (90%)

3.50

(4.00)

3.50

(4.25)

3.75

(4.75)

10.5

(13.0)

1800-438-3333

   3

UOB           80%

                  (90%)

3.65

(4.50)

3.65

(4.50)

3.65

(4.50)

10.5

(13.0)

1800-222-2121

   3

Standard    80%

Chartered (90%)

3.25

none

3.50

none

3.75

none

10.50

none

6747-0123

   3

HSBC        80%

                  (90%)

3.50

(4.30)

3.50

(4.40)

3.80

(4.80)

10.80

(13.50)

1800-472-2669

   3

Hong Leong 80% Finance      (90%) 

3.38

(3.98)

3.88

(4.20)

4.00

(4.75)

11.26

(12.93)

6416-2777

   3

POSB         80%

                  (90%)

3.68

(4.43)

3.68

(4.43)

4.08

(4.83)

11.44

(13.69)

6333-0033

18001111111

Notes: (i) Rates are for a $200,000 variable rate home loan with a 2-year lock-in.

(ii) The approximate fixed-rate equivalents can be calculated by adding 0.5 to the variable rates shown here. Most fixed-rate loans are fixed for the first two years only.  

(iii)  The POSB loan is fixed for 2 years.  From year 3, it is pegged to CPF OA rate (2.5 per cent) plus 1.58 per cent.  The 90 per cent loan rate is 0.75 per cent higher. 

(iv)  Most banks require two lock-ins. The first is a legal subsidy clawback of 0.4 per cent for the first 3 years from when you first take the loan.  It is not affected by refinancing. 

The second lock-in is a 1.5 per cent penalty for full repayment, typically within 2 years for a variable rate loan and 3 years for a fixed-rate loan.  This penalty restarts each time you refinance your loan.  Upon request, most banks will offer variable-rate loans with 1-year lock-ins (at slightly higher rates).  HSBC and Maybank also offer no lock-in home loans as follows: Maybank: 3.38, 3.58 and 3.68 per cent; HSBC: 3.5, 3.5 and 3.8 per cent.

Keep in mind that even though you take a 0, 1 or 2-year variable rate loan, you are actually locked in for the fist 3 years since the 0.4 per cent legal subsidy clawback makes it expensive to leave that bank prior to year 3.  However, it does not affect the cost of converting the loan with the same bank -- (and going back to the year-1 rates).  Also, to convert your loan back to the low year 1 rates, you must notify the bank. (It is not automatic.)

(v) An indirect additional cost of 90 per cent loans is that borrowers will hit the CPF withdrawal limits sooner than with 80 per cent loans. (When these limits are hit, loan repayments must be made with cash and not CPF money.)

(vi)  The rates shown for the "current linked account" (CLA) are for Citibank. Citibank calls it a "Home Saver" account. CLA produces savings IF one has the cash to take advantage of this scheme. Citibank's private property CLA package has the lowest rates. (i) It is also the only bank which offers CLA for HDB flats, (ii) it has the lowest loan size requirement ($100K), (iii) it can be used for fixed and variable rate loans and (iv) it is part of Citibank's standard loan package so it does not incur additional charges.  Rates from a CLA are about 3.5 per cent vs. about 3.2 per cent for a money market fund.  So the savings from CLA are not great -- 0.3 per cent in this example. (See CLA details.)

 HDB's rates are cheapest

HDB's 2.6 per cent concessionary rate loans are cheaper than any bank rates. They also have these 4 advantages:

a. HDB is considered to be more helpful should you hit on hard times and default on your home loan.  

b. HDB adjusts interest rates slowly, which is especially helpful when rates are rising.

c. HDB loans give flexibility. It is easy to take an HDB loan then switch to a bank loan.  But you cannot take a bank loan and later refinance it with an HDB concessionary rate loan. 

d. CPF rules require that bank borrowers pay 5 per cent of an HDB flat’s purchase price in cash.  HDB loans do not have this cash requirement.