The key feature of a HDB loan is that the interest rate is fixed at 2.5% plus 0.1% or 2.6%. In the event that the CPF OA interest rate goes beyond 2.5%, the interest rate will increase. The disadvantage of taking a HDB loan is that you must wipe out your CPF OA.
For bank loan, interest rate fluctuates if you opt for a variable rate loan. A variable rate loan interest rate is lower compared to a fixed rate loan. You can check out bank loans which has rates tied to their fixed deposit rates. But do note that if you opt for a bank loan, the minimum amount is $100,000. For bank loan, you have the option of deciding the amount of CPF OA to use.
Assuming the difference between a HDB and bank interest rate is 1.0% and you are borrowing $100,000 for 15 years, the monthly difference between a HDB and bank loan is less than $50. Keeping the interest rate constant, every increase in $100,000 loan will double the monthly difference by around $47.
Loan Amount
|
$100,000
|
$200,000
|
$300,000
|
$400,000
|
Tenure (years)
|
15
|
15
|
15
|
15
|
HDB Loan Mortgage Payment
|
$672
|
$1,343
|
$2,015
|
$2,686
|
Bank Loan Mortgage Payment
|
$625
|
$1,251
|
$1,876
|
$2,501
|
Monthly Difference
|
$47
|
$92
|
$139
|
$185
|
I have done up an excel file. You can download it via the link. The cells highlighted in yellow can be change. The rest are locked.
Hope this helps.
HDB vs Bank Loan
