So you’ve decided it is time to take the next big step in life – becoming a homeowner!
Plus, you’ve found your dream flat that checks off everything in your list. The location’s perfect, there’s a range of amenities conveniently located nearby, the neighbourhood is surrounded by lush greenery and more.
Buying your own home is a big financial commitment that could stretch up to 25 years. It’s important to put careful thought into how you will finance your flat, because the type of housing loan you opt for can have an effect on your ability to pay off your loan.
We understand how choosing between a HDB loan and bank loan can be daunting, so here are 5 key considerations to think about before making your decision:
*The HDB housing loan will be pro-rated from the 90% Loan-to-Value limit, if the remaining lease does not cover the youngest buyer/ owner at the age of 95 and beyond at the point of the flat application.
For more information on HDB loans, click here.
For more information on bank loans, click here.
To put both options into perspective, we spoke to two couples on their home-buying journey.
Newlyweds Ashraff and Shila, who recently collected the keys to their BTO flat in Tampines, decided that an HDB loan was more suitable for them. The couple felt that the 10% downpayment for an HDB loan, which they paid fully using their CPF, was relatively easier on the wallet. This helped to free up some cash for their home renovation.
For husband and wife Joseph and Michelle, who live in a resale flat in Hougang, one of the benefits they have enjoyed from taking a bank loan is the lower initial interest rates. “Plus, our bank loan offers us the flexibility to refinance after 2 years, giving us the opportunity to readjust our rates to prevailing market conditions,” said Michelle.
Ultimately, the type of housing loan you choose really depends on your lifestyle, your priorities and your ability to service your loan. Do take the time to weigh the pros and cons of each type of housing loan, and see how it suits your needs – now and in the future.
Remember, regardless of the type of loan, your housing loan must be approved before you can purchase your flat. To check on your eligibility for an HDB loan, click here.
Which loan is more suitable for you? Share your thoughts with us in the comments below! Or, check out these other articles for more information on financing your home.