andrew loke 210615Photo courtesy of Andrew Loke / Stock Snap

With 80% of Singaporeans living in a HDB flat, a HDB Built-To-Order flat is likely to be the first property that many young Singaporeans purchase.

This is a big financial obligation that requires financing to the tune of hundreds of thousands of dollars. A few variables affect your home loan repayments, thus, you should carefully think about your options. The main consideration would be whether to get a HDB loan or a bank loan.

In fact, whether you’re in the market to get a new loan or want to get a quote to see if refinancing your home loan can save you money, you should check out our Guide to Choosing The Most Suitable Home Loan In Singapore.

Regardless what home loan financing option you eventually choose, it might make the most sense to first get a HDB loan with the longest tenure first, and then refinance later down the line. Here’s why.


Benefits Of Getting A HDB Loan First

Most BTO buyers are young couples. Taking a HDB loan first allows them to pay less downpayment upfront of 10%, which can be paid using a combination of CPF funds or cash. If one were to take a bank loan, one will need to make a downpayment of 20%, of which 5% needs to be in cash.

LQM 000066Taking a HDB loan first allows one to pay less downpayment upfront of 10%, which can be paid using a combination of CPF funds or cash. If one were to take a bank loan, one will need to make a downpayment of 20%, of which 5% needs to be in cash.

For a $300,000 flat, taking a bank loan will mean coughing up $15,000 in cash and $45,000 in CPF funds.

This might be challenging for young couples, who might be just starting to build up their savings and CPF funds.

In addition, even if your eventual intention is to get a bank loan, the fact is, you can always do so afterward, since the HDB loan does not have a lock-in period. The reverse is not true – once you take up a bank loan, you cannot go back to a HDB loan.

Read Also: How Much CPF Can You Use For Your Home?

HDB gives you the option of a maximum loan tenure of 25 years, or up till the buyer is 65 years old, whichever is shorter.

You should always take the longest tenure possible for your HDB loan, even if you wish to pay up your loan sooner. Unlike bank loans, there is no early repayment penalty for a HDB loan. Thus, there is really no benefit to handicapping yourself by not giving yourself flexibility.


Young couples should not underestimate their monthly expenses as flat owners. In addition to the monthly home loan repayments, there is fire insurance, property taxes, conservancy charges, utilities bills and repayments of instalments for furniture. Having a more comfortable cash flow will be helpful to buffer against unexpected expenses and be less stressful on the whole.

Many things can happen over the years. You might find yourself retrenched, or your spouse would like to take a hiatus from working to take care of aged family members or a newborn. Stretching the loan tenure eases the monthly requisite burden and allows you more options. Once you ride out the difficult period, you can always voluntarily increase your repayments, for instance when you get a bonus at work!

Read Also: Year-End Bonus: How To Make It Last A Lifetime

LQM 000066Unlike bank loans, there is no early repayment penalty for a HDB loan.

In addition, Total Debt Servicing Ratio (TDSR) rules mean that with a longer long tenure, your obligatory monthly debt repayments will be lower, which will come in handy if you to plan to get a second property.

Another benefit you should know about is the CPF Home Protection Scheme. It is a form of mortgage insurance whereby in the event of death, terminal illness or total permanent disability, CPF will cover the outstanding housing loan, up to the insured sum. This protects CPF members and their families from losing their HDB flat. You can see why a longer tenure is beneficial in this case.

Read Also: Choosing The Most Suitable Home Loan In Singapore

Ultimately, its doesn’t hurt to have more options, and taking a HDB loan with the longest possible tenure first gives you that. You can always refinance with a bank later if you want, but not the other way round. You can always repay the loan quicker, but not slower if you already committed to a shorter tenure.

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