CIMB HDB Home Loan

CIMB HDB Home Loan Review: Best for Private Property Loan Scheme Borrowers

CIMB HDB home loan packages allow homeowners to stretch repayment installments up to thirty years and impose no penalty on partial early repayments. Besides, they can lend up to 75% loan-to-value to homebuyers. However, the interest rates offered are not competitive.

What is an HDB Home Loan?

An HDB home loan is a loan borrowed for purchasing an HDB flat developed by the Housing Development Board of Singapore. A bank or the HDB uses the purchased flat as collateral and lends money to the homebuyer. An HDB flat is a subsidized house and offered to Singaporeans at an affordable price by the authority.

Suppose you are interested in an HDB flat as your permanent home and plan to finance the purchase. You have two sources to do it: an HDB home loan scheme and loan packages by financial institutions. Click here and learn to compare HDB loan vs Bank Loan.

The HDB, a government agency, indeed offers loans(a concessionary loan scheme) to applicants. The HDB can lend a higher loan-to-value of 90% than 75% by banks. Besides, an applicant can use the CPF(Central Provident Fund) draw-downs to pay 10% of a home’s value as a downpayment. There is no prepayment fee and fewer late payment fees.

 

What Are the CIMB HDB Loan Packages?

Congratulations! You are to become a homeowner. A lifetime dream for you and your family! Wait, are you fully committed?

A span of twenty to thirty years is what you should commit yourself to pay up to, other than your family commitments. But you are taking it seriously; otherwise, you would not have been here, for sure! Many financial institutions offer home loan services to to-be home buyers besides Housing Development Board. You may have already seen them.

The CIMB HDB home loan service is the one you may not want to miss because it is popular. Let’s take some time to study before you make the right decision for one of the most important dreams in your life. CIMB offers two types of loan packages to applicants: HDB and private property loans. Applicants can choose one of the packages appropriate to their situations.

Key Features

  1. High margin of financing

CIMB offers homebuyers a higher loan margin of financing. The maximum HDB loan amount can be as high as 75% of a property value. That said, you only pay up to a minimum of 25% as a downpayment when buying a home approved by HDB(Housing Development Board of Singapore).

You may have more cash available for other purposes compared to loans from other banks. Please remember the bank has the final say in the financing amount.

  1. Flexible repayment schedules

CIMB allows HDB loan borrowers to extend repayment periods to a maximum of thirty years. The benefit is homeowners lower repayment amounts but should pay more interest due to more extended repayment periods.

Of course, a payback period depends on a borrower’s age and payment schedule. The bank has the discretion over the final decision.

  1. Zero partial prepayment penalty for a private property loan

If you plan to prepay a partial loan to reduce the interest burden before the expiry date, CIMB will not levy any charges on the portion of the prepayment amount. However, full prepayment is still subject to a penalty.

  1. Attractive interest rates

No matter which type of loan(HDB home loan or private property loan) a borrower chooses, the interest charged by CIMB is lower than HDB’s one. More information about the interest rate charged by banks is on the following.

Pros and Cons of CIMB HDB Home Loans

Let’s summarize the key points to help you make a better decision best suitable for you:

Pros

  • Long repayment period: CIMB home loan services have a long payback period of up to thirty years.
  • High loan-to-value ratio financing: CIMB offers up to 75% of property value financing to clients. Clients have more cash available for other uses.
  • Zero partial prepayments for private property loan: CIMB does not charge early partial surrender. An applicant can reduce interest costs.
  • Up to 20% of a downpayment from the CPF: You can draw down 20% of your home value from your CPF.

Cons

  • CIMB’s loan interest rate is not the most competitive among banks.
  • There is a lock-in period of two years.
  • You must pay the remaining 5% of a home value in cash. You must have them on hand.

Home Loan Concept

How to Apply? 

Buying a house is a major event in life; deliberating a loan for your dream house can be another one for you. You may suffer a loss by paying more interest or fines if it is not well planned.

You should know the following and get well prepared before making a successful application for an HDB home loan:

Eligibility

Like other banks, CIMB has basic requirements a loan applicant has to fulfill before further consideration. They are:

Requirements CIMB HDB Loan CIMB Private Property Loan
Age Aged 21 or above Aged 21 or above
Income requirements At least one of the applicants must earn S$36,000 or above per year Same as CIMB HDB Loan
Minimum Loan Amount S$100,000 S$200,000
Document requirements
  1. Photocopy of NRIC/Passport for all Applicants and Owners
  2. Options to Purchase or Sale & Purchase Agreement (for a new purchase)
  3. Loan Statement from Existing Bank/Financial Institution – Latest 12 months (for refinancing)
  4. Latest CPF Withdrawal Statement for Existing Property to be Refinanced/Sold
  5. Evidence of Sale of Existing Property (if applicable)
  6. Tenancy Agreement (if applicable)
Same as the CIMB HDB Loan
Income statements for the employed Latest Tax Assessment and CPF Statement Latest Tax Assessment and CPF Statement
Income Documents for Self-Employed Applicants(An applicant must be in the current business for two years before the application) 2 Years Income Tax Assessment 2 Years Income Tax Assessment

 

A self-employed applicant must show the bank he can repay the loan amount timely and regularly.

Loan Property Fact Sheet

Once a bank like CIMB has approved your application after review, it will issue a fact sheet about the loan details. It includes essential information you shouldn’t ignore like:

  1. The loan amount and period
  2. Lock-in periods(if applicable)
  3. Repayment schedules
  4. Interest rates illustrations including effective interest rates and annual interest rates
  5. Multiple scenarios of interest rate changes
  6. Penalties

The list of information is not exhaustive, and you should consult the bank for more information.

Steps to Apply

Applying for an HDB or private home loan is easy. Just follow the simple three steps:

  1. Get all documents required ready and make an appointment with CIMB.
  2. After reviewing your request and documents, the bank will issue a letter of offer with conditions attached if accepted.
  3. You should sift through the terms and conditions before taking the offer and signing the letter. CIMB may impose a 0.75% penalty if a successful applicant turns down the loan after signing a letter of offer, no matter the reasons.

What Types of Rates Do CIMB Offer?

CIMB offers fixed and variable loan plans for homebuyers. The following table summarizes the relevant information:

Fixed-rate loan plans Floating interest rate loan plans
A fixed rate is in place for the first two to three years, and rates change subsequently. A bank determines a rate regarding a CPF ordinary account, SIBOR, SOR, internal board rate, and spread.
A bank determines the rate based on its rate policy. The interest rate goes up and down in line with the market.
The fixed-rate stays the same whether the market rates go up or down. n/a

 

CIMB Loan Fees

The following table lists fees probably incurred:

Items Fees in Singapore dollars
Rescheduling of Intended Date of Full Redemption 200
Change of Insurer for Fire Insurance 200 per year
Loan statement request (per statement) Current Calendar Year: Nil

Previous Calendar Year: S$50 (inclusive of GST)

Custody of Title Deed for Fully Repaid Loans 500 per year
Late Payment of Monthly Instalments Prime Lending Rate + 5% (subject to 30 minimum)

 

What Are the Loan Plans Offered by CIMB?

HDB Loan Plans

(first-year interest rates & lock-in period)

Private Property Loan Plans

(first-year interest rates & lock-in period)

Fixed-rate  1.3%; 2 years n/a
Fixed-rate  1.3%; 3 years n/a
Board-rate 1.6%; 2 years 1.6%; 2 years
SORA-rate 1.33%; 1 year 1.33%; 1 year
SIBOR-rate1 n/a 1.51%; 2 years
SIBOR-rate2 n/a 1.72%; 2 years
SIBOR-rate3 n/a 1.81%; 2 years

 

What major loan plans does CIMB offer?

CIMB also offers various loan plans helping homebuyers find appropriate solutions to their situations. The followings are some major plans CIMB provides:

  1. Board rate home loan

It is one of the most common plans offered by CIMB. The bank determines the loan rate based on its internal policy. The loan rate is independent of market ones.

Homebuyers should consider two things before taking the board rate plan: (1.) The rate history and policy: though the rating process is not transparent, clients should assess the stability of rate-determining policy from a bank. (2.) A homebuyer may choose the loan plan if it is preferable to their circumstances.

  1. Building under construction home loan(BUC)

It belongs to a loan scheme for a flat still under construction. CIMB disburses loans in installments during the construction periods until the completion phase. It is also called the “progressive payment scheme.”

Homebuyers of flats under construction have to bear some risks: 1. A developer may default on the building project. Homebuyers may suffer due to the financial problems caused by a property developer. 2. A developer may not complete the project on time. Homebuyers may have to bear additional costs due to the risk. 3. Homebuyers may face the quality risk as they have no way of inspecting the “end-product” of the flat to-be-completed and run the risk of poor quality of a property after completion.

  1. Fixed-Deposit Home rate loan(FHR)

The interest rate of the loan scheme is pegged to a fixed deposit plan. The loan interest rate is the deposit rate plus a bank spread. However, the homebuyer should deposit a certain amount of cash with CIMB and make a loan with the bank.

It is suitable for borrowers with sufficient cash flows, and the loan interests are favorable to them.

  1. Singapore Interbank Borrowing Overnight Rates(SIBOR)

It is the most common loan plan in Singapore. CIMB determines the loan rate using SIBOR plus a bank spread in loans. The advantage is homebuyers have a transparent and open market loan rate to manage their interest payments. Yet as it is a floating rate, a homebuyer may have to pay more interest due to the interest rate rise.

  1. Singapore Overnight Rate Average(SORA)

Recently, it has become a popular form of home financing for borrowers. It is a volume-weighted average rate of interbank transactions and is administered by the Monetary Authority of Singapore.

It is a more transparent market rate, and homebuyers may have more information about the rate mechanism. CIMB and banks are actively promoting the SORA loan plans.

What Makes CIMB Stand Out?

  • Long repayment period: CIMB offers homebuyers up to thirty years to repay the loan. It helps reduce the regular repayment amounts over longer and lessens homeowners’ financial burden. The homeowners may have more cash flows for other purposes.
  • Zero partial prepayment charges: A homebuyer using a private property loan service does not pay the penalty when paying up part of a loan. It is good news! CIMB encourages early retirement of debt and improves a homeowner’s balance sheet.
  • High debt-to-value loan ratio: CIMB offers up to 75% of financing to homeowners. People with less financial capability have opportunities of owning a house.

What are the factors to consider before getting a home loan?

Before signing on a sales and purchase agreement for your dream home, you should consider numerous pre-purchase expenses likely to occur. You may regret it if you don’t. The following are the main ones:

  1. Stamp duty: It is the tax on the legal documents of asset transfer.
  2. Commission: It is the property remunerations you have to pay.
  3. Renovation expenses: You may think it necessary to spend money to convert your home into a world of your own no matter what you buy from a new or another owner.

You may think the drawdowns from CPF can solve it. But unexpected cash needs may occur! Having sufficient cash flows may help you get through difficult times. You should consider using part of a loan for your pre-purchase use.

The benefit is you can repay the one-time-off expenses for a more extended period and have more cash flow available for unexpected use. However, you have to pay extra interest for repayments.

Should I extend the loan repayment period as long as possible?

An extended repayment period reduces a borrower’s current financial liability because the payment amounts are smaller if more installments come over a longer period.

However, you should know two pitfalls before you decide to do it: 1. The longer you pay up a loan, the more interest you have to pay. It is a cost-of-time game. 2. The longer the loan period extends, a borrower has to bear the risk of rising interest rates.

If the interest rate rises, a borrower of a variable-rate loan plan pays more interest costs. Therefore, you should consider your financial circumstances before signing up for a suitable one.

What to do if I find a bank loan cheaper than an existing one?

You should first talk to your current bank; reducing your interest cost is the first of your job as it will involve switching costs. However, luck may not always be at your side.

Refinancing is the second thing you can do. You should discuss with the target bank in detail and examine the pros and cons of switching before making a prudent decision.

Final Thoughts

The key takeaways if you consider CIMB HDB home loan packages:

  • High loan-to-value financing of up to 75% is available to homebuyers.
  • Extended repayment periods of up to thirty years help reduce repayment amounts.
  • Zero partial prepayment penalty for private property loan borrowers encourages early retirement of debt.
  • Banks like CIMB provide more flexible options to clients in packages. They differ from fixed to variable rates and offer clients flexibility in loan repayments. More details are below.

If you’re planning to take out a loan but has limited time to compare your options, Instant Loan can help you find the best-licensed moneylenders according to your needs! Request free quotes now!

Instant Loan CTA Banners DesktopInstant Loan CTA Banner 2