DBS HDB Home Loan

DBS HDB Home Loan Review 2021: Best Mortgage for HDB Flats

Are you looking for a better alternative than loans provided by the Housing & Development Board? A DBS HDB Home Loan may be the perfect choice for you. Featuring a range of customizable packages and competitive interest rates, refinancing or turning your dream of buying a home into reality can be more affordable. 

 

Why Choose DBS HDB Home Loan Why You Should Look Elsewhere
Very competitive HDB home loan interest rates Not the best choice for refinancing a less than S$500,000 home loan
The total cost of the loan is among the lowest on the market
Favorable refinancing terms for S$500,000 or more home loans
DBS Multiplier accounts can earn up to 3% per annum when paired with a DBS loan

 

Why Choose DBS Over Other Banks

Since its founding some five decades ago, DBS has grown to be one of the largest banks in Southeast Asia. Today, the bank has nearly 10.7 million banking customers and S$646 billion total assets. For 12 consecutive years, Global Finance has accorded DBS as Asia’s safest bank.

 

DBS HDB Home Loans Features

1. Competitive Total Cost of Borrowing

DBS is one of the banks in Singapore that consistently provides low total costs for mortgages. Not only that, but they also offer S$2,000 to S$3,000 subsidies on legal fees, making them ideal for refinancing. Hence, instead of looking at the benefits of seemingly lower interest rates, it is better to look at how much you end up paying over the loan term.

 

2. DBS Home Payment Care

DBS protects new home loan customers from loss of income. This insurance covers new loan customers for six months.

Insurer Benefits:

  • Up to three monthly loan installments (maximum of S$2,500/month)
  • Up to S$30,000 Accidental Permanent Disability
  • Up to S$30,000 Accidental Death

Note: Only DBS HDB loan customers who financed their completed HDB flats can qualify for this complimentary insurance cover.

 

3. DBS Multiplier Account Bonus Interest

DBS Multiplier is a personal deposit account with a 0.05% base interest rate. But if you use that account to transact in some categories, including home loans, the bonus interest rate can bump up the base rate to 3%.

 

DBS Home Loan Rates for New and Refinanced Properties

With DBS home loans, you can avail of future stability today. That is because DBS, besides pegging home loan rates to their fixed deposit interest (FHR6) rate, also uses the new interest rate benchmark.

The Singapore Overnight Rate Average (SORA) will take over the Singapore Interbank Offered Rate (SIBOR) at the end of 2024. SIBOR is more predictable, making it is easier to gauge how much you have to pay in monthly installments. Also, there is less risk because it does not rely on the Singapore-US dollar exchange rate.

DBS provides many loan packages categorized as:

  • Floating rate packages
  • Fixed-rate packages
  • Bridge loan

 

Floating Rate Packages

Variable-rate mortgages generally have lower interest rates than fixed-rate loans. Suppose the economy remains stable throughout the loan term. In that case, this type of loan is favorable because you will pay the least amount of interest.

On the downside, if the interest rates increase beyond the fixed rates, then you may end up paying more.

2-Year Lock-in (with protection against interest rate hike)

For two-year floating-rate lock-in loan packages, DBS gives you two options based on minimum loan amounts. During this period, the cap on interest rate is 1.4%.

OPTION 1:

  • Minimum Loan Amount: S$100,000
  • FHR6 Rate: 0.20%
  • Interest Rate Cap: 1.40% during the first two years
Tenure Interest Rate per annum Interest Rate Cap
1 0.90% + FHR6 1.40%
2 0.90% + FHR6 1.40%
3 and subsequent years 1.00% + FHR6

 

OPTION 2:

  • Minimum Loan Amount: S$500,000
  • FHR6 Rate: 0.20%
  • Interest Rate Cap: 1.40% during the first two years
Tenure Interest Rate per annum Interest Rate Cap
1 FHR6 + 0.80% 1.40%
2 FHR6 + 0.90% 1.40%
3 and subsequent years FHR6 + 1.00%

 

2-Year Lock-in 3M SORA

For homebuyers looking for a possible alternative to 2-year lock-in home loan packages, this 3M SORA package may be worth considering. But that is if the SORA rates remain below the FHR6 rate. Otherwise, there is no cap to protect you from interest hikes in the first two years.

  • Minimum Loan Amount: S$500,000
  • 3M SORA Rate: 0.1304% as of September 29, 2021
  • Interest Rate Cap: None
Tenure Interest Rate Interest Rate Cap
1 to 2 0.80% + 3M SORA
3 and subsequent years 1.00% + 3M SORA

 

3-Year Lock-in (with protection against interest rate hike)

DBS introduced this floating-rate loan package only recently. Previously, buyers could only choose between two or five years lock-in periods.

For many homebuyers, this package provides a balance of low-interest rates and interest rate hike protection.

  • Minimum Loan Amount: S$100,000
  • FHR6 Rate: 0.20%
  • Interest Rate Cap: 1.60% during the first three years
Tenure Interest Rate Interest Rate Cap
1 0.80% + FHR6 1.60%
2 0.85% + FHR6 1.60%
3 0.90% + FHR6 1.60%
4 and subsequent years 1.00% + FHR6

 

This loan – dubbed the Max Savers Package – guarantees that you will not have to deal with interest hikes for the first five years. Furthermore, you can sell the property without worrying about a commitment fee. And, should you decide to prepay your loan partially, there is no need to pay any prepayment penalty.

Compared to two or three-year lock-in periods, the only downsides are the slightly higher interest rates and interest rate hike cap.

  • Minimum Loan Amount: S$100,000
  • FHR6 Rate: 0.20%
  • Interest Rate Cap: 2.00% during the first five years
Tenure Interest Rate Interest Rate Cap
1 0.80% + FHR6 2.00%
2 to 5 1.00% + FHR6 2.00%
4 and subsequent years 1.00% + FHR6

 

No Lock-in

For the short term, this package is more costly than other floating-rate loans. It becomes feasible only if interest rates breach 1.8% a few years into the future.

  • Minimum Loan Amount: S$100,000
  • FHR6 Rate: 0.20%
  • Interest Rate Cap: None
Tenure Interest Rate Interest Rate Cap
1 to 3 1.60% + FHR6
4 and subsequent years 1.60% + FHR6

 

Fixed Rates Packages

Generally, a fixed-rate mortgage is a better choice compared to variable rates. Even if the interest rates are higher than floating rates, they are still significantly lower than the 2.6% fixed rate of HDB concessionary loans.

After the fixed term lapses, you have the option of repricing your home loan free of charge.

2-Year Fixed Rate

For fixed-rate loans, this 2-year package has the lowest interest rate.

  • Minimum Loan Amount: S$100,000
  • FHR6 Rate: 0.20%
  • Conversion Option: 24 months from the date of the first disbursement
Tenure Interest Rate
1 to 2 1.30%
3 and subsequent years 1.60% + FHR6

 

3-Year Fixed Rate

If you want to keep your options open for the short-term, the 3-year package is an excellent alternative to two years lock-in period. The difference in interest rates is minimal, while you gain an extra year to decide if you want to refinance for better rates (if available).

  • Minimum Loan Amount: S$100,000
  • FHR6 Rate: 0.20%
  • Conversion Option: 36 months from the date of the first disbursement
Tenure Interest Rate
1 to 3 1.40%
4 and subsequent years 1.60% + FHR6

 

5-Year Fixed-Flexi Rate

For peace of mind over the next five years, you can choose a 5-year lock-in period. In the future, should you decide to sell the property, there is no need to pay commitment fees. And, there is no prepayment fee if you choose to make a partial prepayment of the principal loan amount.

  • Minimum Loan Amount: S$100,000
  • FHR6 Rate: 0.20%
  • Conversion Option: 30 months from the date of the first disbursement
Tenure Interest Rate
1 to 5 1.68%
6 and subsequent years 1.60% + FHR6

 

5-Year Fixed Rate (exclusively for HDB homeowners)

For HDB flat buyers, this Super Savers Package is the cheaper alternative to the 5-year Fixed-Flexi plan. Instead of a 1.68% interest rate during the lock-in period, DBS lowered it to 1.48%.

  • Minimum Loan Amount: S$200,000
  • FHR6 Rate: 0.20%
  • Conversion Option: 60 months from the date of 1st disbursement
Tenure Interest Rate
1 to 5 1.48%
6 and subsequent years 1.60% + FHR6

 

Bridge Loan

DBS provides bridge loans – these are short-term loans that you may need until:

  • Removing an existing obligation
  • Securing a permanent loan

An example of how you can use this loan is using short-term capital to close a property.

  • Bridging Loan

DBS bridging loan is a floating rate package using prime rate without a lock-in period. You can use this loan for purchasing a residential property.

  • Minimum Loan Amount: S$200,000
  • Prime Rate: 4.25%
Tenure Interest Rate
Up to 6 months 4.25%

 

Home Loan

Why Choose DBS Home Loan Over HDB Concessionary Loan

In many aspects, an HDB loan appears to be better than a bank loan. The maximum loan amount, for example, is up to 90% of the property value. Conversely, you only need to pay a 10% downpayment. Moreover, you can use your CPF OA without the need to put up a cash payment. 

Over the long term, however, you still end up paying higher interest than a bank loan. DBS HDB home loans range from 1% to 1.4% instead of the fixed 2.6% HDB concessionary loan interest rate. Know more about HDB loan and HLE document here. 

One could argue that interest rates may hike in the future. Even so, there are no indications that it would breach 2%. For the foreseeable future, bank home loan rates appear to be stable. Click here to know how much home loan can I borrow in Singapore.

 

Differences Between DBS HDB Home Loan and HDB Concessionary Loan

DBS HDB Home Loan HDB Concessionary Loan
Interest Rate per annum 1.00% to 1.40% 2.6%
Maximum Loan Amount Up to 75% of purchase price or market value (whichever is lower) Up to 90% of purchase price or market value (whichever is lower)
Downpayment 25% of purchase price or market value (whichever is lower) 10% of purchase price or market value (whichever is lower)
CPF & Cash Upfront 20% CPF + minimum 5% cash payment 10% CPF, no minimum cash payment

 

The Best DBS HDB Home Loan to Finance Your HDB Flat

There is only one hurdle you have to overcome to take advantage of the low-interest rates of DBS mortgage loans. Instead of only a 10% downpayment, you have to pay 25%. You can use your CPF OA to pay up to 20%. As for the remaining 5%, it needs to be in cash.

Other than the downpayment, the only thing you have to do is to figure out which mortgage loan package to choose.

DBS makes it easy by offering the Super Savers Plan – a 5-year fixed-rate home loan exclusive only for HDB flat buyers.

As of September 30, 2021, the published interest rate of this loan is 1.48%, fixed for the first five years. This rate is significantly lower than the 2.6% of HDB concessionary loans.

 

Sample Computation of DBS HDB loan vs. HD Concessionary Loan

  • DBS Super Savers Loan Interest Rate: 1.48%
  • HDB Loan Interest Rate: 2.6%
Home Loan Amount DBS HDB
Interest Rate 1.48% 2.6%
Loan Amount S$300,000 S$300,000
Loan Term 20 years 20 years
Total Interest S$85,047 S$46,771
Total Payment S$385,047 S$346,771
% of Total Payment Paid on Interest 22% 13%

 

The sample computation illustrates the difference in the total cost, but not an accurate one. It does not include downpayment and other expenses associated with the home mortgage. Also, it assumes that the interest rates do not change throughout the loan tenure.

You need to pay at least a 25% downpayment with bank loans instead of 10% only for HDB concessionary loans. It means that the actual loan you take out is likely to be lesser for bank loans.

Having both loan options pegged at S$300,000 merely highlights money you can save over the long term with DBS home loans.

 

Repricing vs. Refinancing a Home Loan

Both terms – repricing and refinancing – are easy to understand. Yet, they have a far-reaching implication on the total cost of interest that you will eventually pay.

Repricing is switching to another loan package within the same bank. For example, you can switch from a fixed-rate loan to another with a shorter or longer lock-in period. Or, you can switch from a fixed to a variable rate, or vice versa.

On the other hand, refinancing ends the existing home loan and sets up a new loan with another bank. Suppose you are not a DBS customer, for example. In that case, you may refinance your loan with another bank with DBS to take advantage of lower interest rates.

 

DBS HDB Home Loan Application and Requirements

There are essentially three reasons why you should take out a housing loan. These are to:

  • Purchase an HDB flat, private property, or executive condominium
  • Refinance an HDB flat or property from another financial institution
  • Refinance an HDB flat from HDB

Personal and Property Information

Purchase Refinance from another financial institution Refinance from HDB
NRIC (for Singaporeans and PR)/Passport (for foreigners) of all applicants Yes Yes Yes, but only for Singaporeans and PR
HDB Flat & Financial Information Yes Yes Yes
Option to Purchase or Sales & Purchase Agreement Yes
Value confirmed by HDB (for HDB resale)

Valuation report (for Private Property & Executive Condominium)

Yes
Letter of Offer from your Financial Institution Yes
Latest 6 months loan repayment history Yes Yes
IRAS My Property Portfolio (if owner-occupied) Yes Yes
Latest CPF Property Withdrawal Statement (if you have an existing term loan or are applying for a term loan) Yes

 

Income

Purchase Refinance from another financial institution Refinance from HDB
Latest Notice of Assessment and 12 months CPF Contribution History Yes Yes Yes
Latest 3 months’ payslips (if you are working for less than 3 months, you may submit your latest payslip and employment contract) Yes Yes Yes
Latest 3 months’ salary crediting account statements (additional documents required for customers working overseas) Yes Yes Yes

 

Financial Commitments

Purchase Refinance from another financial institution Refinance from HDB
Latest credit facilities statements (for example, existing home loans, credit card, car loan, personal loan facilities, or others) Yes Yes Yes

 

Fee Schedule

Change in Loan Tenure S$250
Title Deed Safekeeping for Fully Repaid Facility S$300 per year
Request for Statements
  • Current Year
S$20
  • Previous two Years
S$30
  • More than Three Years
S$50
Administrative Fee for the Use of Third-party Insurer for Property Insurance S$100 per year

 

Frequently Asked Questions (FAQ)

1. Can you get a DBS home loan to finance a property overseas?

Yes. You can use a DBS home loan to buy a property in the United Kingdom and Australia.

2. How do you repay your loan?

You can use any of the following:

  • Cash
  • CPF savings
  • Combination of Cash and CPF savings

Note that you would need approval from the CPF Board to use CPF for DBS loan payments.

3. Can you make a partial prepayment of a DBS HDB housing loan?

Yes. But you have to submit a request one month in advance.

4. Is repricing or refinancing a good move?

The decision to reprice or refinance is for two reasons.

  • Lower the interest payments
  • Prolong the loan term in exchange for smaller monthly installments

Generally, you only consider this measure if your lock-in period is near its end and the loan balance is around S$300,000. This way, the cost of repricing/refinancing does not negate the potential savings.

5. Do you need to pay legal fees?

Yes. DBS, however, may subsidize legal fees but up to only a certain amount.

 

DBS HDB Housing Loans Can Save You Money

DBS Bank home loans have among the lowest interest rates on the market. The variety of fixed and variable rate loans can save you money compared to an HDB concessionary loan. More importantly, the total cost of the loan is much lower than many others.

Key Highlights:

  • DBS housing loans rank high among banks that offer the lowest interest rates and total cost of loans.
  • Floating-rate loans have lower interest rates than fixed-rate loans. But there is no telling when interest rates may increase substantially in the future.
  • The Super Savers Package is a 5-year fixed-rate loan exclusive for HDB homebuyers. This loan can save you tens of thousands of dollars compared to HDB concessionary loans.

Finding the lowest rates and total cost of loans on the market is confusing. Besides the interest rates, there are many other fees to consider. You can save time by requesting free quotes from Instant Loan, a website dedicated to finding the best loan rates, making comparisons much more effortless!

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