Asked by Anonymous
I will be going for HDB loan. If I were to take a bank loan, I will need to come up with 5% cash for the downpayment. For HDB loan, I can finance all through CPF. HDB loan is easier to manage to me. Bank loans will need to be refinanced regularly and currently the interest rates are already going up. I expect most bank loans interest rates will go above 2% by the end of the year or early next year.
HDB loan. I don't really want to come up with the 5% downpayment because I feel that if I put this amount into CPF itself it'd have generated more interest for myself. I have heard that interest rates from banks can be lower than HDB but it would simplify things alot for me just for everything to go through CPF and I believe the savings is minimal if I top up my CPF by cash.
Also, HDB loans interest may be high but they are fixed so I know what to expect. Bank loans normally are valid for couple of years only. By then it's either you have to refinance or stick with whatever they give to you - which I don't like and there's no penalty if I pay off HDB loan earlier but if I pay off bank loans earlier I have to pay a 1.5% penalty. That said, I can also borrow more from HDB vs Bank (90% vs 75%).
Hope this helps!
HDB loan, so that I need not come up with the 5% cash downpayment. I think it's easier to manage and plan with a fix interest rate, rather than to monitor the interest rate and work on refinance as needed. Though current bank loan interest rate is lower but seems like there is an upward trend lately. Also, I do not need to worry about being penalized to pay off my HDB loan earlier.