My fiance and I are intending to purchase a resale flat. We are unsure if a bank loan or HDB loan would be more suitable? Any advice and other things we should take note of? - Seedly
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Resale HDB

Anonymous

Asked on 19 Feb 2020

My fiance and I are intending to purchase a resale flat. We are unsure if a bank loan or HDB loan would be more suitable? Any advice and other things we should take note of?

What are some other things that I should be taking into consideration? Are there other alternatives that I should be considering too?

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Davin
Davin
Level 7. Grand Master
Answered on 24 Feb 2020

If either one of you have a stable income, I would suggest to go for bank loan as the saving is quite substantial (1.8% vs 2.6%).

Only benefit of hdb loan is they are more flexible if you unfortunately fall into financial difficulty situation. So you have to judge based on yr situation

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Moneysmart did a brilliant comparison between the two. Click here

A few questions to ask:

  1. Stability of income

  2. If interest rates were to jump 2%, would you be sensitive to it?

Generally, the biggest benefit of an HDB loan is it's fixed interest rate. You know exactly what you are getting yourself into, unlike a floating rate from a bank that might increase beyond 2.6%.

Another big benefit is that HDB will not penalize you should you decide to pay off your loan earlier. A bank would.

My suggestion is to quantify your two decisions and make a decision whether or not the risk is worth the potential savings.

Click here to find out more about me!

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