How does hdb loan interest work?

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Harvey Rogahn asked a question: How does hdb loan interest work?
Asked By: Harvey Rogahn
Date created: Mon, Feb 8, 2021 4:18 PM
Date updated: Fri, Sep 23, 2022 10:56 AM

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Technically, the interest rate on a HDB loan is pegged at 0.1% above the prevailing CPF OA interest rate (2.5%). As such, the HDB loan rate at present is 2.6% per annum… This makes your HDB loan one of the cheapest debts you can acquire. A personal loan is generally in the realm of 3% to 9% interest per annum.

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The HDB Loan Eligibility (HLE) letter and property loan fact sheet contain the terms of your loan and show how rising interest rates could affect your repayments. For bank loans, variable rates will kick in after the fixed rate lock-in period ends (differs by loan package). Refinancing a home loan may help you save on the interest.

An HDB concessionary loan is the money issued by HDB to help you buy your HDB flat. HDB usually offers a higher price and finance over 90% of your flat price. For instance, if you are going to buy a flat with SGD 300,000 worth, the HDB loan can lend you up to SGD 270,000 to pay for your flat.

Assuming you have $300k to pay in full but you decided to take a HDB loan, the interest cost to you is - additional $3,023 for 20 years loan. additional $4,535 for 30 years loan.

The interest cost difference paid using a HDB concessionary loan compared to a bank loan could be around $63,835 ($171,899 – $108,064) or $49,960 ($171,899 – $121,939) as well as about $10,000 lower in outstanding loan. Or to put it in another way, between paying $108,064 (based on 20 year median) or $121,939 (based on 20 year Sibor average ...

How does a HDB bank loan work? When compared to HDB loans, a bank loan on the other hand is fairly simple to understand. It is a general housing loan that is taken from a bank of the buyer’s choice and based on the bank’s interest rate packages offered; the loan application process and repayment process.

The temporary loan will be offered at the prevailing non-concessionary interest rate. If the temporary loan amount (capped at the net sale proceeds) is not enough to complete the new flat purchase, you must top-up the shortfall in cash within the stipulated time period so that you can collect the keys to the new flat.

The down payment is thus bigger when you use a bank loan. If banks want to get a share of the HDB market, they need to innovate and create loan products that will attract borrowers. Some banks feel incentivised to create offers that have interest rates below the HDB loan rate, in order to tap the gigantic HDB market.

What is the Interest Rate? The interest rate for a HDB loan is often considered to be fixed; this is semi-correct. Technically, the interest rate on a HDB loan is pegged at 0.1% above the prevailing CPF OA interest rate (2.5%). As such, the HDB loan rate at present is 2.6% per annum.

5. The interest rate for the loan is pegged at 0.1% above the CPF OA interest rate When you take a housing loan from HDB, you will enjoy a concessionary interest rate. This interest rate is pegged at 0.1% above the prevailing CPF OA interest rate, and may be adjusted in January, April, July and October, in line with CPF interest rate revisions.

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