Dear readers, thanks for dropping by. Kindly note that I have migrated all these posts to my new blog All Things Cozy and Homely . I will blog at the new site from Jan 15 onwards.

Friday, April 22, 2011

HDB Loan vs Bank Loan

Most couples did not do adquate ground work prior making the biggest purchase in their lives. Most went straight for bank loans, enticed by the freebies and low bank rates. While others opt for HDB loans because they are too lazy to shop around for the best rates.

So, what are the pros and cons of going for HDB Loan as compared to Commercial Bank Loans? Some of the advantages I can think of as follows:

  1. If ...for any reasons, you had defaulted HDB loan payment, the risk of foreclosure is lower. HDB will try to arrange for means and ways for you to make repayment.
  2. HDB rates are fixed (2.6%) whilst most of the bank rates fluctuates with economy.
  3. No hidden cost. But there are hidden costs if you decide to switch from one bank to another and these were not highlighted to most people.
What about disadvantages?
  1.  Many restrictions; you need to meet the eligibility Conditions for HDB Concessionary loan. One of the conditions is that if your combined income level is above 8k, you can't apply.
  2. You need to apply for HDB Loan Eligibility(HLE)  prior application for the HDB concessionary loan.
  3. Inflexible; once you switched from HDB loan to a bank loan, you are not allowed to switch back to HDB loan.

Here are some of the other useful resources you should take a look to find out more:
  1. Should you switch from HDB loan to a Bank loan?
  2. Housing Loan FAQ
  3. MortgageSmart FAQ

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