What kind of loans can you use for your BTO Flat?

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What kind of loans can you use for your BTO Flat?

Home purchasing is a long-term commitment. Many Singaporeans take housing loans to finance a purchase and bear with the burden of repayment for at least 25 years. Therefore, it is critical to have useful information on the loans available and focus on a suitable plan that is sustainable and will not derail your financial stability. Comparing home loan rates in Singapore will go a long way to ensuring that you make the best decision possible.

If you are considering settling into a BTO flat, and intend to take up a loan, here’s a breakdown of what kind of loans you can use for your BTO flat.

First, Ensure that You are Eligible

Buyers of BTO flats must not be owners of any other property, whether HDB or privately owned locally or abroad. If they do, they must be willing to dispose ownership within two and a half years of the application for the BTO flat.

Also, buyers must also fulfil the following:

  • Be citizens of Singapore aged 21 and older, or have families of at least one citizen, applying with one other citizen. If you are considering marriage and want a joint application with your fiancé (e), the marriage should be registered before taking possession of the flat.
  • Earn an income that fits with the size, location and lease terms as spelt out in the BTO eligibility criteria.

HDB Loans

HDB loans are a great option to finance the purchase of BTO flats. Before taking up a HDB loan, you must first get the HDB Loan Eligibility Letter (HLE) It indicates the maximum loan amount that you can borrow, the loan term and the expected monthly instalments. The letter is valid for six months after which it expires and you will need a new letter.

HBD loan rates are pegged to the CPF rate and ideal for people with lower cash flows. However, HDB loans are not as flexible as bank loans.

Bank Loans

Unlike HBD loans, bank loans are more flexible, and the process is less complicated. If you are eyeing to finance your BTO flat using a bank loan, you have the option of choosing between a fixed rate and floating rate packages.


Bank loans and HDB loans differ on the following primary areas.


  • Interest Rate: HDB loans are relatively stable and pegged at the CPF rate. Bank home loans fluctuate with market conditions pegged to indexes such as SIBOR. Fixed rate home loans are often time-bound, and banks will have the leeway to review the interest rates upon expiry of these periods.
  • Penalties for Late Payment: HDB loans attract less hefty penalties for lateness as compared to bank loans.
  • Down payment: Unlike banks which require a down payment of at least 5% in cash up front, HDB loans permit applicants to use their CPF.
  • Bank loans have a lock period where you have to keep the loan with the initial bank. However, same does not apply to HDB loans.

To conclude, the choice between a HDB loan or bank loan for your BTO flat ultimately depends on your financial capability. The information above will help you make a better decision for what kind of loan you can use for your BTO flat.

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