HDB Loan Calculator vs Bank Loan

HDB Loan Calculator – what happens if rates increase?

Home owners who want to compare hdb rates vs bank rates that changes periodically may use the calculator below.

How to use:

HDB Loan amount ($) – Enter the loan amount for your hdb in the HDB loan calculator. The minimum loan amount is $100,000

Loan Tenure (Years) – Use the drop down list and select the loan tenure.

Years to sell or pay off the loan – This refers to the nth year that you will redeem your hdb loan. The HDB loan calculator will calculate the total interest at the nth year.

Predicted change in rates – Here you can select either “Interest rates will remain the same” if you think your bank rates will remain constant throughout the entire tenure. Or you can select “Interest rates will increase”.

Rate change per year – enter the interest rate in percentage that you think will increase per year.

Maximum rate – this is the capped rate. For example, if your thereafter rate is 2.50% and you enter 3.50% in maximum rate. The maximum payable rate will be 6.00% (2.50%+3.50%)

Bank Package – Enter the rate for 1st, 2nd, 3rd and thereafter rate. Select whether it’s a fixed or variable rate.

HDB – HDB loan rate is assumed at 2.60% p.a throughout the loan tenure.

Bank Loan

Loan packages that are pegged to market benchmarks have only a short history in Singapore. Previously loan packages have always been pegged to the lender’s board rate. Its only in early 2007 that banks started introducing loan packages that are pegged to SIBOR or SOR for greater transparency.

Nowadays most packages are pegged at a spread above the SIBOR. Currently interest rates offer by the banks are as low as 0.8% above the 3 month SIBOR rate.

The 3 months SIBOR is now at its historical low since 2009. This is after the Lehman Brothers collapse in Sept 2008. Before that, the 3 month SIBOR was above 1% and peaked at 3.56% in 2006.

Assuming that you already qualified for both a HDB housing loan and bank loan at the same loan amount and tenure.

Like all housing loans, we will do a side by side comparison based on Cost, Stability, and Flexibility

HDB housing loanBank loan
Cost2.6% p.a(0.1% + CPF OA interest rate)Approx 1.18%(0.8% + 3month SIBOR)
StabilityDepend on market conditions The benchmark rate, CPF OA, has been consistent since 1999Depend on market conditionsThe benchmark rate, 3month SIBOR, is more volatile than CPF OA and there is indication that MAS has plans to review how its set.
FlexibilityNo charges for early repayment or partial repaymentSome packages may have a penalty charge for early repayment and partial repayment

At current economic situation, a bank loan is definitely cheaper than a HDB rate. For example a $300,000 loan over 30 years will have a monthly payment of SG$1,201 from HDB and SG$990 from the bank (assuming no change in SIBOR). This is a significant savings of SG$2,532 for the 1st year. This is assuming that SIBOR will continue to stay low.

But if you are just starting your career or family, and foresee that you will be strapped for cash in the next few years, you may want to consider opting for a HDB loan. While a HDB loan is more expensive now (SIBOR is usually not so low), it offers you a more stable interest rate. In the event of a default, HDB has many comprehensive policies and measures in place to help you restructure your loan or even postponing your payments.

HDB loan is also more flexible in allowing prepayment. Unlike a bank loan, HDB does not charge borrowers on prepayment. At current interest rate, you should consider making prepayment in cash and not CPF because your CPF is earning a higher compounded interest.


A housing loan is a long term commitment that will last more than 20 years for most people. The current low interest situation is not expected to last forever. So you should pick a mortgage based on your current income and financial ability.

If you have 5 – 7 years left on your housing loan, or if you have a stable income and want to save on interest in the short term, you can consider choosing a bank loan over HDB loan.

If you have taken up a HDB market rate loan before 2003, you should also consider refinancing your loan to a bank loan to save on interest.

If you are just starting a career and you expect yourself to be cash strapped, then maybe you should start with a HDB loan first.

You can compare your monthly instalment with HDB bank loan calculator.

Inforgraphics: Cash or CPF for HDB BTO

HDB Cash or CPF