For most ordinary people, buying a house is the most expensive purchase of their lifetime and may require a long-term financial commitment. This article provides a comprehensive guide to mortgage loans in Singapore, which can be a reference whether you are buying a home for your own stay or for investment.
Table of Contents
What is a Mortgage Loan
A mortgage loan refers to a situation where a homebuyer uses the purchased property as collateral to apply for a loan from a bank or financial institution and makes installment repayments according to the loan agreement until the principal and interest are fully paid off. In Singapore, eligible homebuyers can also opt to apply for a housing mortgage loan from the Housing & Development Board (HDB).
Types of Mortgage Loans in Singapore
Residential Property Mortgage Loans
Residential properties in Singapore can be broadly categorized into three types: private properties, public housing (HDB flats), and executive condominiums (ECs). Different property types are eligible for different types of mortgage loans.
Related Articles:
Mortgage Loans for ECs and Private Properties
When purchasing private property or landed property in Singapore, you can only finance your mortgage through banks or other financial institutions. Depending on the homebuyer’s risk tolerance and monthly installment budget, major banks in Singapore offer a variety of mortgage packages and interest rates.
Building Under Construction (BUC) Private Properties
If you are purchasing a condominium, private property, or landed property that is not yet completed or is still under construction, it is best to choose a bank loan with no lock-in period, allowing you to reprice or refinance at a lower interest rate at any time.
Completed or Resale Private Properties
If the private property you are purchasing is a completed unit or a resale property, major banks in Singapore offer quite favorable fixed or floating rate mortgage options. The only thing to note is that the more favorable HDB loan is not applicable to private properties, as HDB loans are designed to address the housing needs of Singaporean citizens and permanent residents with relatively lower incomes.
Mortgage Loans for HDB Flats
If you are purchasing an HDB flat in Singapore and one of the core family members (such as you or your spouse) is a Singaporean citizen or permanent resident, you are preliminarily eligible to apply for an HDB loan. However, the application criteria for an HDB loan are relatively strict. In addition to identity, the following conditions must be met:
- The total monthly household income must be below the income ceiling set by HDB (S$14,000 for regular families, S$21,000 for extended families, and S$7,000 for single buyers).
- The core buyers must not own any private or commercial property (whether acquired through purchase, gift, or inheritance, and regardless of whether the property is located in Singapore or abroad).
If you meet all the conditions for purchasing an HDB flat, you can apply for the highly favorable HDB loan. The HDB loan interest rate is as low as 2.6%, which is pegged to the current interest rate of Singapore’s Central Provident Fund Ordinary Account (CPF OA). The current CPF OA rate is 2.5%, and the HDB loan rate is 0.1% above that. The Singapore government may adjust the CPF OA rate in January, April, July, and October each year. In theory, if the CPF OA rate changes, the HDB loan rate will also change accordingly. However, in practice, both the CPF OA and HDB loan rates are unlikely to change in the short term, so HDB flat buyers can enjoy this favorable mortgage policy provided by the government.
When purchasing an HDB flat, you can also opt for a bank loan.
If you are unsure about which option to choose, you can use Anjia SG’s mortgage calculator to find a personalized mortgage plan that suits you better.
Mortgage Consultation:
Commercial Property Mortgage Loans
When purchasing commercial real estate, you can only apply for a loan from a bank or other financial institution. Commercial real estate mortgage packages can be fixed-rate loans with a lock-in period or floating-rate loans. The down payment and interest rate are influenced by various factors, such as the property’s intended use, development plans, perceived risk, market changes, etc.
The main differences between residential and commercial property mortgage loans are as follows:
| Residential Property Loan | Commercial Property Loan | |
| Loan-to-Value (LTV) Limit | Bank loan or HDB loan: 75% | Bank loan: Usually 80% |
| Factors Affecting Loan Amount |
|
|
| Loan Tenure | Relatively long
|
Relatively short Usually 25 to 30 years |
How to Apply for a Residential Property Mortgage Loan?
Applying for an HDB Loan
HDB Flat Eligibility (HFE) Letter
To apply for an HDB loan, you first need to be eligible to purchase an HDB flat, which means you need to apply for an HDB Flat Eligibility (HFE) Letter from the Housing & Development Board. The HFE letter will inform you of your eligibility to buy a new or resale HDB flat, the amount of the HDB loan you can take, and the amount of CPF housing grants you can receive. It is valid for 9 months.
You can apply for the HFE letter online via the HDB website by logging in with your SingPass. HDB will complete the assessment within 14 days and update the results on the website.
Applying for a Bank Loan
Whether you are buying an HDB flat, a condominium, or other types of private or commercial property, you can apply for a bank loan.
In-Principle Approval (IPA)
To apply for a bank mortgage loan, you first need to obtain an In-Principle Approval (IPA). The bank will determine the loan amount you can receive based on your financial situation and credit score. The IPA is usually valid for 30 days.
Once you have the IPA and have confirmed your property purchase, you can proceed to apply for the bank loan.
If you have any questions about applying for a home loan in Singapore, you can consult with an Anjia SG mortgage advisor.
What is the difference between a bank loan and an HDB loan?
| Bank Loan | HDB Loan | |
| Mortgage Down Payment | 25% | 25%* |
| Mortgage Interest Rate | Floats with the market | 2.6%
(0.1% above CPF OA rate) |
| Lock-in period
|
Yes | No |
*The HDB loan down payment was previously 20%. According to the Singapore government’s latest cooling measures for HDB flats, starting from August 20, 2024, the HDB loan amount cannot exceed 75% of the property’s value. Therefore, the minimum down payment for both bank loans and HDB loans is now 25% of the property value.
Which is better, a bank loan or an HDB loan?
When choosing a loan, you need to consider your actual financial capacity and risk profile.
If your financial situation cannot withstand risks, or if you subjectively do not want to take on financial risks, it is best to choose an HDB mortgage loan. The HDB loan interest rate is fixed at 2.6%, so as long as you plan your monthly finances well, you won’t have to worry about cash flow issues.
If you are capable and willing to take on financial risks, have a good credit score, and are not averse to the tedious process of repricing and refinancing your mortgage every few years, you can consider the home loan packages offered by various banks, whether they are fixed-rate or floating-rate packages. If you conduct in-depth research of market conditions and plan your finances well, there is a high probability that you can enjoy an interest rate lower than that of an HDB loan.
Latest Mortgage Packages from Major Singaporean Banks for 2025
Bank loan interest rates are affected by the market environment and are constantly changing. As of now, the fixed mortgage rates of major banks in Singapore are as follows.
| Fixed Loan | OCBC
|
DBS
|
UOB
|
Maybank
|
Standard Chartered
|
| One-Year | N/A | N/A | N/A | N/A | N/A |
| Two-Year | 2.65% | 2.60% | 2.50% | 3.30% | 2.55% |
| Three-Year | 2.75% | 2.65% | 2.60% | 3.40% | N/A |
| Four-Year | N/A | N/A | N/A | N/A | N/A |
| Five-Year | N/A | N/A | N/A | N/A | N/A |
*As the fixed loan rates of major banks change relatively frequently, if you want to confirm if the latest rates have changed, please submit a home loan application form.
Mortgage Interest Rates
Fixed Interest Rate
The HDB loan interest rate is a typical fixed rate, set at 2.6%.
Additionally, bank loans can also offer fixed rates, with specific values varying depending on the bank and the loan package. Under some loan packages, the fixed rate of a bank loan may be lower than the fixed rate offered by an HDB loan, but the fixed period is limited, usually for the initial 1 to 3 years of the loan, with the specific duration depending on the lock-in period specified in different loan packages. The monthly repayment amount during the lock-in period remains constant unless the bank suddenly changes the interest rate.
The benefit of a fixed-rate loan is that it is easier to manage personal finances and cash flow because the monthly repayment amount is fixed.
However, for bank loans, at the end of the lock-in period, the home loan interest rate may rise, or it may switch from a fixed rate to a floating rate. Therefore, after the lock-in period ends, it is best to contact the bank to reprice or refinance to maintain the best home loan interest rate.
Floating Interest Rate
There are currently 3 types of floating rates in Singapore: the bank’s internal board rate (MBR), the Singapore Overnight Rate Average (SORA), and the Singapore Interbank Offered Rate (SIBOR). SIBOR will be discontinued on December 31, 2024. If you did not actively switch your SIBOR loan package to a package based on another rate before April 30 of this year, the bank has automatically converted it to a SORA Conversion Package (SCP) starting from June 1.
They are called floating rates because they can rise or fall at any time, with the range of fluctuation depending on market conditions.
The main differences between MBR and SORA are summarized as follows:
| MBR | SORA | |
| Meaning | Mortgage Board Rate or Internal Board Rate | Singapore Overnight Rate Average |
| Managed and Set By | Bank | Monetary Authority of Singapore (MAS) |
| Transparency | Not transparent, determined entirely by the bank internally | Relatively transparent |
| Volatility | Relatively stable | Relatively frequent fluctuations |
| Supports Free Loan Package Changes | Free change allowed if MBR increases | Free change allowed after the lock-in period |
Frequently Asked Questions
Which bank offers the best home loan package?
The interest rate environment has been continuously volatile in recent years, and each fluctuation in interest rates and market conditions could cause a previously favorable loan package to lose its advantage. Therefore, banks are constantly adjusting their loan packages.
If you are unsure which loan package is best for you, you can consult with Anjia SG.
Is a fixed rate better, or is a floating rate better?
Neither is better; it’s about which is more suitable. The overall cost of a fixed-rate loan is usually higher because the borrower pays a premium for stability. For risk-averse individuals, this is a worthwhile trade-off, but for those willing to take on more risk, leveraging the advantages of a floating rate might save some money on the home loan, which can be used for other investments or to increase savings.
Is the mortgage interest rate during the lock-in period always fixed?
Not necessarily. Many people mistakenly believe that the interest rate of a bank mortgage during the lock-in period is always fixed, but this is not the case. Only when you sign a special fixed-rate loan package with the bank can you repay at a fixed rate during the lock-in period.
Can foreigners apply for a mortgage loan in Singapore?
Foreigners can apply for a housing mortgage loan in Singapore, but it is limited to bank loans for private properties. The HDB loan is a preferential policy exclusively for Singaporeans, and foreigners are not eligible.
How is SORA calculated?
The Singapore Overnight Rate Average (SORA) is the primary benchmark interest rate for SGD interest rate contracts, calculated and managed by the Monetary Authority of Singapore (MAS). The daily SORA, as well as a series of 1-month, 3-month, and 6-month compounded SORA rates, are published on the MAS website. Compounded SORA is calculated as the compounded average of daily SORA levels over the relevant 1-month, 3-month, or 6-month period preceding each publication date, thereby reducing the impact of interest rate volatility.
SORA is a robust and transparent benchmark rate based on actual market transactions and is supported by a deep and liquid overnight interbank funding market. It is determined by the volume-weighted average rate of borrowing transactions in the unsecured overnight interbank SGD cash market between 8:00 AM and 6:15 PM.
For further enquiries, please get in touch:
WeChat: sgleokwek
Telegram: sgleokwek
WhatsApp: Message us
