How To Pay Your Housing Loan In Singapore

Written by Shannon Wong on November 8, 2022

You were just approved for your housing loan, and now it’s time to start thinking about the best way to pay it off.

There are different payment options, but you must do your best to make the smartest choice. This article will show you how to pay housing loan.

You can pay your housing loan in Singapore by borrowing money from HDB or a bank.

1. How To Pay Housing Loan: HDB 

A HDB loan is a home or housing loan given to individuals for homes built in Singapore by the Housing & Development Board (HDB).

HDB Loan Eligibility

These conditions must be met:

  • The loan must be for buying a HDB flat.
  • You must be Singaporean. If you’re buying a house as a group, at least one buyer must be a Singaporean.
  • For singles, the combined monthly income cannot exceed $7,000, for families it must not exceed $14,000, and for extended families it cannot exceed $21,000.
  • No private property, whether in Singapore or elsewhere, may be owned by you.

You must wait 30 months before applying for a HDB loan if you just sold a private property.

  • You can only own one piece of industrial or commercial real estate.
  • You must only have used HDB for one loan.
  • In addition, the property you funded with a HDB loan cannot be a private residence.

HDB Loan Interest Rate

HDB loans typically have interest rates that are 0.1% higher than the current CPF OA interest rate (2.5%). The annual interest rate on a HDB loan is currently 2.6%.

What Is The HDB Loan-To-Value Ratio?

As of 30 Sep 2022, HDB loans now have an 80% loan-to-value (LTV) ratio. It was previously 85%. An average bank loan has a 75% LTV ratio.

In other words, HDB offers higher borrowing limits than banks do.

What Is The Current HDB Loan Downpayment?

A 20% downpayment of the cost of the flat is required by HDB because its LTV ratio is 80%.

How To Pay For Your Housing Loan Installments

After receiving your loan, you must begin making monthly HDB loan installment payments on the first day of the following month.

There are several ways to pay the monthly installments on your HDB loan:

Payment Modes

Any of the following methods may be used to pay off housing loan installments:

  • CPF

Should I pay off my HDB loan using CPF? Yes, you can pay off your HDB loan using CPF – as long as you’re the owner of the property.

How To Use Your CPF OA To Pay For Your Housing Loan

There are three ways to pay off your home loan using your CPF Ordinary Account (OA):

1. Pay HDB Loan Using CPF Ordinary Account (OA) Funds

By completing and signing a CPF withdrawal form that is accessible at the HDB office, you can fund a HDB loan that you have taken out using your CPF OA.

2. Pay Bank Loans Using CPF Ordinary Account Funds

You need a lawyer in order to pay back a bank loan with CPF.

He or she will include a Letter of Authorisation, Declaration, Consent, and Agreement with your payment request.

Once you’ve accomplished the following, you’ll have access to the CPF funds. But you need to make:

  • A cash downpayment at the time of purchase equal to at least 5% of the lower buying price
  • Payments for any sum that exceeds the home’s real cost (i.e. Cash Over Valuation or COV)

3. Make Installment Payments with CPF

Here is how to repay the CPF housing loan in monthly installments using your CPF:

  • Visit the official HDB website and log in with your Singpass
  • Select “Use CPF for my Property” in the “Property” subsection
  • Click on the ‘’Property Details’’
  • Choose ‘’Revise Monthly Installment’’
  • The next step is to update the effective date and the “Monthly Installments” amount
  • Submit the request
  • Three working days will be required to review your request
  • GIRO 

GIRO is a good option when considering how to pay housing loan. GIRO is an agreement by your bank to transfer money from your bank account to the housing loan account. This payment is commonly called a bank GIRO Transfer.

  • Cheque Or HDB Cashier Order

Before submitting it for processing, your cheque or cashier’s order needs to include the HDB reference number, flat address, and the reason for the payment.

Before the suggested date for the housing loan CPF payments, your application must also reach the HDB branch managing your housing loan.

  • NETS Via AXS Payment Channels

Another excellent option for paying your housing loan installments is NETS.

However, the maximum amount payable by NETS is determined by the withdrawal limit amount agreed upon by the bank.

Therefore, be sure to speak with your bank before using this payment option.

  • PayNow via SGQR/ eNETS Debit

This is also a convenient option to pay your outstanding housing loan with. But just like NETS, the highest amount you can pay by this method depends on the withdrawal limit amount you agreed upon with your bank.

So, make sure you get in touch with your bank before you use this method.

  • Internet Banking

You can use the internet banking services offered by DBS Bank, POSB Bank, OCBC Bank, and United Overseas Bank to pay your housing loan, according to HDB.

  • Cash Payments At HDB Branches

You can also pay your housing loan in cash at any HDB branch.

Partial Capital Repayment

The abovementioned payment methods are acceptable for partial capital repayment of your home loan by HDB.

A month after receiving your request, HDB will set the start date for the partial capital payback.

HDB has a set minimum partial capital repayment amount ($500). This amount applies if the start date of your loan was before 1 Apr 2012.

If the start date of your loan was on or after 1 Apr 2012, the minimum amount of partial capital repayment is S$5,000.

Paying Off Your HDB Loan Early

To reduce your financial obligations, you can utilise your CPF OA savings to pay off your HDB loan before you turn 55.

Late Payment Charges

The housing loan is due on the 1st of every month. If the loan is not repaid by then, HDB will charge a late payment fee, which is determined based on the loan balance remaining at the end of the month.

Any payment made after the 1st will be applied to the late payment fee. The remaining amount will be applied to other pending loan fees.

The average prime lending rate serves as the foundation for the late payment fee rate. It was established by the Ministry of Finance. The rate for late payments is assessed yearly and set on 1 Apr.

The current annual percentage fee for late payments is 7.5%. You arrive at that figure by adding the prime lending rate (5.5%) to the late payment fee rate (2%).

2. How To Pay Housing Loan: Bank

Bank loans are used to fund the purchase of a HDB flat or private property.

Bank Loan Interest Rates

Bank interest rates can be lower than those of HDB’s, but they can also change. For housing loans, certain banks in Singapore charge as little as 1.6% interest.

When seeking a bank housing loan, you’ll have two choices: a fixed rate loan and a floating rate loan.

  • Fixed Rate Loan

During the lock-in period (typically two to five years), this loan’s interest rate remains fixed. But it will change after the lock-in period.

The bank determines the interest rate fluctuation percentage after the lock-in period by considering two things:

  • The Fixed Deposit Based Rate (FDR)
  • The Singapore Overnight Rate Average (SORA)

For example, fixed-rate housing loans range between 2.65-3%. So, if the fixed rate is 2.65% and the SORA rate is 0.78%, the bank will charge 3.43% as the interest rate.

Currently, fixed rate housing loans range between 2.65-3%.

  • Floating Rate Loan

The bank may change the interest rate on this loan from time to time.

Depending on the type of floating rate housing loan you select, the frequency of the adjustments may vary. The monthly installment payments also fluctuate when the loan’s interest rate does.

In addition, the bank permits penalty-free partial repayments during the lock-in period.

What Is Required To Be Eligible For A Bank Housing Loan

Like HDB loans, bank housing loans have comparable eligibility requirements. However, banks place more emphasis on credit ratings.

A credit score of at least BB is required by the majority of Singapore banks. You can obtain a larger loan and a more favourable interest rate with a strong credit score.

Be Aware Of How To Pay Housing Loan In Singapore

You must submit a downpayment in Singapore before you start repaying your property loan on a monthly basis.

The remaining balance may be paid in installments using cash, online banking, CPF, GIRO, check or HDB cashier’s order, NETS via AXS payment channels, PayNow via SGQR/eNETS Debit, and PayNow via SGQR/eNETS Debit.

Now, if you don’t qualify for any of these housing loans in Singapore, visit 1AP Capital. We are a licensed money lender that offers various kinds of loans, including personal loans that you can use to finance your HDB or bank loan.

Even better, when you apply for a loan at 1AP Capital, you receive a fast loan application at no obligation. Contact us now.

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