Mortgage & Home Loan Guide
Everything you need to know about home loans in Singapore — HDB vs bank loans, SORA rates, fixed vs floating, TDSR, MSR, and refinancing strategies.
📌 Key Takeaways
- 🏦 HDB loan: ~2.6% p.a., 20% down payment, no early repayment penalty, one-way switch only
- 🏛️ Bank loan: 2.5%–4% p.a., 25% down payment, lock-in periods apply
- 📊 TDSR: Total debt capped at 55% of gross income
- 🏠 MSR: HDB loan payments capped at 30% of gross income
- 🔄 Refinancing: Can switch HDB→Bank, but cannot switch back to HDB
HDB Concessionary Loan vs Bank Loan — The Full Comparison
This is the first and biggest decision you'll make as a home buyer. Here's how they stack up.
| Feature | HDB Concessionary Loan | Bank Loan |
|---|---|---|
| Interest Rate | 0.1% above CPF OA (~2.6% p.a.) | 2.5%–4.0% p.a. |
| Down Payment | 20% (10% cash, 10% CPF) | 25% (5% cash, 20% CPF/cash) |
| Loan-to-Value (LTV) | Up to 80% | Up to 75% |
| Debt Ratio | MSR 30% of income | TDSR 55% of income (30% MSR for HDB) |
| Lock-in Period | None | 1–3 years typical |
| Early Repayment Penalty | None | ~1.5% of principal during lock-in |
| Loan Tenure | Up to 30 years | Up to 35 years (varies by bank) |
| Can Switch Back? | — | ❌ One-way street |
Sources: HDB, "HDB Concessionary Loan," hdb.gov.sg; MAS, "Property Cooling Measures," mas.gov.sg (2025).
Understanding SORA — Singapore's Benchmark Rate
If you're going with a bank loan, you'll hear a lot about SORA (Singapore Overnight Rate Average). This is Singapore's benchmark interest rate that replaced SIBOR in 2023. Most floating-rate bank loans are now pegged to 3-month Compounded SORA.
Here's how it works: a typical SORA-based loan is priced as SORA + spread. For example, if 3-month Compounded SORA is at 3.2% and your bank offers you SORA + 0.5%, your effective rate is 3.7%. The spread depends on your credit profile and how much you're borrowing.
SORA rates fluctuate — they went from near-zero in 2021 to above 3.5% in 2023–2024 — so if you're risk-averse, a fixed-rate package might be the better choice.
Source: MAS, "SORA & Interest Rate Benchmarks," mas.gov.sg (2025).
Fixed Rate vs Floating Rate — Which One?
🔒 Fixed Rate
- ✅ Interest rate locked for 1–5 years
- ✅ Predictable monthly payments
- ✅ Best when rates are expected to rise
- ❌ Typically higher starting rate
- ❌ Hefty penalty if you break the lock-in
📈 Floating Rate (SORA)
- ✅ Lower starting rate than fixed
- ✅ No lock-in (can refinance anytime)
- ✅ Best when rates are stable or falling
- ❌ Payments can go up unexpectedly
- ❌ Harder to budget long-term
Our take? If you're on a tight budget and need predictability, go with a 2-year or 3-year fixed rate. If you have flexibility and think rates might come down, floating SORA-based packages are worth considering.
TDSR and MSR — The Two Ratios That Limit Your Loan
These are the two rules that determine how much you can borrow. They're not suggestions — banks are legally required to enforce them.
Total Debt Servicing Ratio (TDSR)
TDSR = 55% — your total monthly debt obligations (including the new home loan, car loans, credit card debts, study loans, etc.) cannot exceed 55% of your gross monthly income. If you earn S$10,000/month, your total debt payments — including the new mortgage — can't exceed S$5,500.
Mortgage Servicing Ratio (MSR)
MSR = 30% — this only applies to HDB flats and executive condos (ECs). Your monthly mortgage payments cannot exceed 30% of your gross monthly income. Even if you have no other debts, the cap is still 30%. This is tighter than TDSR for most people.
Source: MAS, "Property Cooling Measures — TDSR & MSR," mas.gov.sg (2025).
Refinancing — When and How
Refinancing means switching from your current loan to a new one (usually with a different bank) to get a better rate. Here are the key rules:
- HDB → Bank: Allowed at any time, but you cannot switch back to HDB. Think carefully before doing this.
- Bank → Bank: Allowed. Watch out for lock-in periods (usually 1–3 years). Early repayment during lock-in costs ~1.5% of the outstanding amount.
- Legal fees: Expect S$2,000–S$3,500. Some banks offer legal subsidy if you refinance above a certain amount.
When should you refinance? A good rule of thumb: if you can get a rate that's at least 0.5% lower than your current one, and you're past the lock-in period, it's probably worth it. Use our mortgage calculator to run the numbers.
Pro Tips for Getting the Best Mortgage
1. Shop Around — Don't Take the First Offer
Banks' published board rates are rarely their best rates. Use a mortgage broker or compare across 3–5 banks. Even a 0.2% difference on a S$500,000 loan saves you over S$20,000 in interest over 25 years.
2. Get an In-Principle Approval (IPA) Early
An IPA from a bank tells you exactly how much you can borrow. It's free, valid for 30 days, and makes you look like a serious buyer when negotiating with sellers.
3. Factor in All Costs
Your monthly mortgage isn't the only cost. Include property tax, maintenance fees (condo: S$300–S$600/mo), fire insurance, and home contents insurance in your budget.
4. Don't Max Out Your Loan
Just because the bank offers you S$1 million doesn't mean you should borrow that much. Keep your monthly payments at 25–30% of your income max — gives you breathing room for rate hikes, job changes, or unexpected expenses.