Should I Use a Bank Loan or HDB Loan for my 2nd HDB purchase?
Here is my answer:
Every household is entitled to 2 HDB loans.
For the second HDB purchase, it would require 50% of your cash profit to be paid to the house and with a fixed rate of 2.6%.
A bank loan on the other hand - it allows more cash to be kept on hand.
With a bank loan to finance the 2nd HDB purchase - you only need to deposit 5% of the cash profit.
But take note!
Every household is entitled to 2 HDB loans.
For the second HDB purchase, it would require 50% of your cash profit to be paid to the house and with a fixed rate of 2.6%.
A bank loan on the other hand - it allows more cash to be kept on hand.
With a bank loan to finance the 2nd HDB purchase - you only need to deposit 5% of the cash profit.
But take note!
Bank loan interest rates fluctuate!
And they can fluctuate significantly.
You have seen in recent times where a lot of homeowners suddenly have to increase their monthly payments as banks revised the interest rates upwards.
When I get this question, I would recommend an honest financial assessment of your household income.
You have seen in recent times where a lot of homeowners suddenly have to increase their monthly payments as banks revised the interest rates upwards.
When I get this question, I would recommend an honest financial assessment of your household income.
My Own Example: We Used A Bank Loan For Our 2nd HDB Purchase
When we sold our house, we chose to proceed with bank loan mainly due to the reason so that we could have more cash on hand.
Partly also we knew that our 2nd HDB was not going to be our “forever home”.
We wanted to keep the option of our last HDB loan usage available.
This move was strongly supported by the following factors:
1) Job stability - I was a contact centre agent in a reputable stable bank while Khairul was a civil servant (that mostly meant as having iron rice bowl) we were confident that we didn’t have to worry about retrenchment throughout our loan.
2) Our job’s monthly contribution - both of our jobs have a high fixed amount of regular contributions. Hence, even if there was an increase in the interest, we believe we have a comfortable buffer.
3) The amount of loan required - We sold our 5-room BTO (112sqm) at 545K and we bought a 4-room (109sqm) HDB resale at 315K.
For this, we only needed a 100K loan.
4) Discipline - we have to have the discipline to regularly refinance the house every 2 to 3 years.
Partly also we knew that our 2nd HDB was not going to be our “forever home”.
We wanted to keep the option of our last HDB loan usage available.
This move was strongly supported by the following factors:
1) Job stability - I was a contact centre agent in a reputable stable bank while Khairul was a civil servant (that mostly meant as having iron rice bowl) we were confident that we didn’t have to worry about retrenchment throughout our loan.
2) Our job’s monthly contribution - both of our jobs have a high fixed amount of regular contributions. Hence, even if there was an increase in the interest, we believe we have a comfortable buffer.
3) The amount of loan required - We sold our 5-room BTO (112sqm) at 545K and we bought a 4-room (109sqm) HDB resale at 315K.
For this, we only needed a 100K loan.
4) Discipline - we have to have the discipline to regularly refinance the house every 2 to 3 years.
So, the direction that we are heading towards?
We want to eventually use the last HDB loan for our retirement property.
That’s why we held back from using it for our current property.
So what’s the direction you are heading towards?
That’s why we held back from using it for our current property.
So what’s the direction you are heading towards?
