Types of Mortgage Loans in Singapore
Singapore’s property market offers four distinct mortgage structures, each regulated differently and suited to different buyer profiles. HDB concessionary loans are only available for HDB flats purchased directly from HDB or on the resale market, while bank loans cover both HDB and private property. Bridging loans serve a narrow but critical function for sequential property transactions, and refinancing lets existing owners capture better rates after their lock-in expires.
Not sure which type fits your situation? Chat with an advisor and they’ll help you narrow it down based on your property type, income, and timeline.
Key Concepts You Need to Know
Mortgage applications involve a few important terms and rules. Understanding these upfront saves time and prevents surprises during the application process.
These aren’t just jargon — they directly affect how much you can borrow, what you’ll pay monthly, and when you can switch lenders.
TDSR in Practice
The 55% TDSR threshold set by MAS applies to all property loans from financial institutions. For example, if your gross monthly income is $8,000, your total monthly debt obligations — including the proposed mortgage, car loans, credit card minimum payments, and any other loans — cannot exceed $4,400. Banks calculate TDSR using a medium-term stress-test rate (currently 4.0% p.a. for residential properties) rather than the actual loan rate, so your borrowing capacity may be lower than you’d expect from the headline rate alone.
CPF Usage for Property
You can use CPF Ordinary Account (OA) savings for your down payment and monthly mortgage instalments. For HDB loans, up to 80% of the property value can be financed, with the remaining 20% payable through CPF OA and/or cash. For bank loans (75% LTV), you need at least 5% in cash and can use CPF OA for the remaining 20% of the purchase price. Note that CPF usage is subject to the CPF Withdrawal Limit and the property must be for owner-occupation or approved investment.
If any of these feel unclear, our advisors can walk you through the numbers for your specific situation.
Choosing Between HDB and Bank Loans
This is the most common question for Singapore home buyers. Here’s how the two options compare side by side.
HDB loans suit buyers who want certainty — the rate is fixed at 2.6% p.a. and eligibility is more forgiving. You also get a higher LTV of 80%, meaning a smaller cash or CPF down payment. The trade-off is a higher interest rate compared to most bank packages.
Bank loans suit buyers comfortable with rate movements who want a lower starting rate. Most fixed packages start at 2.5–3.5% for the first 2–3 years, while floating rates track SORA. Bank loans are available for both HDB and private property, but have stricter credit requirements and a lower 75% LTV cap.
The right choice depends on your risk tolerance, financial stability, and how long you plan to hold the property. Not sure which suits you? Chat with an advisor and they’ll walk you through it.
Refinancing — When It Makes Sense
Refinancing means switching your existing home loan to a new lender offering better terms. It’s worth considering when:
- Your lock-in period has ended
- Market rates have dropped significantly since you took the loan
- You want to switch between fixed and floating rate structures
Refinancing Cost Example
On a $500,000 outstanding loan with 20 years remaining, switching from a 3.5% p.a. rate to a 2.8% p.a. rate saves roughly $200 per month in interest. Over the remaining tenure, that amounts to significant savings even after accounting for one-time refinancing costs: legal fees ($2,000–$3,000), valuation ($300–$500), and potentially a fire insurance premium. Most borrowers recoup these costs within the first year of the lower rate.
The key rule: if your rate savings over the remaining lock-in-free period exceed total refinancing costs by a comfortable margin, it’s worth switching.
When Banks Say No
Common reasons for mortgage rejection in Singapore include:
- TDSR above 55% — your total monthly debts (including the proposed mortgage at the stress-test rate) exceed MAS limits. This is the single most common rejection reason for employed borrowers.
- Irregular income — self-employed borrowers, freelancers, and commission-based earners face stricter assessment. Banks typically require two years of tax assessments (IRAS NOA) showing consistent income.
- Multiple existing properties — additional buyer stamp duty (ABSD) aside, the LTV for second and subsequent properties drops to 45% (bank) or 25% with an existing loan, requiring significantly more cash upfront.
- Credit history issues — late payments, defaults, or a CBS score below BB can trigger automatic decline at most banks.
- Age and remaining tenure — banks cap loan tenure so the loan is fully repaid by age 65 (or 75 with reduced LTV). A 55-year-old buyer has a much shorter maximum tenure, which pushes monthly payments higher and may breach TDSR.
If you’ve been declined, our advisors can help you understand your options — which may include restructuring existing debts to lower TDSR, increasing your cash down payment to reduce LTV, or timing your application after clearing outstanding obligations.
Things to Watch
Lock-in penalties — Breaking your lock-in early typically costs 1.5% of the outstanding loan. On a $500K loan, that’s $7,500.
Clawback clauses — Some banks claw back legal fee subsidies if you refinance within 2–3 years of origination, even after the lock-in ends.
Progressive payments — For BTO or new-build purchases, your loan draws down in stages. You only pay interest on the amount drawn, not the full loan, during construction.
Mortgage vs Personal Loan for Property Costs
Some buyers consider personal loans for costs that fall outside the mortgage — renovation, stamp duty shortfalls, or legal fees. It’s worth understanding the differences:
- Mortgage loans are secured against the property, which means lower rates (2.5–3.5% p.a.) but the property is collateral. They cover the purchase price only.
- Personal loans from banks (3.5–9% p.a.) or licensed lenders (1–4% per month) are unsecured and can be used for any purpose, including renovation, stamp duty, or furnishing.
- Renovation loans from banks are a middle ground — lower rates than personal loans, specifically for renovation works, typically up to $30,000 or 6x monthly salary.
If you’re buying a new home and need funds for both the purchase and renovation, speak with our advisors about structuring the financing to minimise total interest cost. See our renovation loans guide for detailed renovation financing options, or compare personal loan rates for unsecured options. If you’re a foreigner buying property, our guide on foreigner personal loans covers the additional borrowing considerations for EP, S Pass, and Work Permit holders.
