- Enjoy interest rates lower than or capped at 2.5% p.a. for 10 years
- Guaranteed lower interest rates compared to HDB concessionary loan
- No prepayment fee
Specifically, the loan pricing can be illustrated by the table below.
| Loan Tenor | POSB HDB Loan |
| First 10 years | 3M SIBOR + 1.38% |
| (capped at CPF OA rate) | |
| 11th year onwards | 3M SIBOR + 1.48% |
At the time of the launch, the 3M SIBOR was 0.38%. Assuming no change to the 3M SIBOR for 10 years, the POSB HDB Loan mortage rate will be 1.76% p.a. In contrast, HDB Singapore offers a fixed rate concessionary loan at 2.6% p.a.
My analysis:-
Pros
- Mortgage loan interest savings within the first 10 years
- May appeal to HDB dwellers who plan to upgrade after meeting the Minimum Occupation Period
- May appeal to existing HDB dwellers with 10 years or less HDB concessionary loan
Cons
- Possible higher mortgage loan interest rate from the 11th year onwards
- No going back to HDB concessionary loan
- No financial assistance from HDB in event of borrower difficulty in loan repayment
My view:-
Given the current low interest rate environment and escalating HDB housing prices, it may be worth taking a shot at the POSB HDB Loan. However, loan takers / switchers should strive to clear the loan within the first 10 years.
