The comparison most people get wrong
HDB 2.6% or a bank loan?
A bank rate under 2.6% looks like free money. Answer three questions and see both loans side by side — including the part after the fixed rate ends.
This decision only goes one way. You can refinance from HDB to a bank. You can never go back. Everything below matters more because of that one line.
Everything that differs, in one table
| HDB loan | Bank loan | |
|---|---|---|
| Interest rate | 2.6%, pegged to CPF | Set by the bank, repriced every package |
| Rate certainty | Whole tenure | 2–3 years |
| Maximum loan | 75% | 75% |
| Minimum cash | None | 5% of price |
| Lock-in period | None | Usually 2–3 years |
| Repay early | Free | ~1.5% during lock-in |
| Legal & valuation | Not charged | $2,000–$3,000 |
| Effort after signing | None | Reshop every 2–3 years |
| Switch back later | — | Never |
When each one wins
You are over the $14,000 income ceiling, or have already used two HDB loans — then there is no choice.
Your remaining tenure is short, under about ten years, so less of the loan is exposed to a future repricing.
The loan is large and you will genuinely reshop every time a package expires.
Your cash buffer is thin and a rate jump would hurt. Run your loan at 4% — if that number strains you, certainty is worth more than a fractional saving.
You plan irregular lump-sum repayments and do not want penalties.
You know you will not chase a new package every two years. Most people do not, and end up on the reversion rate — the exact outcome the comparison assumed away.
The three-year illusion
On a $400,000 loan over 25 years, a bank at 2.4% saves about $40 a month — roughly $1,450 across the fixed period, before legal and valuation costs. Then the package expires. At 3.2% the payment jumps about $145 a month and those three years of saving are wiped out in a little over a year. At 2.1% you stay ahead.
Nobody can tell you which happens. What you can decide is how much a wrong guess would hurt.
Common questions
Can I switch from a bank loan back to HDB?
No. The move is permanent, which is why the decision should not turn on a rate guaranteed for only three years.
What does refinancing to a bank cost?
Legal and valuation fees, typically $2,000 to $3,000. Many packages subsidise most of it, usually with a clawback if you leave within three years.
Do banks assess my income the same way?
Similar ratios, higher stress rate. Banks size residential loans against a 4% floor against HDB's 3%, so the same income supports a smaller bank loan.
If market rates fall, does my HDB loan get cheaper?
Only if the CPF Ordinary Account rate falls. The peg cuts both ways — it is also why the rate did not spike when market rates did.
I am buying now. Which should I start with?
If you qualify for an HDB loan, taking it keeps the option to refinance later. Starting with a bank loan closes the HDB door permanently.