DBS Home Loans

If you’re considering buying an executive condominium or private residential property, DBS offers both fixed and floating home loan rates for these properties.

DBS’ floating-rate vs SORA-pegged packages

DBS offers two types of floating rate mortgages — either FHR6 (DBS’ 6-month fixed deposit interest rate which is published on DBS’ website) or pegged to Singapore Overnight Rate Average (SORA).

DBS’ SORA-pegged packages are based on the SORA rate which is the volume-weighted average rate of borrowing transactions in the unsecured overnight interbank SGD cash market. As the name suggests, the 3-month SORA rate is updated every 3 months, validated and calculated by the Monetary Authority of Singapore (MAS), so your home loan package will update every 3 months as well. 

On top of the 3-month SORA rate, DBS also charges a mark-up, which is called a “spread”. These 2 components form the total interest rate, and is what determines your monthly payments.

Unlike the SORA-pegged packages, DBS’ FHR6 home loans are pegged to DBS’ 6-month average fixed deposit rate. Although both the SORA rate and DBS’ FHR6 rate are validated by MAS, the FHR6 rate isn’t as transparent as compared to the SORA rate as it’s still a type of board rate which is still entirely determined by DBS and there is a margin by which DBS can adjust the FHR6 rate.

For example, you and your partner plan to buy a private property (whether it’s a condominium or landed property) costing $1,750,000 while taking up a DBS housing loan (DBS FHR6 rate package with a cap of 2.0% p.a.) of $1,312,500 with a tenure of 24 years.

Assuming the total monthly income for the two of you is $20,000, the estimated math will be as follows with the help of MoneySmart’s Mortgage Calculator.

Your downpayment:

$350,000 by CPF + $87,500 in Cash = $437,500 

(at least 5% of the property price to be paid in cash which comprise of the option fee & option exercise fee, and 20% to be paid in CPF)

Your estimated monthly instalment:

It’ll range from $5,430 to $5,742

(based on prevailing interest rates of 1.5% to 2%)

Other one-time payments*:

$54,600 (buyer’s stamp duties) + $5,250 (legal fee) + $400 (valuation fee) = $60,250

Estimated total payment over 24 years:

$1,750,000 + $60,250 = $1,810,250

*Buyer’s stamp duties fee is usually about 3% to 4% of the purchase price of the private property - a form of tax payable to the government for registration of purchase of the property. Legal fees are often paid to property lawyers for the processing of the private property’s home loan. Banks will usually have their own panel of licensed valuers and the valuation fee for a private property can range from $200 to $400 due to the valuation report required.

If you’re financing an HDB flat, you can opt for either the HDB loan or a bank loan such as a DBS HDB housing loan. 

The most obvious difference is that bank interest rates are often much lower i.e. ranging from 1.00% p.a. to 1.40% p.a., compared to HDB loan’s 2.6% p.a.

However, a bank loan requires a much higher downpayment of 25% (of which at least 5% must be in cash) whereas the HDB loan requires only 10% (can be fully paid with CPF).

Here’s an example to help you understand better:

Assuming that you and your partner are keen on taking up a $500,000 SORA-pegged loan with a tenure of 25 years for a resale HDB flat.

The 3-month Compounded (3M) SORA rate is 0.1332% which is the same rate that all banks in Singapore follow for any SORA-pegged home loan packages.

On top of the 3-month SORA rate, DBS also charges a mark-up, which we call a “spread”. Those 2 components form the total interest rate, and is what determines your monthly payments.

Your downpayment:

$100,000 by CPF + $25,000 in Cash = $125,000 

(20% of the total loan among paid with your CPF and a minimum 5% of the total loan amount paid in cash)

Your interest to pay for the first month:

DBS’ spread = 0.80%

3-month Compounded SORA = 0.1332%

0.1332% (3M Compounded SORA) + 0.80% (bank’s spread) = approx. 0.94%

0.94% x $500,000 = $4,700

$4,700 ÷ 12 months = $392

(based on the 3-month Compounded SORA rate which will fluctuate over time)

Other one-time payments:

$1,000 + $4,000 (option fee + option exercise fee) = $5,000

(this $5,000 is considered a deposit which forms part of the downpayment paid in cash i.e. $25,000)

Total payment over 25 years:

$500,000 (principal amount) + $61,244 (in interest) = $561,244

*All above calculations are estimated using MoneySmart’s Mortgage Calculator.

Should you consider refinancing or repricing your home loan?

Does your existing home loan charge you more than 1.4% interest? If it is, you might want to consider refinancing or repricing your home loan as you’re most likely paying more than what you really need to.

There’s a difference between refinancing and repricing if you’re wondering. While refinancing means financing your current home with another bank instead of the current bank you’re with, repricing refers to switching to a new home loan package offered by the same bank that you’re currently financing your home with.Find out more about these rates and how you can go about refinancing your home loan at our DBS Home Loans Refinancing page.