Private property or HDB flats?

In Singapore, buying private property is something that speaks of wealth. Real estate investments are quite important in this city-state, and owning several houses guarantees financial well-being, due to a few factors, such as the CPF interest rate, tolerance for interest rate spikes and availability. lower interest rates for the rich.

Private owners pay lower interest rates than HDB flat owners, even though HDB flats cost less. The rate difference ranges from 0.9% to 1.2%, which can be quite significant. The explanation is that, for private property, a bank loan is always the option, with rates ranging from 1.4% to 1.7%, while the HDB concessional loan is around 2.6%, since it is fixed at 0.1% above the CPF rate.

However, in the case of choosing a bank loan, you should consider your tolerance for interest rate spikes, since bank loan rates are variable, which means that they can easily go up or down, making them into a riskier option for the average Singaporean. They can’t afford to go too high. The advantage of the HDB concessional interest rate loan is that it is practically constant, which means that there is not a high risk that it will increase dangerously during the life of the loan. In other words, HDB apartment dwellers cannot afford private property, because they cannot afford the risk involved.

those who can repaying a bank loan has more to benefit from CPF (Central Provident Fund), too. If you buy a house and decide to make your house payments with CPF money, which is an acceptable option if you get a bank loan, your CPF money will likely grow at a much faster rate than the loan initially. , and as you pay off more of the loan, the monthly payments decrease, due to the fact that your mortgage loan gradually amortizes, while the CPF grows at 2.5% compound interest. If you use the HDB concessional loan in this case, the interest rate is 2.6%, that is, 0.1% above the current CPF rate.

HDB flats must remain public housing, a fact that has led to some measures, such as decoupling the prices of new flats from the prices of resale flats, which makes these flats a less important asset than the private property.

Therefore, when it comes to the ultimate advantage of private property in Singapore, buying private property is second to none as it is simply a means to enrich yourself and be a much better asset.