COMPLETE GUIDE · 2026
Property financing Singapore — the 2026 guide.
HDB loans vs bank loans. SORA vs fixed. LTV limits for Citizens vs PRs vs foreigners. When to refinance. What equity release actually means. All of it, plainly.
Singapore property financing — the landscape
Singapore's property financing market is heavily regulated by MAS through LTV limits, TDSR caps, and ABSD (Additional Buyer's Stamp Duty) rates. The regulations exist to prevent over-leveraging — which means understanding them is essential before making any property financing decision.
This guide covers the main products, the key regulations you need to understand, and the situations where each product makes most sense. It's written by a practitioner who compares these products across 12+ banks daily — not a content team summarising public information.
HDB concessionary loan vs bank loan — an honest comparison
First-time HDB buyers in Singapore can choose between the HDB concessionary loan (from HDB directly) or a bank loan. The decision is permanent for that property — you cannot switch back from bank to HDB loan.
| Feature | HDB Loan | Bank Loan |
|---|---|---|
| Interest rate | 2.6% p.a. (pegged to CPF OA rate + 0.1%) | 2.8–4.5% p.a. (SORA or fixed) |
| Maximum LTV | 80% | 75% |
| Down payment | 20% (can use CPF) | 25% (5% must be cash) |
| Eligibility | Singapore Citizens only; income ceiling applies | Citizens and PRs; no income ceiling |
| Flexibility | Fixed — no repricing | Can refinance when lock-in expires |
| Best for | Stability and simplicity | Lower total interest if rates stay competitive |
SORA — what it is and how it actually affects your mortgage
SORA (Singapore Overnight Rate Average) replaced SIBOR as the benchmark interest rate for Singapore mortgages. Published by MAS daily, it reflects the rate at which Singapore banks lend to each other overnight.
In practice: Your mortgage is priced as “3-month compounded SORA + spread.” When SORA rises, your repayment rises. When it falls, your repayment falls. The spread (typically 0.8–1.2%) stays fixed.
SORA-pegged mortgages have been lower than fixed rates in some periods and higher in others. There is no universally correct answer — the right choice depends on your specific financial situation, your view of where rates are heading, and how much rate uncertainty you can absorb. We advise on this specifically for your situation.
Equity release — using property value as business capital
Equity release (cash-out refinancing) is one of the most powerful but underutilised tools available to Singapore business owners who own property. If your property has appreciated significantly or your mortgage is significantly paid down, you may be sitting on substantial equity that can be deployed as business capital.
Why business owners do this: Property-backed borrowing (3–4% p.a.) is significantly cheaper than unsecured business loans (6–14% p.a.). For a $500K capital need, the difference in annual interest cost can be $15,000–$50,000.
Case study
A Bukit Timah homeowner with a $1.8M property and $600K outstanding mortgage released $570K in equity (at 65% LTV) to fund the expansion of their retail chain into three new outlets. The property loan rate was 3.5% — compared to 6.5% for the business loan they had originally been considering. Annual interest saving: ~$17,000.
Property financing questions
What is the maximum loan amount for a Singapore property?
It depends on LTV (loan-to-value) limits set by MAS. For a first residential property with a Singapore bank loan: up to 75% LTV (meaning you need a 25% down payment). For a second residential property: 45% LTV. Commercial property: up to 80% in some cases. LTV limits also depend on your citizenship status, age, and remaining loan tenure.
Should I choose SORA or a fixed rate mortgage?
SORA-pegged mortgages move with market interest rates — they're typically lower when rates fall but rise when rates increase. Fixed rates are locked for a period (usually 1–3 years), offering certainty regardless of market direction. There is no universally correct answer. We assess your specific situation: how long you plan to hold the property, your income stability, your view on interest rate direction, and the actual rate differential at the moment you're deciding.
What is TDSR and how does it affect property financing?
TDSR (Total Debt Servicing Ratio) is a MAS regulation that limits your total monthly debt repayments to 55% of your gross monthly income. This includes mortgage repayments, car loans, credit card minimums, and any other debt obligations. Exceeding 55% TDSR means the bank cannot approve your loan regardless of your creditworthiness. We calculate this before recommending any property financing product.
When does it make sense to refinance my mortgage?
Refinancing typically makes sense when: (1) your lock-in period has expired or is about to, (2) there's a meaningful rate gap (typically 0.3% or more annually), and (3) your loan amount is large enough for the savings to outweigh legal fees and hassle. For a $1M loan, a 0.3% rate saving = $3,000/year. Legal fees for refinancing are typically $1,500–$3,000, often subsidised by the new bank. We run the exact calculation for your situation.
What is equity release and when should I consider it?
Equity release (cash-out refinancing) lets you borrow against the value of your property above your outstanding mortgage. If your property is worth $1.5M and you owe $600K, you may be able to release $375K in equity (at 65% LTV). Common uses include business expansion capital, investment, education, or major renovations. Property-backed borrowing is typically cheaper (3–4% p.a.) than unsecured business loans (6–14% p.a.) — making it worth serious consideration for business owners.
Last updated: April 2026 · Written by FundWise Broker, FundWise
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