Last Modified On 3 Aug, 2020
8 Benefits Of DBS Home Loan
DBS boasts of holding the titles of “World’s Best Bank” (and equivalent) concurrently by Euromoney, The Banker and Global Finance. More importantly, it has also won multiple accolades of “World’s Best Digital Bank” and being recognized widely for its push into digital solutions and frontiers in recent years. This bodes well as the bank is strongly positioned to take on challenges and disruptions brought about by fintechs and global tech giants muscling into financial services fields.
Besides being present in 18 markets globally including six priority markets in Asia – Singapore, Hong Kong, Indonesia, Taiwan, China and India, DBS also boasts of the largest network of branches in Singapore and the biggest pool of Sing dollar funds. This is apparent with the acquisition of the POSB franchise in 1998 for S$1.6b then. POSB (Post Office Savings Bank) was a household brand beloved by many generations of older Singaporeans as the first bank they opened their savings account with as a kid.
The fact that many Singaporeans credit their salary to a DBS/POSB bank account gives DBS a strategic edge in the marketing of its suite of retail products and services – which it does to great success! The DBS Multiplier Account (made famous now by the “rabbit” advertisements) is marketed strongly as a unique feature of DBS home loans. See details below.
And salary crediting allows DBS to access perhaps one of the biggest pool of some S$160b Sing dollar deposits. That gives it an unrivalled position amongst the three local banks to offer competitive longer term 3-year fixed rate home loans, if it so wishes. DBS also champions many product innovations – it pioneered the use of fixed deposit rates (called FHR) to price its mortgages, probably the first-of-its-kind in the world. And DBS promises FHR to be a more stable and reliable mortgage loan peg, less susceptible to extreme swings in interest rate cycles – as fixed deposit rates are known to stay low for long periods in Singapore.
Apart from Singapore residential properties financing, we also broker DBS’s property financing packages for:
- Commercial property under personal name
- Commercial property under company name
- Australia property financing (primarily for DBS Treasures or preferred customers)
- London property financing (primarily for DBS Treasures or preferred customers)
Before we go on, you may check all the latest rates from the market here:
DBS Home Loan Packages
(For Completed Residential Property)
DBS Home Loans Packages
(Rates may change from time to time, check latest home loan rates)
|Lock-in||2 years||2 years||3 years (convert aft 18m)|
|1.50 (Fixed)||1.50 (Fixed)|
|1.50 (Fixed)||1.50 (Fixed)|
|Year 6 (thereafter)||1.80|
>$300k-$2,000 (for hdb)
>$300k-$2,000 (for hdb)
>$300k-$2,000 (for hdb)
NOTE: There are “deviated rates” for DBS fixed rate home loans lower than what you see here but which we are unable to publish. Contact us for details or apply here.
Which local bank’s home loans is the best right now?
There is probably a case to be made for one to stay open to any bank’s offer, let alone local banks that most are familiar and comfortable with. That’s how one can benefit from the dynamics of a free market. Think airfares before budget airlines took off, or more recently, taxi fares before disruption by Uber/Grab.
In fact, looking beyond rates per se, staying open to all options becomes even more meaningful now. This is because mortgage loan features have become more and more differentiated from one bank to another. Some of these could be more beneficial than that few basis points difference in rates offered by different banks.
We like to present here the lesser known benefits of why one should consider applying for DBS home loans.
Why DBS Home Loans? 8 Benefits..
|Fast approval||DBS, being one of the most digitalized banks in Singapore, will not be second to others in terms of approval turnaround time. As long as all documents are complete. Approvals can be just as fast and instant.|
|Highest cash rebate||Similar to OCBC, DBS offers cash rebate and not legal subsidy for refinancing cases.|
This is important as one could effectively put “extra cash” in his pocket after refinancing is completed. This happens as one could opt to pay the legal fee of $1,800 net (special rate from our partner law firms) for refinancing of private properties from their CPF! Hence, keeping the entire cash rebate of $2,000 (or more) which will be credited into his DBS account later. In the case of legal subsidy, the law firm bills the bank and this option of paying via CPF will not be available.
What’s more, DBS is one of the most generous when it comes to cash rebate for private properties refinancing – loans above $1m gets $2,500 in total instead of the usual $2,000 from most other banks. This effectively covers the valuation fees as well and make DBS home loans a “zero-cost” option for those looking to refinance over $1m.
|Multiplier Account||DBS bundles home loans as one of the categories under its Multiplier Account mechanics where one needs to transact simply more than a total combined value of $5,000 in 3 categories (salary crediting + home loan instalment + monthly credit card spend) to earn a risk-free deposit interest rate of 2.20% p.a. on the first $50,000 in the account. This is much higher than sourcing for the highest fixed deposit rate in town, which requires one to commit the funds for a period of time like 12-month. In fact, it is possible to earn another 2.40% p.a. on the next $50,000 but it requires buying insurance products or doing investments with the bank, which is not a low-hanging fruit for most. So, we shall not discuss that here.|
As most Singaporeans already credit salary to a DBS account, taking a DBS home loan simply means one just need to shift spending from other banks to DBS credit cards to qualify for the 2.20% tier. In fact, with typical home loan instalments in the range of $3,000-5,000, a DBS home loan makes it a possibility now to hit the next tier ($15,000 transaction value) of deposit interests – to enjoy 2.30% p.a. (average).
The real icing on the cake is to get up to 3.50% p.a. with $30,000 transaction value per month. But to be honest, I doubt many of us could hit that. To give an example, that requires one to credit a salary of $12,000, plus spend $10,000 on DBS credit cards alone every month, and have one big home loan instalment of at least $8,000 (or 2 mortgages combined). Well, 2.20% p.a. is already superb in our view. It’s the next best to CPF Board’s 2.50% risk-free interest, but that you can’t withdraw.
DBS Multiplier Account does not allow for joint account under husband and wife. Please check the bank’s website for details.
|FHR mortgage peg||In 2014, DBS pioneered pegging of home loan rates to fixed deposit rates that the bank publishes on its website daily. This means that it is in the open and more transparent than traditional lending peg – internal BOARD rate for housing loans. No one knows and no broker can really track the historical movements of BOARD rates over time. The bank can choose to increase the BOARD rate for one segment of customers in its portfolio, but hold it for other segment.|
The other thing we like about FHR is how it is singular in nature. The bank may have different tranches of FHR like FHR24 (24-month fixed deposit tenure), FHR8 (8-month fixed deposit tenure), etc. but there is only one such rate for each FHR tranche. If DBS decides to hike FHR24 it will be applied across the board to both new and existing customers. This makes it transparent and here at MortgageWise, we do track each and every FHR tranche closely since 2014. See Resource.
FHR as a mortgage peg is indeed more stable and lags behind any movements in SIBOR. Due to this laggard effect and the generally smaller swings, we recommend it in periods when rates are going up.
DBS is the only local bank offering a fixed deposit rate home loan peg at the moment.
|Fixed rates||As we have explained earlier, DBS has a competitive advantage with its millions of DBS/POSB accounts when it comes to funding costs for Sing dollar lending.|
As such, the bank is able to consistently lead the market in offering the most competitive fixed rate home loans especially for 3-year or longer fixed term. This becomes important when interest cycles are turning up as one would love the comfort of knowing – there will always be competitively-priced fixed rates for repricing later on when the lock-in ends.
|Free conversion||Free conversion refers to repricing without being charged a conversion fee (typically $500 for local banks). |
Depending on the packages, DBS has been one of the more aggressive banks offering free conversions during lock-in periods, even for fixed rate home loans. This is likely due to again its low-cost funding base compared to the other banks. It markets the flexibility of such loans where homeowners can fix their monthly repayment yet retain the option to convert to any other prevailing DBS home loan package, usually after 12 months into a 2-year or 3-year lock-in period.
|Waiver due to sale||DBS also offers a complete 100% waiver of the typical penalty of 1.50% (of the loan redeemed), if redemption is due to a sale of property during the lock-in period. |
Again, this is a feature that is offered on selected pacakges.
|DBS Treasures||From time to time, we noticed DBS does offer slightly differentiated pricing for its preferred banking or DBS Treasures customers. However, these tend to be on floating rate home loans rather than fixed, where typically the bank will shave off 3 basis points (0.03%) off the prevailing rate.|
|Online acceptance||Being the most digitalized bank, it comes as no surprise DBS is the first mortgage bank to do away with the need for physical signing of the Loan Offer (LO). |
DBS bankers are able to send a link to applicants who can then login to scrutinize the loan offer terms from the comforts of their home, before putting their digital signatures on it for acceptance. A copy of the digitally-signed LO will then be sent to the applicant a week later.
Like to compare home loan packages across all 12 major banks in Singapore, speak to our experienced team here at MortgageWise.sg
Refinance home loan through us here and receive a $150 valuation fee offset! Or take a new purchase loan when you buy your next Singapore condo and enjoy a special all-taxes inclusive legal fee of $1,800 (for completed properties up to $3m). Not only do we show you the most updated and comprehensive Singapore home loan rates, our service is free! Check out our testimonials.
Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, seeking to build trust with clients over the longer term rather than product-peddling for quick one-time deals.