Optimal Loan Tenure to Minimize Total Interest: Bank Rate Comparison Guide

The optimal loan tenure to minimize total interest is typically 20-25 years for Singapore HDB buyers, balancing lower monthly payments with significantly reduced lifetime costs compared to 30-year terms. Shorter tenures like 20 years can save tens of thousands in interest, but require higher monthly repayments—use Homejourney's mortgage calculator to test scenarios.

This cluster article dives into loan term strategy for Singapore property buyers, linking back to our pillar guide on Optimal Loan Tenure: Minimize Interest Costs | Homejourney Guide. At Homejourney, we prioritize your safety and trust by verifying real-time bank rates from partners like DBS, OCBC, and UOB, helping you make confident decisions.

Why Loan Tenure Matters: Shorter vs Longer Tenure Breakdown

Shorter vs longer tenure is a core loan term strategy debate. A shorter tenure reduces total interest cost because interest accrues over less time, but monthly payments rise. For example, on a S$500,000 HDB loan at 3% interest:

30-year tenure: Monthly ~S$2,108, total interest ~S$258,880
25-year tenure: Monthly ~S$2,368, total interest ~S$211,040 (save ~S$47,840)
20-year tenure: Monthly ~S$2,775, total interest ~S$166,000 (save ~S$92,880)

Bank loans allow up to 30 years for HDB flats, versus HDB's 25-year cap[1][2][3]. Longer tenures ease cash flow for first-time buyers but inflate costs—aim for the shortest affordable tenure to minimize interest.

Current Bank Rates Comparison (2026)

Compare rates from Homejourney partners. Rates pegged to 3M Compounded SORA (~2.8% as of Jan 2026) plus spreads. Use Homejourney bank-rates for live updates.

Bank	Year 1-2 Rate	Year 3+ Rate	Lock-in	Min Loan
DBS	SORA + 0.60%	SORA + 0.90%	2 years	S$200k
OCBC	SORA + 0.65%	SORA + 0.95%	2 years	S$250k
UOB	SORA + 0.70%	SORA + 1.00%	2 years	S$250k[3]
HSBC	Fixed 1.55%	SORA + 0.85%	3 years	S$500k
Standard Chartered	SORA + 0.55%	SORA + 0.90%	2 years	S$400k

Maybank, CIMB, RHB, Public Bank, Hong Leong, and Citibank offer similar packages—compare all on Homejourney. HDB loans at 2.6% fixed provide stability but cap at 25 years[1].

The chart below shows recent interest rate trends in Singapore:

As seen, SORA rates are at 3-year lows, favoring shorter tenures now[5].

Actionable Steps: Choose Optimal Loan Tenure

Calculate Affordability: Use Homejourney's eligibility calculator with your income (e.g., S$10k household) and property price (e.g., S$600k Tampines resale HDB).
Test Tenures: Model 20/25/30 years—target tenure where payments <30% income.
Compare Banks: On Homejourney bank-rates, view DBS vs UOB for your tenure.
Apply Multi-Bank: Submit once via Singpass—get offers from all partners, no paperwork hassle.
Refinance Smartly: After lock-in (2-3 years), shorten tenure if rates drop. See How to Pay Off Mortgage Faster: Bank Rate Guide | Homejourney.

Insider tip: For BTO in Punggol, pair 25-year tenure with DBS for low Year 1 rates, saving S$20k+ vs 30 years.

Pros & Cons: Shorter vs Longer Tenure

	Shorter (20-25 yrs)	Longer (30 yrs)
Total Interest	Lower (minimize cost)	Higher by 40-50%
Monthly Payment	Higher (e.g., +S$600)	Lower cash flow
Best For	Stable income families	First-timers, investors

Disclaimer: Rates fluctuate; consult Homejourney mortgage brokers. Not financial advice—verify eligibility via HDB Flat Eligibility (HFE) letter.

Homejourney: Your Safe Path to Savings

Homejourney verifies rates in real-time, integrates Singpass for secure applications, and lets banks compete for you. Track SORA, calculate eligibility, and search budgeted properties on Homejourney property search. Post-purchase, maintain value with aircon services.