By MoneyBees
Banks in Singapore may not grant interest-only loans to buy a home: MAS has banned them since 14 Sep 2009. Bridging loans are the exception. Compare paying interest only with an amortising loan over the same months to see the cost, what you still owe and the jump when interest-only ends.
A bridging loan runs up to 6 months.
For the amortising comparison.
Not for a home purchase. MAS Notice 632 says a bank must not grant an interest-only loan to buy residential property. These figures are for a bridging loan or for comparing structures, not a home loan offer.
Interest only, a month
$1,500
3.6% on $500,000
Amortising, a month
$2,530
over 25 years
After interest only ends
$2,562
to finish in 25 years
Over 6 months, interest only costs $9,000 and you still owe the full $500,000. Amortising costs $8,953 in interest over the same months and pays off $6,227 of the loan.
Interest only frees $1,030 a month now. But the loan has fewer years left to clear, so the instalment afterwards is $32 a month higher than if you had amortised from the start.
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| Interest only | Amortising | |
|---|---|---|
| Monthly payment | $1,500 | $2,530 |
| Interest paid | $9,000 | $8,953 |
| Loan repaid | $0 | $6,227 |
| Still owed | $500,000 | $493,773 |
Same rate throughout. Interest is worked month by month on the balance.
Take S$500,000 at 3.6%. Interest only, you pay S$1,500 a month, S$9,000 over 6 months, and owe S$500,000 at the end. The same loan amortising over 25 years costs S$2,530 a month.
Stretch interest only to 5 years and the loan then has 20 years to clear: about S$2,926 a month, S$396 more than amortising from day one. That jump is why MAS banned these loans for home purchases.
Figures checked 3 Oct 2026.
No, not to buy a home. MAS Notice 632 says a bank must not grant credit to buy residential property where only interest is payable for a period. MAS disallowed these loans from 14 Sep 2009.
MAS said in 2009 that interest-only loans and interest absorption schemes remove or lower a buyer's instalments in the first few years. It disallowed both to keep the property market stable and sustainable.
A bridging loan is exempt from the ban. DBS's terms have bridging loan interest paid monthly in cash, with the loan repaid in full at the end of its term or from your sale proceeds, whichever comes first. DBS lends up to 20% of the price for up to 6 months.
Multiply the loan by the yearly rate and divide by 12. S$500,000 at 3.6% is S$1,500 a month, and the S$500,000 is still owed at the end.
You start repaying the loan with fewer years left, so the instalment jumps. On S$500,000 at 3.6%, five years of interest only on a 25-year term pushes the later instalment to about S$2,926, against S$2,530 amortising from the start.
Paragraph 3 of MAS Notice 632 is about credit to buy residential property. For other loans, the bank's own terms apply, so ask the bank.
MAS caps housing loans at 30 years for HDB flats and 35 years for other property.
These calculators provide general estimates for educational purposes only and are not personalised financial advice. Results may rely on rates and rules that change over time, so verify against official sources (IRAS, CPF Board, HDB, MAS) or consult a licensed financial adviser before making decisions.
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