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Old 26-03-2019, 12:18 PM   #1123
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Join Date: Oct 2009
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No, that's not correct. Bonus interest is awarded on the first $60,000 of combined CPF balances (OA+SA+MA+RA), but you must have at least $40,000 in SA+MA+RA to earn all the bonus interest. (Starting from age 55 there's another percentage point of bonus interest that applies to the first $30,000 of combined balances.) Bonus interest is paid into your SA (and then into your RA from age 55).

In short, your Ordinary Account really doesn't earn any bonus interest as such. You can have a zero OA balance and still earn maximum bonus interest. That's very common, actually. At most only the first $20K of OA could help you qualify for maximum bonus interest, and that's only if your MA+SA+RA is less than $60,000.

I actually like the HDB loan offer at present (for those who qualify). Yes, I know the U.S. Federal Reserve has allegedly paused its interest rate hikes for 2019, but this is a 25+ year mortgage we're talking about. That 2.6% rate is technically adjustable but is very well anchored since we're still well within floor rate buffers; bank rates would have to sail way past and well above 2.6% before the HDB loan rate would even flirt with an increase. And it's possible to flip from an HDB loan to a bank loan at some point in the future via refinancing, but not the reverse. You're also allowed to accept a higher LTV ratio with a HDB loan, although I don't recommend you do that in order to buy a bigger, more expensive unit than you should.
I see!

In that case, is it advisable to use any balance from OA (assuming less the 20k to make up for 60k from MA + SA + RA), to pay for housing loans?

I remembered you mentioned that one should still continue funding their investment portfolio with cash instead of using it all to pay off housing loans since the end goal of the annualised return is supposed to surpass the 2.6% that CPF offers.

And yes one reason that HDB loan is also a tad more attractive as they are more 'forgiving' on delayed repayments
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