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Old 26-03-2019, 04:52 PM   #1124
BBCWatcher
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Join Date: Jun 2010
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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?
Are you asking whether it makes financial sense to use Ordinary Account dollars to make mortgage payments at standard pace or at accelerated pace? Those are two very different questions.

Let me answer the second question right now since it's easier. Obviously you shouldn't take dollars that are earning 2.5% interest to pay off a mortgage with an interest rate that's less than 2.5% any faster -- even one dollar per month faster -- than necessary. That's just burning free money (the difference between what your OA dollars are earning and the loan interest rate), and that's not smart. Enjoy that free money as long as it's given to you. (Why do so many people actually do this?)

This particular decision is more interesting if/when the mortgage interest rate crosses 2.5%. Ordinary Account dollars could be doing better than 2.5% through either OA to SA transfers or prudent, long-term CPF Investment Scheme choices.
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