How does HDB loan work?

[iamsinkaporean]

My knowledge is that they will empty mine and my gf's ordinary cpf account first, then give the remaining amount as loan. Is it correct?

Another question is, is it better to take a 20 years loan over 30 years? Essentially you are pay lesser interest if finish paying the loan, but what if you are selling it 5 yrs later? You are actually paying more money?

Assuming a $300,000 loan....

Total $ paid for 20yr loan after 5 years -> $96261.6, Interest paid -> $35,699.51*

Total $ paid for 30yr loan after 5 years -> $72061.2, Interest paid -> $37,369.11*


Which loan period is a better choice? Any expert can help?

 

[goliath2011]

it's better to pay off the loan asap so the 20 years one will be good. However, with the current poor economy, the 30 years one is great lest you encounter any financial difficulties in the future

 

[final1]

u pay 20 years obviously the monthly instalment will be higher than if u pay 30 years.

So, the most important is can u afford to pay 20 years time frame based on your monthly salaries and monthly CPF contributions? If cannot, then you have no choice but to take 30 years.

 

[GenuineSeller]

My knowledge is that they will empty mine and my gf's ordinary cpf account first, then give the remaining amount as loan. Is it correct?

Another question is, is it better to take a 20 years loan over 30 years? Essentially you are pay lesser interest if finish paying the loan, but what if you are selling it 5 yrs later? You are actually paying more money?

Assuming a $300,000 loan....

Total $ paid for 20yr loan after 5 years -> $96261.6, Interest paid -> $35,699.51*

Total $ paid for 30yr loan after 5 years -> $72061.2, Interest paid -> $37,369.11*


Which loan period is a better choice? Any expert can help?

Assuming you bought within your means, take the max no of years!! If you JUST based on interest payable, your calculation will not be "correct" as you didn't take into consideration the money in your CPF after 5 yrs!!

 

[okichin]

if you can take 20 yrs.. the diff in interest is huge

 

[GenuineSeller]

if you can take 20 yrs.. the diff in interest is huge

Come on guys please .... Don't just calculate the interest payable without taking into consideration the interest that you earn in your cpf account!!

 

[okichin]

Come on guys please .... Don't just calculate the interest payable without taking into consideration the interest that you earn in your cpf account!!

how much is CPF interest arh? din take that into considerations

 

[HunterXtreme]

Come on guys please .... Don't just calculate the interest payable without taking into consideration the interest that you earn in your cpf account!!

I don't want to sound rude, but the interest on an outstanding loan of say $300,000 is definitely not comparable to the CPF interest of whatever small amount of money you have left in your CPF OA....

 

[goenitz33]

Sorry if you are using your CPF to pay for it.

just take maximum loan period.

you cant see it anyway until the day you die probably.

Also nowadays ppl dont stay in the same house for 20-30 years anyway.

things will change and it will always be best to have more $$ in yr CPF account / on you then for it to be stuck in your property.

 

[GenuineSeller]

how much is CPF interest arh? din take that into considerations

3.5% for the 1st $20K, thereafter 2.5%. HDB loan @2.6%

Even at 2.5%, you will just be paying $10 for every $10,000 outstanding loan. (CPF $10K vs HDB loan $10K).

Cash flow in OA is good for opportunity fund, retrenchment etc... paying more every month, one will have much lesser $$ in OA.

 

[zuoom]

Assuming the cpf interest dun change.

 

[GenuineSeller]

I don't want to sound rude, but the interest on an outstanding loan of say $300,000 is definitely not comparable to the CPF interest of whatever small amount of money you have left in your CPF OA....

Dont worry you are not rude. However, one should look at the difference/savings if one were to take 20yrs vs 30yrs.

Assuming a $300,000 loan....(note that I stressed one have to buy with one's means)
Total $ paid for 20yr loan after 5 years -> $96261.6, Interest paid -> $35,699.51*

Total $ paid for 30yr loan after 5 years -> $72061.2, Interest paid -> $37,369.11*


It may seem that for 30yrs loan, one has to pay more interest, but in this calculation, what was not shown is the amount of money in his CPF OA, comparing 20yrs loan scenario with the 30yrs. Also not shown was the interest (3.5%/2.5%) one would earn in their CPF over the different period.

Taking 30yrs, one will have MORE $$ in CPF OA, since month 1, and accumulatively over the 5yrs together with the 3.5%/2.5% interest, one will build up $$ that could be use for various things (Retrenchment, investing during crisis etc).

After 20yrs has passed, even if one has taken the 30yrs loan, one could choose to fully pay for the flat as his CPF OA would have quite a substantial amount!! So why the hurry to decide to pay for 20yrs now? Paying interest is inevitable... the question is, whether scenario A is better than scenario B for the SAME person or YOU!

I have taken 30yrs loan myself, 10yrs ago. Till today, I am still having the Mortgage loan. In fact I have re-financed it to pay for 0.99% interest whilst my fund in OA is earning much more (3.5%/2.5%). I have benefitted through what I have said above (have $$ in OA and purchased private property). Today I have the option, depending on the situation (mortgage interest rate) to fully pay for my flat in 3yrs time, 10yrs or 20yrs time using ONLY my CPF!!.

Just by looking at Monthly Instalment X number of months and think that you are paying for a lot of INTEREST, without comparing other options, to me is not a wise move!

 

[GenuineSeller]

Assuming the cpf interest dun change.

HDB loan interest will always be 0.1% higher than OA.

Even if the "law" changes, with more $$ in OA over the years accumulation, one could choose to pay off lump sum when their difference gets too huge. There is no hurry now!!

 

[hj_dragon]

Think the longer payment more worth as in case of death the remaining amount need not be pay. "touch wood"
If you can afford to pay off the lump sum after 20 years, the interest will be the almost the same

 

[GenuineSeller]

Final advice... Work out one excel file based on your own cpf contribution, based on various loan tenures, cpf oa, monthly installments etc.... And see what are the differences....

 

[henrylbh]

Assuming you have $300k to pay in full but you decided to take a HDB loan, the interest cost to you is -

additional $3,023 for 20 years loan.
additional $4,535 for 30 years loan.

assuming the interest rate remains at 0.1% pa over the cpf rate of 2.5%.

 

[chrisss]

Dont worry you are not rude. However, one should look at the difference/savings if one were to take 20yrs vs 30yrs.

Assuming a $300,000 loan....(note that I stressed one have to buy with one's means)
Total $ paid for 20yr loan after 5 years -> $96261.6, Interest paid -> $35,699.51*

Total $ paid for 30yr loan after 5 years -> $72061.2, Interest paid -> $37,369.11*


It may seem that for 30yrs loan, one has to pay more interest, but in this calculation, what was not shown is the amount of money in his CPF OA, comparing 20yrs loan scenario with the 30yrs. Also not shown was the interest (3.5%/2.5%) one would earn in their CPF over the different period.

Taking 30yrs, one will have MORE $$ in CPF OA, since month 1, and accumulatively over the 5yrs together with the 3.5%/2.5% interest, one will build up $$ that could be use for various things (Retrenchment, investing during crisis etc).

After 20yrs has passed, even if one has taken the 30yrs loan, one could choose to fully pay for the flat as his CPF OA would have quite a substantial amount!! So why the hurry to decide to pay for 20yrs now? Paying interest is inevitable... the question is, whether scenario A is better than scenario B for the SAME person or YOU!

I have taken 30yrs loan myself, 10yrs ago. Till today, I am still having the Mortgage loan. In fact I have re-financed it to pay for 0.99% interest whilst my fund in OA is earning much more (3.5%/2.5%). I have benefitted through what I have said above (have $$ in OA and purchased private property). Today I have the option, depending on the situation (mortgage interest rate) to fully pay for my flat in 3yrs time, 10yrs or 20yrs time using ONLY my CPF!!.

Just by looking at Monthly Instalment X number of months and think that you are paying for a lot of INTEREST, without comparing other options, to me is not a wise move!

sorry. but can you advise me which bank offers re-financing for hdb?
their interest is low now, but I cant find any bank to deals with hdb.

 

[nerdyfrog]

DBS, UOB, HSBC, OCBC, Maybank..... all do.

Just leave Hong Leong out.

 

[GenuineSeller]

sorry. but can you advise me which bank offers re-financing for hdb?
their interest is low now, but I cant find any bank to deals with hdb.

PMed you......

 

[GenuineSeller]

DBS, UOB, HSBC, OCBC, Maybank..... all do.

Just leave Hong Leong out.

Most mentioned, if not all, will require one to pay some substantial legal fee... Not so worth....