So I have an ongoing HDB loan for my pigeon hole 4 room flat that I bought 5 years ago, and like most others I wiped out my CPF and now have accrued interest in my OA
Say I have $50k spare cash on hand and I would like to either early repay some portion of my HDB loan to save on some interest, or put that money back into OA. I know I have the option to invest that $50k somewhere but I was wondering which of the above two would be the smarter option leh? TIA!
Generally speaking, I don't think the CPF Ordinary Account's 2.5% interest rate (and with a significant liquidity restriction) is
attractive enough if you have "spare cash" you're looking to invest. I think a prudent, responsible, long term-oriented investor can and is highly likely to do better -- and with no liquidity constraint. There are also other ways to inject cash into CPF that ought to be considered ahead of OA repayment since OA repayment is the lowest yielding CPF option.
what is your HDB loan interest rate?
I am facing the same dilemma too. My CPF got accrued interest. I am thinking should I pay off the "debt" i owe CPF or invest it
Paying off home loan is definitely not on my list cos the bank rate is already so low. doesnt make sense to clear it. Mine is a private property
I consider 2.6% HDB loans, and of course <2.6% bank loans, to be cheap dollars -- not loans to accelerate repayment on -- provided you're a prudent, responsible, long term-oriented investor.
I should have mentioned that I took up HDB loan for the flexibility to repay early without penalty. Also starting to think if I should refinance to bank loan..
Many bank loans allow partial and full accelerated repayment, at least under reasonable conditions. "Shop around." But if you're locking in a low interest rate for, say, 5 years it probably doesn't matter whether you can accelerate repayment within that 5 year period. Why repay cheap dollars any faster than required? (Exception: You sell the home, but that's typically allowed without a penalty.)
Other things being equal I prefer SORA-linked loans, not loans linked to interest rates that the lender solely controls. For hopefully obvious reasons.
