Paying down HDB loan using CPF?

[mummy1234]

So you're planning to die early? Which method of suicide are you planning?

By the way, a CPF member can die any time on or before her 70th birthday, and, assuming the member takes no action to start CPF LIFE payouts, the full RA balance (with accrued interest) ends up in the hands of the member's nominated heir(s). Does that mean you're planning your suicide(s) on your 70th birthdays? That's one heck of a birthday party!

Of course not but I have a strong family history of all sorts of cancers on both sides of the family so I am at higher risk of getting a cancer as I age. Though I have a lot of CI coverage and go for yearly health screening, it is still something that may happen to me.

 

[mummy1234]

See point 3.

https://www.areyouready.sg/YourInfo...ngs-you-need-to-know-about-CPF-LIFE-CPFB.aspx

Thanks for the link. Didn't know about the premium to the fund before.

 

[mummy1234]

Is it a good idea to pay down HDB loan with CPF whenever a lump sum is accumulated? Assuming i just keep 20k in OA given it's higher interest rate.

Any downside to this idea?

I think best to pay property loan with cash as much as possible cause if u use cpf, u will owe cpf accrued interest which is really silly. Leave yr money in cpf to earn more interest and as emergency standby only to pay yr mortgage. IMHO only.

We paid our prev terrace in cash so did not have to pay cpf accrued interest when we sold it earlier this year. Accrued interest is what cpf is supposed to earn for us, don't see why we have to pay it.

And money in cpf is protected from creditors right? That is why I will choose to keep it in cpf for their min 2.5% compound interest.

 

[BBCWatcher]

I think best to pay property loan with cash as much as possible cause if u use cpf, u will owe cpf accrued interest which is really silly. Leave yr money in cpf to earn more interest and as emergency standby only to pay yr mortgage. IMHO only.

You only owe accrued interest to yourself.

I think there is strong merit in servicing a low cost mortgage, at standard pace (as long as the mortgage remains low cost), using OA funds provided your SA has reached the Full Retirement Sum and provided you save/prudently invest the cashflow that would otherwise service the mortgage. That particular combination can make a great deal of sense.

Of course not but I have a strong family history of all sorts of cancers on both sides of the family so I am at higher risk of getting a cancer as I age. Though I have a lot of CI coverage and go for yearly health screening, it is still something that may happen to me.

“Cancer” isn’t a death sentence, and medical science continues to advance rapidly.

However, if in the future you have high confidence you’ll depart this earthly plane substantially before median life expectancy at age 65, then (if you can afford it) you would be wise simply to do nothing with your Retirement Account. Later, if you’re still alive at age 70 (latest allowed CPF LIFE payout start date), still have high confidence you’ll perish soon, and still can afford it, choose the CPF LIFE Basic Plan at the lowest payout level you’re permitted (Basic Retirement Sum plus any voluntary top-ups).

 

[dork32]

You only owe accrued interest to yourself.

for once i agree with you.

the accrued interest does not just disappear, like bank interest that is gone forever.

it is put into your oa.

you can use your oa for your next property, play shares or withdraw it when you are 55

 

[dork32]

“Cancer” isn’t a death sentence, and medical science continues to advance rapidly.

you think your knowledge of cancer and medical science can beat a doctor?

 

[BBCWatcher]

you think your knowledge of cancer and medical science can beat a doctor?

What’s my profession?

 

[chopra]

Do you share this excel? Where can I download?

bookmark this thread first.
let me create something for u guys.

 

[dork32]

What’s my profession?

does not matter your profession is. what is the profession of the person you were talking to?

 

[Leaper_SG]

bookmark this thread first.
let me create something for u guys.

You are kind, thanks for spending time and sharing knowledge.

 

[ceciltan]

I finish paying my HDB loan in under 4 years. The peace of mind of being debt free is very good. I got no other loan.

But to each his own, there will always be someone who think stretching the loan as Long as possible is better.

End of the day, just do what you like and be happy with it.

 

[quailmaster]

I finish paying my HDB loan in under 4 years. The peace of mind of being debt free is very good. I got no other loan.

But to each his own, there will always be someone who think stretching the loan as Long as possible is better.

End of the day, just do what you like and be happy with it.

Paying off your property loan can open up cerain opportunities such as buying another property forinvestment

 

[endlssorrow]

I don’t see a problem
U use cpf pay, even interests incurred all is still your money
Don’t know why so many people kpkb

When u sell away that HDB the whole money still your lor

 

[havetheveryfun]

I don’t see a problem
U use cpf pay, even interests incurred all is still your money
Don’t know why so many people kpkb

When u sell away that HDB the whole money still your lor

cause they thought they can game the system, they want to get the $ out from CPF as hard cold cash

 

[dork32]

I finish paying my HDB loan in under 4 years. The peace of mind of being debt free is very good. I got no other loan.

But to each his own, there will always be someone who think stretching the loan as Long as possible is better.

End of the day, just do what you like and be happy with it.

i owe 500k in my bank home loan. i have 300k cash and 200k cpf oa. my bank loan is 1.9%. My cash is earning 2.3% and cpf oa is earning 2.5%. the peace of mind of using the bank's money to earn interest is very good.

but to each his own. there will always be people who think that being debt free is better.

end of the day, just do what you like and be happy with it.

 

[dork32]

Paying off your property loan can open up cerain opportunities such as buying another property forinvestment

if i pay off my property loan, i will have very little cash left for downpayment another property for investment.
now i have 500k of cash and cpf to do the down payment.

 

[WC32890]

if i pay off my property loan, i will have very little cash left for downpayment another property for investment.
now i have 500k of cash and cpf to do the down payment.

That is a dangerous game. You have to factor in the increasing interest rates. Plus i don't know how old you are. The older you are the higher risk you have of losing your job. Imagine what would happen if you took out a loan to buy a second property without paying off the first loan and interest rates went up to 4% and you lose your job. You will lose everything overnight

 

[Prof. Utonium]

i owe 500k in my bank home loan. i have 300k cash and 200k cpf oa. my bank loan is 1.9%. My cash is earning 2.3% and cpf oa is earning 2.5%. the peace of mind of using the bank's money to earn interest is very good.

but to each his own. there will always be people who think that being debt free is better.

end of the day, just do what you like and be happy with it.

1.9% for how long?


$500k bank loan, I would be having sleepless night.

 

[BBCWatcher]

1.9% for how long?

As long as it's 1.9%. Who knows?

$500k bank loan, I would be having sleepless night.

Why? Dork32 can pay off the whole mortgage tomorrow if he/she wishes, and all $500K is earning a higher interest rate than 1.9%. Presumably Dork32 continues to accumulate wealth beyond that $500K. It would be utter financial malpractice to accelerate repayment of this mortgage in these circumstances, assuming the facts are as represented.

This is a fantastic arrangement, and it's prudent (and very safe) to enjoy it while it lasts for as long as it lasts.

On edit: How do banks classically make their money? They accept deposits at interest rate X%, and they lend at interest rate X+Y%. That's a great business. In this case, Dork32 is profiting from the interest rate spread he's experiencing, just like a bank. He has a $500K loan running along right now at 1.9%, and he has another $500K in cash and cash equivalents earning 2.3%+. He pockets the difference, every month. He gets wealthier, every month, for as long as this interest rate spread lasts.

When this party stops, no problem! He can pay off the mortgage. Fully, immediately, in one go.

Low cost, sustainable, well (or even fully) defended debt is absolutely gorgeous stuff, as long as you can enjoy it. Please enjoy it if you're so fortunate.

 

[dork32]

As long as it's 1.9%. Who knows?


Why? Dork32 can pay off the whole mortgage tomorrow if he/she wishes, and all $500K is earning a higher interest rate than 1.9%. Presumably Dork32 continues to accumulate wealth beyond that $500K. It would be utter financial malpractice to accelerate repayment of this mortgage in these circumstances, assuming the facts are as represented.

This is a fantastic arrangement, and it's prudent (and very safe) to enjoy it while it lasts for as long as it lasts.

On edit: How do banks classically make their money? They accept deposits at interest rate X%, and they lend at interest rate X+Y%. That's a great business. In this case, Dork32 is profiting from the interest rate spread he's experiencing, just like a bank. He has a $500K loan running along right now at 1.9%, and he has another $500K in cash and cash equivalents earning 2.3%+. He pockets the difference, every month. He gets wealthier, every month, for as long as this interest rate spread lasts.

When this party stops, no problem! He can pay off the mortgage. Fully, immediately, in one go.

Low cost, sustainable, well (or even fully) defended debt is absolutely gorgeous stuff, as long as you can enjoy it. Please enjoy it if you're so fortunate.

thanks for replying for me.

one of the few times we are on the same wavelength.

i just want to add this point. there is no sleepless nights. i am on a fixed rate loan. for the next 2 years, i am on this rate. the moment the fixed rate ends, i can redeem the full loan without penalty.