Redeeming HDB Home Loan

[AdnexCC]

Hi guys,

Need some expert comments here. I have existing outstanding HDB loan of 53K with a local bank. am thinking of redeem the loan as my CPF balance has enuff to cover it.

Given the raising interest rate it appears better redeeming my loan than to service it monthly. However that will reduce my retirement withdrawal.

Any comments ?

 

[mcylo]

Wat do u mean "it will reduce myretirement withdrawal"

Are u still working?

 

[AdnexCC]

Wat do u mean "it will reduce myretirement withdrawal"

Are u still working?

Yes currently i m 50 tis yr. Job security uncertain

 

[pcmdan]

Yes currently i m 50 tis yr. Job security uncertain

If your current loan interest rate is less than 2.5%.... Personally I feel you should hold it and earn the higher interest from CPF interest.

Loan rate < CPF Rate (dont pay up)

Loan rate > CPF rate (Pay up)

Economically you are still better off right, if CPF rate is higher than Loan rate

An e.g.

53k (2% loan rate) vs 53k (2.5% OA rate)

Liability $1,060 Asset $1,325

Net profit $265 per year. Better right. Note that I am only using simple interest.

 

[pcmdan]

Wat do u mean "it will reduce myretirement withdrawal"

Are u still working?

I think what he meant was,

Lets say min sum is $161k

He currently has $214k.

When he reach 65, by right govt maybe will give him $2k per month. But because now he used $53k, govt will only give him the $1.2k per month lo haha...

My assumption

 

[AdnexCC]

If your current loan interest rate is less than 2.5%.... Personally I feel you should hold it and earn the higher interest from CPF interest.

Loan rate < CPF Rate (dont pay up)

Loan rate > CPF rate (Pay up)

Economically you are still better off right, if CPF rate is higher than Loan rate

An e.g.

53k (2% loan rate) vs 53k (2.5% OA rate)

Liability $1,060 Asset $1,325

Net profit $265 per year. Better right. Note that I am only using simple interest.

Good point .. Need to check the interest rate.

I thot the limit of interest rate for 2.5% is up to 1st 60K in CPF ?

 

[wahkao3]

how to calculate? someone here has an excel sheet to calc?

 

[autumm]

Good point .. Need to check the interest rate.

I thot the limit of interest rate for 2.5% is up to 1st 60K in CPF ?

First combined 60k has 1% extra. Base is 2.5% for all amount

 

[pcmdan]

Good point .. Need to check the interest rate.

I thot the limit of interest rate for 2.5% is up to 1st 60K in CPF ?

first 60k is 3.5% for OA and SA and MA additional 1% (i.e. 5%)

thereafter is 2.5% and the respective SA and MA interest (4%)

Quote from cpf website:

Central Provident Fund (CPF) members currently earn interest rates of up to 3.5% per annum on their Ordinary Account (OA) monies, and up to 5% per annum on their Special and Medisave Account (SMA) monies. Retirement Account (RA) monies currently earn up to 5% per annum.
The above interest rates include an additional 1% interest paid on the first $60,000 of a member's combined balances (with up to $20,000 from the OA), which is part of the Government's efforts to enhance the retirement savings of CPF members.

 

[pcmdan]

how to calculate? someone here has an excel sheet to calc?

Is very ez to make an excel sheet to calculate what..

 

[mcylo]

Cpf min sum can use hdb flat pledge 50%.

 

[pcmdan]

pledge 50% but ur withdrawal monthly will be cut by half also what. TS doesnt wan the retirement payout to be cut

 

[henrylbh]

how to calculate? someone here has an excel sheet to calc?

 

[Garett70]

TS since you are in the 50..
Suggest better paid all or else during 55 years old ALL YOUR CPF OA will be transfer to RA...into CPF life..I doubt many people knew this..

You can rent out a room in your flat and working in the same time

 

[Garett70]

first 60k is 3.5% for OA and SA and MA additional 1% (i.e. 5%)

thereafter is 2.5% and the respective SA and MA interest (4%)

Quote from cpf website:

Central Provident Fund (CPF) members currently earn interest rates of up to 3.5% per annum on their Ordinary Account (OA) monies, and up to 5% per annum on their Special and Medisave Account (SMA) monies. Retirement Account (RA) monies currently earn up to 5% per annum.
The above interest rates include an additional 1% interest paid on the first $60,000 of a member's combined balances (with up to $20,000 from the OA), which is part of the Government's efforts to enhance the retirement savings of CPF members.

PLEASE READ THE TERMS AND CONDITION IN CPF CAREFULLY...many people have this MISCONCEPTION...ITs your FIRST 20k will earn another 1% not your TOTAL CPF hence you only earn another $200 dollars ONLY...

 

[Perisher]

PLEASE READ THE TERMS AND CONDITION IN CPF CAREFULLY...many people have this MISCONCEPTION...ITs your FIRST 20k will earn another 1% not your TOTAL CPF hence you only earn another $200 dollars ONLY...

No lar...

It's additional 1% for the 1st 60k, only that 20k from OA is the max that can get the additional 1% but it's still 1% additional across all 3 account.

'As part of the Government’s efforts to enhance CPF members’ retirement savings, an additional 1% interest will continue to be paid on the first $60,000 of a member’s combined balances, with up to $20,000 from the Ordinary Account (OA).'

The guy you quoted also has similar statement about the 20k from OA...

 

[pcmdan]

wahahahaha someone nv get his facts rights..and down here putting in caps..

Give u a scenario lah

e.g.

ur cpf has

OA $35k
MA $20k
SA $20k

lets assume whole year u have no contribution or withdrawal

your OA MA and SA for the first 60k will give u

OA 20k x 3.5%
Ma 20k x 5%
SA 20k x 5%

remaining OA will fetch u:

OA 15k x 2.5%

if u got more in SA and MA...the extra amount will earn 4% each

go and use a calculator, the figure u churned out will give u the interest that u will earn every year.

This is again sinple interest. By right u will earn more if u know how to use a financial calculator to calculate

Hence it is YOU that has the misconception. Therefore, I will request you to read it more carefully. If in doubt go to CPF to find out more.

 

[henrylbh]

PLEASE READ THE TERMS AND CONDITION IN CPF CAREFULLY...many people have this MISCONCEPTION...ITs your FIRST 20k will earn another 1% not your TOTAL CPF hence you only earn another $200 dollars ONLY...

Either you have misconceived or misrepresented info here.

 

[Garett70]

Ok..I don't want to said much all I can said if in doubt please go to CPF board and ask..Before asking have your Question in hand first all written black and white..also BE careful on this retirement sum issues and housing issues...why because they will PUSH to each other..

Pls read this QandA careful...the maximum benefit of the 1% interest

https://www.cpf.gov.sg/Members/FAQ/schemes/other-matters/others#faq17851

 

[reinphd]

It's okay to get it wrong. Everyone learns. Cheers

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