Repay HDB LOAN?

[romeo88]

The only wise decision is when you can see the future. Any which way there's risk - even putting money in the bank or hiding it below your pillow. Otherwise, there's no certainty the decision you're making today is the right one.

But at least for a start, you're mulling returning money back to CPF, which is good. That's when I suggested to do partial payment first, and then review and re-assess next steps.

Maxing out SA can be a good option too, since it's earning better return than in OA.

hmmm if i transfer my OA to SA, the "burden" of knowing that i still must slog out to get my HDB repaid comes to my mind haha..

if use current OA to pay off the hdb loan, its like peace of mind.

 

[BBCWatcher]

If you pay up all, you become asset rich but cash poor.

Sort of. It's a 99 year HDB leasehold, remember. You would be accelerating payment on an asset that will eventually depreciate to zero. And it's a highly illiquid depreciating asset.(*) There's no card slot in your HDB leasehold to withdraw $258 of cash (or whatever).

I really, really would not be inclined to accelerate payment on an illiquid, depreciating asset with a cheap, stable, insured mortgage serviced using restricted, compulsorily saved dollars (OA). It's just not a sensible thing to do, assuming you are a reasonable, responsible, financially wise individual who doesn't overspend, who does a good job at work, who doggedly saves, who prudently invests. You will almost surely be poorer if you pay faster than scheduled, with those assumptions.

(*) It could appreciate for some years, and it typically appreciates at early resale (after the MOP) compared to your total BTO purchase cost. Then it starts depreciating until it falls to zero value as the leasehold runs out.

 

[jnashville]

Sort of. It's a 99 year HDB leasehold, remember. You would be accelerating payment on an asset that will eventually depreciate to zero. And it's a highly illiquid depreciating asset.(*) There's no card slot in your HDB leasehold to withdraw $258 of cash (or whatever).

I really, really would not be inclined to accelerate payment on an illiquid, depreciating asset with a cheap, stable, insured mortgage serviced using restricted, compulsorily saved dollars (OA). It's just not a sensible thing to do, assuming you are a reasonable, responsible, financially wise individual who doesn't overspend, who does a good job at work, who doggedly saves, who prudently invests. You will almost surely be poorer if you pay faster than scheduled, with those assumptions.

(*) It could appreciate for some years, and it typically appreciates at early resale (after the MOP) compared to your total BTO purchase cost. Then it starts depreciating until it falls to zero value as the leasehold runs out.

hihi thanks for your input.

so in my case, even though combined OA can be used to fully pay up the HDB loan, your recommendation is just not to and let it run through the full remaining 25 years for the loan to slowly deduct?

 

[BBCWatcher]

so in my case, even though combined OA can be used to fully pay up the HDB loan, your recommendation is just not to and let it run through the full remaining 25 years for the loan to slowly deduct?

That's part of the recommendation. The other part is to put some or most of your Ordinary Account dollars to long-term higher yielding (but still prudent) work. One notable example has been mentioned already: transferring some number of OA dollars to SA. Next, secondarily, there's the CPF Investment Scheme (OA), and with a ~25+ year time horizon that'd be a very reasonable thing to do.

 

[henrylbh]

oh i have cash savings still that i placed in maxigain, great eastern endowment, dbs multipier and some other banks.

i treat those as savings and didnt really bother about CPF money since its stuck inside till age 60++

ahhh after all the suggestions, back to square one. now confused to pay up all or just leave it to slowly deduct

Transfer all 100k to CPF SA and continue to service the loan with monthly CPF contribution.

 

[tkdboi]

How much in your SA and MA do you and your wife have currently?

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[culture_counter]

Transfer all 100k to CPF SA and continue to service the loan with monthly CPF contribution.

Concur with this

 

[cal3135]

My suggestion;
•not to repay off o/s HDB loan(0.1% interest diff betw 2.6 vs 2.5). Also in any unfortunate event if any owners are not around, family will heritage sum of CPF$ + HDB fully paid by HPS.

•continue to keep CPF since u are unsure on “invest”

•u may move some OA -> SA to attract +1.5% earlier

Purchased my HDB flat in end 2014.

Currently left about $100k loan remaining for my HDB loa.

Me and wife CPF combine have about $100k in OA. Is it wise to make a full repayment of HDB loan?

Read somewhere people say dont make full payment and use the money for investments that can get better than the hdb interest rate of 2.6 percent etc, but i am not using liquid cash but CPF instead, is it better to make full payment?

i do not know how to "invest" my OA and got no reason to put that OA amount at risk by investing it, since i have also hear news of people losing money in cpf related investments.

So in my situation, bottomline, should i clear my OA to pay off the HDB loan?

🍎xsmax HardwareZone Forums app

 

[dry_county]

I would pay off. to have a peace of mind.

 

[BBCWatcher]

I would pay off. to have a peace of mind.

What does “peace of mind” mean, specifically? Where is this anxiety (I assume) coming from?

There’s yet another reason NOT to do this. If (when?) you ever rent out your unit, the net rental income is taxable at ordinary Singapore income tax rates. But the word “net” is very important. Mortgage interest is one of the few costs that can be subtracted from rental income before the income tax calculation is made. In other words, accelerating repayment on your low cost mortgage could very well mean you have to pay more income tax. Not good!

 

[Nofear40]

Transfer all 100k to CPF SA and continue to service the loan with monthly CPF contribution.

Can you still do that if you hit min sum?

 

[focus1974]

For me, I never intend to pay back a single cent into CPF!

All my CPF is taken out to put into a house to generate real cash.
As long as I don't sell the house after 55yrs old, I will be able to maintain my strategy of never putting any more money into CPF.

 

[cal3135]

Once SA reached FRS, u can’t transfer OA=>SA.

Can you still do that if you hit min sum?

🍎xsmax HardwareZone Forums app

 

[BBCWatcher]

For me, I never intend to pay back a single cent into CPF!

That's nice if you're happy (and not a burden on society if you have the ability to avoid it), but what has that got to do with this thread? Nothing as far as I can tell.

 

[focus1974]

That's nice if you're happy (and not a burden on society if you have the ability to avoid it), but what has that got to do with this thread? Nothing as far as I can tell.

He asked a question. I gave my views.

What has it got to do with you?

Nothing as far as I can tell.

 

[BBCWatcher]

For me, I never intend to pay back a single cent into CPF!

He asked a question. I gave my views.

Yes, and you might as well be giving your opinion on chocolate. Or cricket. Which would also neither be relevant nor helpful.

Nobody is discussing anything in this thread about how many dollars to "pay back" into CPF. That's a completely separate, unrelated topic. All dollars under discussion here are either already in CPF or being compulsorily added to CPF.

 

[rrr2015]

imho, don't repay with OA. besides CPF OA 2.5% interests compound. so eventually it will catchup 2.6% loan rate

Purchased my HDB flat in end 2014.

Currently left about $100k loan remaining for my HDB loa.

Me and wife CPF combine have about $100k in OA. Is it wise to make a full repayment of HDB loan?

Read somewhere people say dont make full payment and use the money for investments that can get better than the hdb interest rate of 2.6 percent etc, but i am not using liquid cash but CPF instead, is it better to make full payment?

i do not know how to "invest" my OA and got no reason to put that OA amount at risk by investing it, since i have also hear news of people losing money in cpf related investments.

So in my situation, bottomline, should i clear my OA to pay off the HDB loan?

 

[SatkiSasuke]

Do u intend to sell your flat later? If yes, dont need to repay. Save it for downpayment for next flat. If no, keep it to hit your basic minimum sum for withdrawal at 55 and pledge your flat as well.

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[focus1974]

Yes, and you might as well be giving your opinion on chocolate. Or cricket. Which would also neither be relevant nor helpful.

Nobody is discussing anything in this thread about how many dollars to "pay back" into CPF. That's a completely separate, unrelated topic. All dollars under discussion here are either already in CPF or being compulsorily added to CPF.

 

[drkcynic]

Tagging on to this question.

I am intending to sell off my private property. Which will send a whole chunk of CPF money back to my account. By my estimation my total CPF after including wife's should be 300k and above.

So I intend to get a resale HDB around 500k range.

So what I do now is pay the bare minimum, take bank loan with longest possible tenor, buy HPS and service monthly via CPF. Then pump the OA to SA for 4%.

Wise?