What Am I Paying To Hdb Monthly?

[glennyuen 0]

Hi there,

Ive just got my annual consolidated statement from HDB stating my payment of mortgage loans and the interests paid in a break-down format.

Here is my profile

Bought 4rm for $300,700, after initial downpayment ,loan $270,630 for 30 years @ 2.6%

HDB asked me to pay $1080 for monthly installment.. I though this amount includes the interest payable but no, the interest of about $500+ was reflected seperately. That means every month I am actually paying $500+ to reduce my loan??

Lets say there is no interest every month I am suppose to pay $270,630 divided by 30 yrs divided by 12 months = $751.75 per month pls correct me if im wrong.

I am abit confuse on how the amount of $1080 is constructed..

Please advise..

[bepgof 20]

Read here:

http://img80.imageshack.us/img80/1276/hdbloan.jpg

PM me your email, if you like to study the formular.

Edited February 7, 2011 by bepgof

[muffin 2]

hi,

there is no mistake in the calculation, monthly payment include principal and interest and usually for the initial payment, interest take up a huge part of the payment, but will decrease gradually and slowly over the years.

[diamdiam 0]

don't forget you have to pay for the hdb insurance also

[gimz63251073 0]

The monthly payment comprises of interest plus principal repayment.

In initial years, the bulk of payment goes towards interest, very little towards principal reduction.

This is because interest is computed based on amount outstanding.

For example, in year one, your outstanding amount is $270k. So interest payable would be based on $270k.

As you make payments, the outstanding amount reduces, so you pay less interest.

As to how the $1,080 was arrived at, its mathematical la. But the main idea behind mortgages is explained above.

Hence, shorter loan period = lesser interest paid. Smaller loan amount = smaller interest paid.

And by the way, it has nothing to do with HDB insurance. There is no such thing as hdb insurance. There are fire insurance and mortgage insurance, which are compulsary if you have hdb loan.

Too many people i heard say SG government very good, if die halfway, HDB is "free". What a myth...

[edenstrauss 3]

If you could stretch your purse strings, try to work towards reducing the principle amount ASAP, i.e. within the shortest period of time.

Otherwise, the accrued interest could end up becoming a killer (or already is for some of us)... becox the principle amount would just roll over with interest. And so much CPF $$ & cash is applicable goes into paying off the accrued interest.

So the lower the loan amount and the higher the monthly repayments, the better it is

[muffin 2]

hi eden,

will it be better to slowly pay the HDB and put the remaining into investment which might get returns more that the loan interest? What do you think?

[therat 18]

u already say.. "Might"

Whether to pay slowily or faster. There are no confirm answer.

All up to indivual

[bepgof 20]

Ensure your investments in OA yield >2.5% and >4% in SA. Anyway, afterall, the "profit" still go back to cpf account.

Towards a conservative & logical approach, while making monthly payment, make sure the OA also growing. Till a certain point of time (say 50k or >), then do a partial payment towards o/s loan amount, to cut down the interest and make changes to tenure. There is no quick way.

The longer the tenure(slowly pay as muffin quotes), the more "interest" one needs to pay.

hi eden,

will it be better to slowly pay the HDB and put the remaining into investment which might get returns more that the loan interest? What do you think?

Edited February 8, 2011 by bepgof

[bepgof 20]

Glennyuen, pls clear yr inbox, already full.

Hi there,

Ive just got my annual consolidated statement from HDB stating my payment of mortgage loans and the interests paid in a break-down format.

Here is my profile

Bought 4rm for $300,700, after initial downpayment ,loan $270,630 for 30 years @ 2.6%

HDB asked me to pay $1080 for monthly installment.. I though this amount includes the interest payable but no, the interest of about $500+ was reflected seperately. That means every month I am actually paying $500+ to reduce my loan??

Lets say there is no interest every month I am suppose to pay $270,630 divided by 30 yrs divided by 12 months = $751.75 per month pls correct me if im wrong.

I am abit confuse on how the amount of $1080 is constructed..

Please advise..

Edited February 8, 2011 by bepgof

[muffin 2]

just to share, you can actually throw in a lump sum payment when you think you have consolidate by logging into HDB website and choose "Application for lump sum payment", and follow the instruction. Using this method will decrease the interest rate. My personal experience, i use 3 years to pay off 10 years loan, so another 10 years to go. Hope i can clear in 5 years.

[edenstrauss 3]

Hi muffin,

the mortgage loan is generally a huge amount. We followed the 30 year maximum repayment period so we had first hand experience in dealing with a hefty loan...

If u could, better try to finish off paying ASAP. Unless u r expecting a huge lump sum cash coming from a lucrative investment that allows u to pay off ALL at one go in the near future.

But the longer u drag, the more funds go into paying off the accrued interests.

This scenario here doesn't apply to those seniors from the older generation like my parents & aunts, uncles. They bought their flats at maybe $15k - $100k during those days; can easily clear and still earn tonnes of money when they sell off their flats.

[bepgof 20]

Glennyuen,

Here are the breakdown of figures from years 0 to 12.

As at 120th instalment (end of 10 year = 2011+ 10= 2021 Feb, if year 0 starts in Feb 2011), the outstanding amount would be $195,669.41, if no partial payment is made during the period mentioned.

Look at the amount of interest(s)you would have to pay, see you scare or not!

http://img62.imageshack.us/img62/6903/60116210.jpg

http://img217.imageshack.us/img217/5382/18973228.jpg

http://img717.imageshack.us/img717/3987/60025960.jpg

http://img687.imageshack.us/img687/3354/1012go.jpg

Edited February 9, 2011 by bepgof

[gimz63251073 0]

u already say.. "Might"

Whether to pay slowily or faster. There are no confirm answer.

All up to indivual

agreed. what is important is that the individual must have the knowledge of pros and cons of paying slowly and paying faster.

that way, it is an informed decision and not a "monkey see monkey do" decision.

Cheers!

[gimz63251073 0]

a rough calculation i did previously for my house.

hdb 25 yr loan at 2.6% --> for every dollar u borrow, u pay 30 cents interest.

Questions influencing tenure of loan:

1. How long are you willing to "slog" for a roof over your head?

2. Assuming zero bonuses and pay increment, would be able to service this loan knowing that CPF contribution rate decreases.

A friend i have had assumed 2 months bonus every year when they compute how much goes into their CPF for loan repayment. For myself, i assumed zero bonus and increment and spouse not working. At first glance theirs might be too generous, but hey they are in the banking industry hor...

Different people, different assumptions la, just make sure you make the most suitable decision given the circumstances you have.