sens 0 Report post Posted October 18, 2012 Hi Folks,I have recently commit a resale HDB flat. in the process of tranfering ownership now. i would like to check if it is better to service my monthly housing loan using fully cpf or partially cpf ? my current financial details as followMonthly CPF ordinary contribution $1300 - $1700Monthly Housing service $1700. I was initially thinking of using monthly $1200 from cpf and $500 cash. having the thoughts of borrowing lesser from cpf and if let say 8 years later i were to sell my HDB flat, i would return lesser borrow amount and lesser interest return as well. Secondly i will also get more cash return after i sell my HDb flat cause every month i am putting in more cash. take it as a additional saving as $500 a month is consider ok for meAny advise will be greatly appreciate. Thanks Share this post Link to post Share on other sites
sens 0 Report post Posted October 18, 2012 Jus to add on info, my monthly cpf contribution is relatively avg at $1500. Question here is should i wipe out my cpf monthly contribution and if not enuff cash den top up or fix a low cpf deduction of $1200, the rest use cash ?I am 30 this year and if i am looking in future if i sell away this house, the cash earn will have to put 50% into next house if i take a loan frm hdb again.. Which means my part of $500 cash being use monthly last time is also lock up ?? Share this post Link to post Share on other sites
angusbeef 0 Report post Posted October 18, 2012 very subjective one. if you confident of job security and have savings (text book is 6 mths income in case no work), use up all your monthly cpf since cash in hand always better than stuck in cpf. other factors like your investment-risk profile and whether the cash/cpf money can be used for investment instead etc Share this post Link to post Share on other sites
DavidPoon 0 Report post Posted October 20, 2012 (edited) Hi Folks,I have recently commit a resale HDB flat. in the process of tranfering ownership now. i would like to check if it is better to service my monthly housing loan using fully cpf or partially cpf ? my current financial details as followMonthly CPF ordinary contribution $1300 - $1700Monthly Housing service $1700. I was initially thinking of using monthly $1200 from cpf and $500 cash. having the thoughts of borrowing lesser from cpf and if let say 8 years later i were to sell my HDB flat, i would return lesser borrow amount and lesser interest return as well. Secondly i will also get more cash return after i sell my HDb flat cause every month i am putting in more cash. take it as a additional saving as $500 a month is consider ok for meAny advise will be greatly appreciate. Thanksat the moment, interest rates for OA is 2.5%, and for first 20k you get additional 1%. hence cpf OA acc will earn you 3.5% (for first 20k) or 2.5% for any amounts exceeding 20k. this interest is guaranteed.if you can not get a guaranteed 2.5/3.5% returns on your cash, then it would be good to invest your spare cash into the flat instead of other riskier products. this is assuming you already have some money set aside for contingencies.using CPF OA to fund your home would mean a net loss of 1.1% (for first 20k) or 0.1% (for amount exceeding 20k). Over time, this amount can be quite bigeven if half of your cash sale is locked up in your new HDB, it will eventually be unlocked when you upgrade to private property. see the big picture.Disclosure: author is funding his home with cash only Edited October 20, 2012 by DavidPoon Share this post Link to post Share on other sites
Exman 0 Report post Posted October 20, 2012 Hi Folks,I have recently commit a resale HDB flat. in the process of tranfering ownership now. i would like to check if it is better to service my monthly housing loan using fully cpf or partially cpf ? my current financial details as followMonthly CPF ordinary contribution $1300 - $1700Monthly Housing service $1700. I was initially thinking of using monthly $1200 from cpf and $500 cash. having the thoughts of borrowing lesser from cpf and if let say 8 years later i were to sell my HDB flat, i would return lesser borrow amount and lesser interest return as well. Secondly i will also get more cash return after i sell my HDb flat cause every month i am putting in more cash. take it as a additional saving as $500 a month is consider ok for meAny advise will be greatly appreciate. ThanksHi sensMy opinion for the monthly service loan is to go for full CPF.The intended cash of $500 which you could set a side as saving for rainy or emergency purpose.There is no longer job security these days that cash is king on hand as move over the CPF policy maker has been constantly adjusting the policy that seem the only way to get the CPF monies out is through payment for the mortgage.If you have swipe up all the CPF monies to confirm the balance loan and now using the CPF monthly contribution to service the monthly loan that should any body is out of work has to use the emergency cash.... Share this post Link to post Share on other sites
mariajames 0 Report post Posted November 8, 2012 I am 30 this year and if i am searching in approaching if i advertise abroad this house, the banknote acquire will accept to put 50% into next abode if i yield a accommodation frm hdb again. Share this post Link to post Share on other sites
duhzzz 0 Report post Posted November 10, 2012 Is a 20 year HDB loan better than a 30 year HDB loan? Interest rate of HDB loan is 2.6% while CPF rate is 2.5%. Assuming monthly serviced using full CPF. Share this post Link to post Share on other sites
Exman 0 Report post Posted November 10, 2012 Is a 20 year HDB loan better than a 30 year HDB loan? Interest rate of HDB loan is 2.6% while CPF rate is 2.5%. Assuming monthly serviced using full CPF.Hi duhzzzIn my opinion, the shorter loan timeline shall be better over the longer period.For this instance, 20 years versus 30 years that 10 years of extra interest incurring.....but as however.....However there are 2 ways and subjectively to view at prospective.1. Let assume that the 80% principle loan quantum which is a monthly installment payment using the monthly contributed CPF if has to balance off with cash during the loan servicing at 20 years, then maybe longer loan term at 30 years does seem to better as is able to cover full monthly CPF mortgage payment....no cash is involved...2. If after the 20% down payment to buy your unit and your Ordinary a/c still has X amount of monies, in my opinion is to go for the max loan principle amount of 80% and opt for the long repayment period eg. 30 years.The reason is now the current bank loan interest is at all time low and leaving your monies parked in the CPF a/c shall earned a higher interest.....is a form of investment earning the higher interest monies to built up the reserve and also to pay the lower interest I the bank....Moreover you can pay off using the untouch monies in the ordinary a/c to lower the principle loan quantum if the bank interest in time to come could be higher than the CPF rates.....Bear in mind that longer repayment period can be revert to shorter as however shorter repayment period cannot be revert to longer..... Share this post Link to post Share on other sites
duhzzz 0 Report post Posted November 10, 2012 I did an excel sheet and it seems like 30 year loan is better than 20 year. 30 year = higher returns from CPF interest in the long term vs 20 year = higher housing interest in the short term. Share this post Link to post Share on other sites
Exman 0 Report post Posted November 10, 2012 Forgotten to add that current bank loan interest does seem more attractive if to versus against the HDB loan interest which is stable.....But however if you to opt for HDB loan, though their interest rates are stable that all your CPF ordinary a/c monies has to be swipe off to pay off the total purchase amount...Thereafter, then HDB shall only loan you the balance amount....Eg. if the BTO 4"room" unit is selling at 300k and your CPF ordinary a/c eg has 200K then technically HDB loan is the unit price of 300k minus off the cpf 200K = 100K or 33% instead of the norm 80% from the banks....about 240K....For this instance that if you opt bank loan, then probably there is about 160K remain untouch in your CPF........ Share this post Link to post Share on other sites
Exman 0 Report post Posted November 10, 2012 I did an excel sheet and it seems like 30 year loan is better than 20 year. 30 year = higher returns from CPF interest in the long term vs 20 year = higher housing interest in the short term.The fact about CPF monies is in my opinion varies to conditions.Looking at 2.6 and 2.5 interest rate already earned 0.1%.Some people prefer to have the unit title deeds on hand earliest possible....Some like myself opt the bank loan and longer repaymebt period shall seem to be more feasible....Some have no stable income and their monthly CPF contribution which has to top up using cash shall opt the longer period as the monthly repayment amount is lower though on the other hand interest is generated....There is no one option fits every body as you yourself would knew the condition an situation you be facing now and after, your regular income, family expenditure and commitments.Excel spread sheets in my opinion is just a mathematics as is not based on conditionals factors...... Share this post Link to post Share on other sites
duhzzz 0 Report post Posted November 10, 2012 Assuming there is no conditional factors, Mathematics is important for long term assessment. Understand that the 0.1% difference, but over long, money in CPF commands much higher returns. U may work out a simple excel sheet to see the difference. Share this post Link to post Share on other sites
Exman 0 Report post Posted November 10, 2012 Assuming there is no conditional factors, Mathematics is important for long term assessment. Understand that the 0.1% difference, but over long, money in CPF commands much higher returns. U may work out a simple excel sheet to see the difference.I agreed that we should have to some mathematic assessment in order to have a reference point to begin with unless there is no conditional factors....Done a spread sheet to take up RHB bank loan that 1st year, interest at 1.2%, 2nd year at 1.6% and 3th year at 2.38% and there after 3.48% to verus HDB loan interest of flat 2.5%.We can see the highest amount of savings is during the first year and still high savings on the 2nd year, and on the 3rd year which we can observe a 0.12% savings as is lower than the HDB.At 4th year shall do a re-financing process as the lock in period is for the first 2 years..... Share this post Link to post Share on other sites
nakadashi 0 Report post Posted January 14, 2013 Take a bank loan which is low now, max out the loan tenure and loan amount since the OA interest 2.5% is greater than bank rate 1.25%. At least you have some buffer in ur CPF in future. Use ur CPF better cos cannot touch. Share this post Link to post Share on other sites
Yaling 0 Report post Posted February 13, 2013 I thought the bank loan with variable interest rate is pretty affordable now. But then, of course you need to refinance after that. Share this post Link to post Share on other sites
