CPF or Cash for mortgage monthly repayments?
Not sure what the right thing to do given this high interest rate economy. General advice from peers is to use cpf to service loan to free up cash for other investments. Are there any pitfalls for this option?
Update: Thanks all for the responses, I now understand the case for both sides. Special thanks to @Kent Toh for also providing the steps on how to activate cpf for servicing monthly mortgage loans. I have cross checked with my lawyer and because I have used CPF to service my downpayment, I am already "opt-in" for this scheme - Take note that even though I am opted in, the default allocation is still $0 from CPF unless you follow the steps in Kent's instructions. An additional point that hasn't been mentioned that I found interesting is that if you still qualify for the extra 1% interest on your CPF (check the conditions for this), perhaps there is a stronger case for using cash first to enjoy the (2.5+1)% cpf.
Thanks!
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Obviously is cpf. Why would you use cash to pay for mortgage when you have enough money to pay using cpf.
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If you can generate returns of more than 2.5% on investing your cash, then it makes more sense to use cpf for repayment of mortgage, otherwise, cash is better, unless one is cash strapped.
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It all depends if you know how to invest your money.
When economy is growing, investments looks like the best option. When economy is bad, people run back to CPF's guarenteed interest rates.
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Pitfall for this method is some people with more cash will not invest and use it to enjoy or wait fo...
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