Does it make sense to top up CPF OA to earn 2.5% interest and use the money to pay off housing loan?

Yes I would do that. Provided you have set up your safety nets for rainy days....

Hi. Ive thought about the same idea as well. After doing some research and consideration, my final answer is No.

A few things to note:
1. VC is irreversible. Although your intention is to use the money to buy HDB, it seems that you have 'withdrawn' the amount. However, in future if you were to sell your flat, you need to put back the full sum you used from CPF + interest. Which means that the 'profit' from the sale of flat will mainly go back to your CPF and trapped there till retirement.

• E.g. Your OA is now $20k, you choose to topup another $20k. 5 years down the road, your OA have a total of $80k (principal 40k + accrued interest + your active contribution for 5 years when working)
• You used the full 80k for HDB.
• 10 years down the road, you decided to sell your flat. You will need to return the 80k + accrued interest to your OA.
• However, it wont be a problem if you are holding the flat till retirement.

2. The OA interest rate of 2.5% isnt really great. You can easily beat that thru investments. Although yes. Many would argue on the risks etc and non guaranteed returns. However, there are also High Yield Savings Account with no risks. (However, the interest rate may change over time) But with these option, you money isnt locked in CPF till retirement.

• SBC Jumpstart (below age 26) Since you are 25 now, you can still open the account and the first 20k will earn 2% p.a. (Just slightly less than CPF OA at 2.5%)
• DBS Multiplier. 3 categories. Salary, Credit Card, Investment (Monthly ETF $100). This will allow you to earn around 2.2% p.a. for first 50k. If you have insurance category, you can get interest up to 100k.