Hi, If I were intending to sell my condo between year 5 to year 10, should I take the max loan tenure from the bank or should I shorten the tenure? Should I pay my loan installments by cash or cpf?

Hi anon,

Since you're taking a bank loan and are planning to sell the condo before fully servicing it, that means that you'll defo be hit with early repayment fees.

In this case, I would go with whichever loan penalises me with the lower early repayment fees. You'll be surprised... a loan with a shorter tenure doesn't necessarily mean that the penalty fees will be lower...

With regard to paying by cash or CPF... if you can deploy your cash into investments or etc, and earn more than the CPF floor interest rate of 2.5% then it's probably a better idea to use your CPF to service the loan.

If you can't... then it's better to just keep the money in your CPF to earn that guaranteed 2.5% (or 4% if you move it over to your Special Account; take note that this is irreversible). And use your cash instead.​​​

If you are taking a bank loan, a shorter tenure may be better since you may incur early penalty fees. It is advisable to do a comparison between interest payable on a shorter tenure vs interest payable on longer tenure + early repayment fees.

If your cash is earning 2.5% then it would be better to use your CPF to pay for it since there is an opportunity cost incurred.