Home loan for HDB?

Going with (2) immediately will force me to cough up cash. Mortgage loans are the cheapest debts and I prefer to pay off the more expensive debts first (e.g. credit card bills, renovation, wedding, etc).

Going with a HDB loan first sounds like the way for the first x months or years.

By minimum accrued interest, do you mean mortgage loan interest? If you want to get rid of that, you can only do so by paying up early. HDB loans have no pre-payment penalties and you can pay up as quickly as you wish. Just ensure you always have 6 months' worth of instalments in your CPF when your loan is still ongoing.

On the other hand, bank loans penalise you if you try to pay up early instead of regularly.

Last but not least, do you really want to pay off your mortgage loan so quickly? Consider transferring to SA or investing OA via CPFIS.

Hi Tennett,

Congratulations on your milestone of home ownership!

Lets try and break it down for you, so that you better understand the options

HDB Loan

Pros

• Straightforward

• Income assessed in advance of loan, through HLE application

• 0% Cash during payment

• Inbuilt Mortgage Insurance (HPS), payable by CPF

Cons

• Full wipeout of CPF-OA is required

• Interest rate of loan is 2.6% p.a.

Bank Loan

Pros

• Wide range of Banks to Choose from

• Lower interest rate for loan quantum

• Loan tenure can be adjusted up to 30 years.

• Not required to wipe out CPF-OA for application

Cons

• Valuation and Legal Fees for Loan application

• 5% Cash upfront for the approval of the loan.

• 20% downpayment required for the CPF-portion

• Refinancing required at the end up the fixed-rate period

• Mortgage Insurance required from Insurer

HDB Loan to Bank Loan

Pros

• Lower initial downpayment of 10%

• Refinance option available anytime after occupancy

• During Refinance of Loan with bank, no cash downpayment required

• Loan tenure can be adjusted to speed up the payment of the loan, or higher affordability

• Not required to wipe out CPF-OA for application

• Lower interest rate compared to HDB Loan

Cons

• Valuation and Legal Fees for Loan application

• Refinancing required at the end up the fixed-rate period

• HPS will lapse, will require Mortgage insurance from insurer

From a financial standpoint, going with option 3 is the best. This is to ensure that your initial loan, will be 100% via CPF with no cash downpayment. You can also plan your CPF funds, with OA-Shielding, to ensure your CPF-OA compounds better. Hope i was able to address your queries! If you have further questions, do drop a contact request, and we can take it from there!​​​