facebookI just bought a resale HDB. Does it make sense for me to switch to a bank loan and grow my CPF money instead? - Seedly

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Anonymous

11 Jun 2020

Property

I just bought a resale HDB. Does it make sense for me to switch to a bank loan and grow my CPF money instead?

Context: I've bought my resale HDB flat and will start paying the monthly installment in Jun. I took HDB Loan. Here's where it gets interesting for me.
The value of the house is $420,000. After grants and fees and our combined CPF, we took a loan of about $150k from HDB.

We want to see if we can switch to a 10 year bank loan of lower interest compared to CPF, and grow our CPF instead.

What are some of the considerations? Is this the right move?

SeedlyTV S2E08

Discussion (3)

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Loo Cheng Chuan

11 Jun 2020

Founder at 1M65 Movement

I have done that for myself. Bank interest rates are very low and in the foreseeable future would be low as well. THere is always a risk of bank interest rate rising above 2.6% charged by HDB, but i would take the risk.

Elijah Lee

09 Jun 2020

Senior Financial Services Manager at Phillip Securities (Jurong East)

Hi anon,

If you intend to pay off your loan in 10 years, then I do think a bank loan would be a good move. You can get a loan with a fixed interest rate for the next 2-3 years, and you'll save a fair bit on your interest. A 2.6% HDB loan on $150K for 10 years is $1421/mth. A 1.5% bank loan would be $1347/mth. The total interest saved is around $8K+ if interest rates remain at this level.

Yes. Switch to bank loan since lower interest rates now. Around 1.5 vs 2.6 (hdb loan). Go for those ...

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