My BTO is scheduled to be done in 4Q2021 and currently we have paid 5% downpayment and will be paying another 5% to get the keys. Can I get some advice?

Basically we came up with 2 scenarios :
1) We are thinking of keeping $20,000 (for buffer like job lost) in each of our OA and transfer the rest to SA periodically to get the additional interest and hit FRS. Getting a 90% loan for 25 years and our monthly OA contribution is able to cover the monthly HDB loan instalment.

2) Clear out OA to get lower HDB loan amount to clear off loan ASAP but not able to build up on SA.

Thank you!

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Pang Zhe Liang

03 May 2020

Lead of Research & Solutions at Havend Pte Ltd

Objective

Firstly, we need to know your objective. For instance, do you intend to sell your house after 5 years or longer? Or do you intend to stay as long as you live? This is because of the potential accrual of interest when you sell the house. With this in mind, there exists a need to evaluate whether you should be using the monies in your Ordinary Account to fund the house.

Once we have established your objective, we will also know whether your emphasis is on clearing the loan or to save up for retirement. To do this, we will need to create a spreadsheet for a detailed projection.

On one column, we will based it on the loan rate and project when you will complete paying for the house (if you intend to stay that long). On the second column, we will opt for the irreversible transfer to Special Account.

Backup

On the whole, you will also need to create a backup plan. In detail, this means your income ability and how readily are you able to find another job should the need arise. This will in turn help you to understand whether it is necessary to keep so much money in your account.

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