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Teo See Hwa
06 May 2020
MArketing Associate at Propnex
Without knowing your potential not much to share which is better for you.
When you bought BTO.
Monthly income and household income
OA, SA, MA, and cash on hand.
The number of dependents parent, the parent-in-law children.
06 May 2020
ABC at ABC
Hi good questions,
In my opinion, it depends on your income, savings and comfortability.
HDB BTO loans are at 2.6%, current bank loan (due to Covid-19) is at floating/fixed 1.4/1.6%. On average of past few years, the bank interest is between 1.6-2% (which is still significantly lower)
Assuming a $500K property loan,
In 30 years, you are paying additional $220+k based on 2.6% (HDB Loan), while if bank loan of 1.6% it will be around $129+k. The difference is close to $90k over 30 years.
Personally I prefer the later Bank Loan, as HDB Loan interest rate are just too high in my opinion. The only troublesome part would be that for bank loan, likely you will need to refinance every few years to get the best interest rate or look for a mortgage advisor.
At the same time, whether you choose HDB or Bank Loan, you do not need to pay for your home loan in cash; you can pay for it through your CPF Ordinary Account (CPF OA). However by doing so, it also means that your CPF balance will not be generating it's interest, 2.5% for OA.
By using OA to cover for monthly housing loan you are incuring the interest of 2.6% (assuming HDB loan) + 2.5% (guaranteed from CPF-OA interest) = loss of 5.1% per year.
Do consider carefully whether you should take HDB housing loan, or bank loan.. and also if you should pay the monthly installment by cash or CPF-OA.
Best of luck!
07 Jun 2019
Senior Supply Chain at Mnc
Always go for HDB Loan, as you don't risk being evicted by HDB if you can't pay.
Bank loan is cheaper but the loan quantum is lower than hdb's 90%
21 Sep 2018
Financial Planner at AXA
Hi there, would recommend you to take up HDB loan (2.6%) instead of wipping out your CPF OA account ...
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