Hallo,
This is a monster topic that you have asked a question on. I'll try to outline the most prominent caveats to each.
Paying house through cash means you don't incur accrued interest on your CPF monies. However, it also means less on hand liquidity to invest with. Of course, with solutions like CPFIS, we can invest our CPF and platforms like Endowus even help us to do it. So CPF becomes really and truly a "retirement fund".
Paying with CPF is great because it means you can invest your cash. The downside is that you actually have to invest your cash and not just blow it all on expenses. CPF accrued interest is something else to think about when you sell your flat.
Housing loan is great in this current era of low interest rates because you can borrow money for cheaper (bank loan, not HDB loan; HDB loan interest is pretty fixed). This means you don't have to come up with so much cash/CPF up front for your house - so you're free to invest. The downside is obviously if you go out of work, you may struggle to pay your mortgage. Of course, with proper financial planning, this should not be.
Note that housing loan is not mutually exclusive with the first two options you listed. You will have to pay off your housing loan with either cash or CPF.
Personally, I'd take out a bank loan for my house, and use my CPF to pay for it. This is because I prefer to invest my cash, while my CPF earns risk free interest of 2.5%. If I invest my CPF, I'm not confident that my remaining cash can earn 2.5% interest sitting in the banks.
I also hold this mindset that a house is an expense, not an asset, so I'd rather not pay for it with liquid assets like cash. I don't consider CPF to be cash per se, since it is illiquid to 55/65. My retirement planning is entirely without factoring in CPF.
But this is my view and you have to form your own in order to decide what course of action you'll take.
Ultimately, the choice of whether to take a loan depends on whether you have enough to pay off your house at one shot. The choice of cash/CPF to pay for your housing loan depends on many factors but you have to decide which matters more to you.
Hallo,
This is a monster topic that you have asked a question on. I'll try to outline the most prominent caveats to each.
Paying house through cash means you don't incur accrued interest on your CPF monies. However, it also means less on hand liquidity to invest with. Of course, with solutions like CPFIS, we can invest our CPF and platforms like Endowus even help us to do it. So CPF becomes really and truly a "retirement fund".
Paying with CPF is great because it means you can invest your cash. The downside is that you actually have to invest your cash and not just blow it all on expenses. CPF accrued interest is something else to think about when you sell your flat.
Housing loan is great in this current era of low interest rates because you can borrow money for cheaper (bank loan, not HDB loan; HDB loan interest is pretty fixed). This means you don't have to come up with so much cash/CPF up front for your house - so you're free to invest. The downside is obviously if you go out of work, you may struggle to pay your mortgage. Of course, with proper financial planning, this should not be.
Note that housing loan is not mutually exclusive with the first two options you listed. You will have to pay off your housing loan with either cash or CPF.
Personally, I'd take out a bank loan for my house, and use my CPF to pay for it. This is because I prefer to invest my cash, while my CPF earns risk free interest of 2.5%. If I invest my CPF, I'm not confident that my remaining cash can earn 2.5% interest sitting in the banks.
I also hold this mindset that a house is an expense, not an asset, so I'd rather not pay for it with liquid assets like cash. I don't consider CPF to be cash per se, since it is illiquid to 55/65. My retirement planning is entirely without factoring in CPF.
But this is my view and you have to form your own in order to decide what course of action you'll take.
Ultimately, the choice of whether to take a loan depends on whether you have enough to pay off your house at one shot. The choice of cash/CPF to pay for your housing loan depends on many factors but you have to decide which matters more to you.