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Astelle T

18 Mar 2022

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With the interest rate increase, should we use our cpf OA to pay up remaining mortgage loan for house?

I have around 38k remaining mortgage loan for my hse currently on hdb loan. I was wondering if I should pay up all the mortgage loan using my OA which has approximate 90k. I have 120k in SA and 65k in medisave. Both my partner are reaching 40's. Anyone think is wise to pay up the remaining mortgage loan with OA in view of raising interest rate? Or shld we use cash to pay remaining loan and convert my OA to SA in order to hit minimum retirement sum? Any advice? Thanks

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Tan Choong Hwee

18 Mar 2022

Investor/Trader at Home

HDB mortgage loan rate is pegged at +0.1% over CPF OA interest rate, which in turns is pegged at the 3-month average local bank deposit rate or the legislated floor rate of 2.5%, whichever higher. So unless deposit rate rises to above 2.5%, your HDB loan rate will remain at 2.6% for quite a while.

If you have spare cash to pay up the outstanding loan, and you don't have other place to park your cash for higher than CPF interest rates, it does make sense to pay up HDB loan using cash and transfer your OA to SA to hit FRS and enjoy 4% interest rate in SA.

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I had been paying my HDB housing loan for the past 3 years. If I do Partial Capital Repayment using CPF, does it benefit me from the loan interest rate and also accrued interest on my Cpf.?

Is it wise to repay HDB housing loan earlier than loan duration (paying in full/partial)? To save on loan interests / use less of CPF OA?

We used CPF to pay HDB. But after we fully paid using CPF after 25 years loan, we sell the house to buy another, why are we still paying the interest in the loan when the CPF money should belong to us? What do you guys think?

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