Anonymous

02 Jan 2020

∙

Would it make sense to make a partial cash repayment to your CPF housing loan?

Suppose one has set aside 6 months of emergency savings with a high interest rate account with avg 2% interests annually.

Given the scenario that SA and MA are fully maxed out, does it make sense to do a partial cash repayment to the CPF using a few months of this emergency savings and having them "parked" in OA gaining 2.5% interests (while minimizing the accrued interests) instead of inside a bank savings account? The main liability is the house loan which the OA can be used in emergency

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Pang Zhe Liang

02 Jan 2020

Fee-Based Financial Advisory Manager at Financial Alliance Pte Ltd (IFA Firm)

Firstly, we need to have a complete understanding on our cashflow. Through this process, we will understand our earning ability and spending habit. Here is a guide to help you: https://www.blog.pzl.sg/understanding-your-pers...

Next, it will depend on your financial planning and how you intend to plan for your future. For instance, if you intend to sell the house in 10 years' time, then it may make sense to reduec the accrue interest.

On the other hand, if you have a large expense, e.g. to buy a car, then it may make sense to keep some cash on hand.

With this in mind, I will suggest you to do comprehensive financial planning for your family and yourself in order to have a further understanding on your situation. This way, you will be able to make sound financial decision that maximises the associated opportunity cost.

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I have low risk appetite. Should I use spare cash to make a voluntary refund of housing amount withdrawn at CPF ($150k including accrued interest) or do partial payment of housing loan (1.8%,$140k left)?

For housing loan repayments, can the Cash to CPF ratio be changed each month? How do i indicate the amount of cash i want to repay? I will pay more cash over the years as i get increments. Any suggestions?

I’ve been repaying my housing loan in cash as the interest rate was less than 1.8%. However, I’m repricing to a fixed rate loan at 2.65%. At this rate, it better to repay the loan with CPF?

If I were to have cash on hand ($30k) and cpf-oa @ 2.5% ($30k) and am taking up a bank loan at 1.5%, would it be advisable for me to clear my housing loan or let the cpf remain in OA or invest in ?

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.?