Does it make sense for me to pay monthly property mortgage by cash? - Seedly
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Anonymous

Asked on 12 Sep 2019

Does it make sense for me to pay monthly property mortgage by cash?

About $100k in various investments, $40k cash savings, protection plans sorted. With a combined income of ~$12k (before less CPF), took a DBS home loan.

Thinking whether to pay monthly HDB mortgage of ~$1.8k by cash rather than CPF since

(1) collect CPF 2.5% interest,

(2) I can afford it now and can switch to paying by CPF if I need the cash flow subsequently rather taking eating straight into my savings (e.g retrenchment or wife stop working to take care of kids).

Does this make sense?

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Cedric Jamie Soh
Cedric Jamie Soh, Director at Seniorcare.com.sg
Level 8. Wizard
Answered on 12 Sep 2019

There are people who do that

1) lack of choice.. coz CPF not enough

such as me. I have very little CPF since I operate my own business and has very little CPF in my OA account.

2) Choose to do so willingly, as they know they have to pay back the CPF with accrued interest (at 2.5% per year) when they sell off their properties.

If it's me, I will maximise as much CPF as possible. Sure, I have to pay back 2.5% pa accrued later (accumulated it's going to be a big sum) but it's still to myself...

and let's be honest with all of us, cash is king.

You can see your cash, but it's very difficult to see your CPF outside the.. building.

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Joe
Joe, Adventurer at Game of Life
Level 5. Genius
Answered on 25 Feb 2020

1) If you can hit FRS, which means you are able to withdraw the extra monies (Including accured interest) when you hit 55.

&

2) You have plans to use your cash to invest/ start a business or put into income generating assets that can give you significantly more interest than 2.6%.

If the above 2 points resonates with you, then go ahead and use CPF to pay as having cash on hand is always better since there are more flexibility.

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Davin
Davin
Level 7. Grand Master
Answered on 24 Feb 2020

Its perfectly make sense if cash is not a problem.

Ppl use cpf is because don't have cash. You can always go back cpf if u need to.

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Tommy
Level 3. Wonderkid
Answered on 09 Feb 2020

It really depends on your personal cashflow and okding power. You may service your mortgage loan either by cssh or your CPF OA. CPF OA earns you a very attractive interest thus it may also be a good idea to maintain your CPF OA contributions.

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