Home Payments and Loans? - Seedly
 

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Asked by Stephy

Asked 3w ago

Home Payments and Loans?

Dear all, question, I balloted a BTO and collecting keys real soon.

My BTO is 470k

Cash on hand: 200k

CPF: 190k

Stable job total of 10k income for both of us.

Can someone advise me if we should pay my up all using CPF, then the rest Cash then home loan for the remaining amount.

Or

Empty my my cpf amount to investment and then take home loan from HDB and pay using CPF monthly?

Why?

Thanks in advs bros n sis!! I am in a dilemma here and hoping someone can help me on this.

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Mark Chan
Mark Chan, Business Manager at Amobee
Level 4. Prodigy
Answered 3w ago

Congratulations! It's no mean feat for you to gather such a huge trove of resources.

Between the options you have listed, this is what I would do if I were you.

1. Can someone advise me if we should pay my up all using CPF, then the rest Cash to fully pay the house.

A housing loan is known to be good debt. If you have financed it via a HDB housing loan through CPF, the interest levied would be 2.6% p.a. Assuming you are a young couple, there are a number of instruments out there that you can deploy your cash into in order to get returns superior to this interest rate charged to you. One such method would be to DCA into a market index (e.g. STI or S&P500) over a long period of time (e.g. 25 years) which should yield 6% p.a. on average.

Hence, I would not pay off my house in full and do something like this instead. This is especially so as I do not have an ambition to own a second property, and so would not need to apply for another housing loan (to which having an existing housing loan would be a problem)

2. Or Empty my my cpf amount to investment and then take home loan from HDB and pay using CPF monthly?

There are many parts to this question.

In general, I would not advise using your CPF funds to invest. There are many reasons for this, but one is that it is hard to guarantee performance better than the prevailing OA and SA rate. This is one article which you may take reference from. You will notice that CPF members are better off leaving the funds in their existing accounts (or better yet, moving it to SA for the 4%p.a. return).

It really depends on your investment objective, time frame, and goal :)

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