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.?

Question

Andrew Kwek · Accepted Answer

Yes I recommend to use more cash to pay for your loan, unless they are generating more than 2.5%. Keep a 3-6 months emergency buffer and you should be fine. Overall, it's all about asset allocation and you want to make sure you are not over allocated or too concentrated on certain asset class.

Typically the asset classes are stocks, bonds, long term bonds, cash, commodities, home equity. Just make sure that by partial repayment you are not overly allocating your capital on home equity.

Teo See Hwa · Answer

Need to know your age.

your loan tenure

Do you know about Time value of Money.

The _time value of money_ (TVM) is the concept that _money_ available at the _present time_ is _worth_ more than the identical sum in the future due to its potential earning capacity. This core principle of finance holds that, provided _money_ can earn interest, any _amount of money_ is _worth_more the sooner it is received.

Siow Nan · Answer

Assuming you are taking hdb loan @2.6% interest. And you use your OA to pay partly. You will forgo 2...

Read 2 other answers with a Seedly account

You will also enjoy exclusive benefits and get access to members only features.

Continue with Facebook

Sign in with Apple

Sign up or login with an email here

in any case, any amount used from cpf OA for property will start to have an “accrued interest” component to be returned back to cpf if you sell your hdb later on. The earlier you use, the more “accrued interest’ there will be.

if You are not planning to stay in this hdb for Long and want to minimize the “accrued interest“ component, then I would recommend you to do partial repayment in cash rather than in cpf, unless you have a sure way with minimal risks to generate more than the 2.5%/3.5% that cpf is giving you already for OA.  Of course make sure your cash flows are healthy when you do this, it will pay off in the Long run with the extra savings of interests.  by saving more, you have lesser tendencies to spend the extra money on unnecessary items too since your “budget“ will be tighter

Eric Chia · Answer

Just giving a brief answer here. Your interest rate does not change, though the accrued interest on your cpf will reduce.

Good to do partial repayment if your cash or cpf OA investment is giving less than 2.6%p.a. returns.