I have mortgage loan of 155k. Should I pay it off or invest if I have 330k cash (emergency funds inclusive)? - Seedly
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Anonymous

Asked on 04 Jul 2020

I have mortgage loan of 155k. Should I pay it off or invest if I have 330k cash (emergency funds inclusive)?

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Hi anon,

With the current low interest rate environment, you can see if you can refinance your loan. However as the quantum of your remaining loan is very low, I am not sure if you would be able to find new terms. If you can, in this low interest rate environment, you won't be paying too much interest, which means you may consider investing part of your funds to 'pay off' the interest you incur.

Subtracting your emergency funds, the remaining amount can definitely be earmarked for investments, but you will be exposed to market risk if you do so. You can opt to maybe invest 1/4 to 1/3 of the earmarked amount at the current market juncture while holding on to the rest, and RSP an amount into the market.

Another option is to also set aside maybe 50% of the outstanding mortgage, if interest rates rise down the road, you may want to just clear off your loan.

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Question Poster

05 Jul 2020

Forgot to add im using hdb loan and paying thru cpf
Elijah Lee
Elijah Lee

05 Jul 2020

I feel that if you are using HDB loan, you can try refinance to bank to get a better interest rate since rates are at a all time low. Keep 12 - 24 months buffer in CPF OA in case. If you don't think you'd be able to take advantage of the low rates, you can consider partial repayment as I mentioned.