Anonymous
I just bought a resale HDB. Does it make sense for me to switch to a bank loan and grow my CPF money instead?
Context: I've bought my resale HDB flat and will start paying the monthly installment in Jun. I took HDB Loan. Here's where it gets interesting for me.
The value of the house is $420,000. After grants and fees and our combined CPF, we took a loan of about $150k from HDB.
We want to see if we can switch to a 10 year bank loan of lower interest compared to CPF, and grow our CPF instead.
What are some of the considerations? Is this the right move?
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Loo Cheng Chuan
11 Jun 2020
Founder at 1M65 Movement
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Elijah Lee
09 Jun 2020
Senior Financial Services Manager at Phillip Securities (Jurong East)
Hi anon,
If you intend to pay off your loan in 10 years, then I do think a bank loan would be a good move. You can get a loan with a fixed interest rate for the next 2-3 years, and you'll save a fair bit on your interest. A 2.6% HDB loan on $150K for 10 years is $1421/mth. A 1.5% bank loan would be $1347/mth. The total interest saved is around $8K+ if interest rates remain at this level.
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Yes. Switch to bank loan since lower interest rates now. Around 1.5 vs 2.6 (hdb loan). Go for those ...
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I have done that for myself. Bank interest rates are very low and in the foreseeable future would be low as well. THere is always a risk of bank interest rate rising above 2.6% charged by HDB, but i would take the risk.