Asked by Anonymous

If I were to have cash on hand ($30k) and cpf-oa @ 2.5% ($30k) and am taking up a bank loan at 1.5%, would it be advisable for me to clear my housing loan or let the cpf remain in OA or invest in ?

Better returns investments? I am willing to take up to high-middle risks, aged around late 30s to 50s. No dependants.

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  • Zuhdy Farhan
    Zuhdy Farhan, Consultant at Jna Real Estate Pte Ltd
    Level 2. Rookie
    Answered on 03 Mar 2019

    Using your CPF for housing will deplete your cash proceeds from the sale of your flat in future.

    Because:

    Sale proceeds = Sale price - outstanding loan - CPF used - CPF accrued interest

    The more CPF you use, the less cash you receive = more money locked up in CPF.

    Therefore unless you are sure that you will be staying in this flat for the rest of your life, it is more advisable to not use it for housing wherever possible.

    Feel free to contact me for more information.

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  • Siow Nan Wong
    Siow Nan Wong
    Level 2. Rookie
    Answered 3d ago

    Depends on how much more housing debt do you have left and your future plans going forward. Eg. are you planning for an upgrade of your home, or get another investment home for yourself?

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  • Jim Tay
    Jim Tay, Director at Jimtay.com
    Level 2. Rookie
    Answered on 05 Mar 2019

    Your bank interest rate is still low.

    Leave your CPF in your OA, and take the cash to invest :)

    Using your CPF to pay off your bank loan is not advisable, unless you are really cash tight.

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  • Loo Cheng Chuan
    Loo Cheng Chuan, Founder at 1M65 Movement
    Level 6. Master
    Answered on 05 Mar 2019

    Think about the difference between the bank interest rate va the return rates of the OA or SA. There would be an arbitrage opportunity if you take the loan and put money in SA.

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