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 ? - Seedly
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Anonymous

Asked on 02 Mar 2019

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 3. Wonderkid
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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IC

01 Feb 2020

Even you sell the apartment, for typical people, will need to buy the new apartment, so it no matter cash or cpf. Unless u sure after u sell the apartment and u will not need to buy new apartment or buy with full cash without touching cpf, than you reasoning apply. But if you can pay full cash on next apartment, who why care about cpf accrued interest, can consider as retirement fund
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MT2020
MT2020
Level 7. Grand Master
Answered on 09 Mar 2020

I prefer to clear your housing loan first as before you can even invest, you should clear up any loans and debts you currently have.

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Lim Boon Tat
Lim Boon Tat, Mathematics at Cambridge University
Level 6. Master
Answered on 01 Feb 2020

Are you late 30s or late 50s? When do you anticipate retiring, and not having a stable income? If you are only late 30s (like i am), and have a healthy work attitude (aka will continue trying to make money till 60s/70s), then i would say you should NOT clear the housing loan, and use the cash to go invest (this is assuming you have an emergency fund stashed away or you have a (very) stable job).

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Siow Nan
Siow Nan
Level 6. Master
Answered on 21 May 2019

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 3. Wonderkid
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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