My gf and I are both earning about $3.5k a month ($2.8k after CPF deductions). Should we use cash to finance our BTO loan or should we use CPF?

When one is young leverage, when old de-leverage.

I would think for BTO, you are in a very safe position! Your house value would definitely appreciate in value whether you sell within 5 years or if you decide to hold longer.

On average, people make between $100K to $200K in cash proceeds (after deducting outstanding loans and CPF utilized and accrued interest) even if they utilize CPF to pay for the mortgage.

If you are not thinking of selling your BTO, you can consider using CPF to finance and your girlfriend to use cash to finance the mortgage. In this case, you can make your money work harder to reap the 5% interest while she can enjoy the CPF interest (which is higher than 2%)

For now, Cpf is the best choice. 2.6% fixed is good, and any interest paid actually goes back to your OA when you sell your house. Technically you don't even lose anything. If you have cash, you can choose to do cash top up to your cpf to finance your mortgage. Gives you tax exemptions too.

When you put cash into your BTO, it is still a form of savings as it will continue to appreciate in value,albeit a form of forced savings.

I believe the BTO would not be the final place of residence and you may look to upgrade in future when your family grows in number. CPF put into financing the flat would incur accured interest that you can't see now at this point of time. You will feel the effects when you find that the cash proceeds from your future sale of flat is less than what you expected because part of it goes into paying the accured interest.

I would recommend working out your budget carefully. Work out a cash amount that you and your future wife are comfortable with putting into the mortgage for BTO, and use CPF to pay the remaining amount. Since you are financially savvy,continue to set aside that money to invest, at some point of time, use the returns to lower your outstanding loan. Savings in the house and your own investments are separate baskets of investments. This is also considered diversification. Most importantly consider the expenses that you might incur as a young family before arriving at the amount of cash/CPF to use