Should I pay my mortgage over 25 yrs with CPF or with cash asap?

It's a question that I am facing myself as well - but I am single and have no kids on the way (Congrats on no. 2 coming btw! And also savings of $150k at age 35!)

There are several data points you would need to evaluate. If you took up a bank loan, do check to see how interest rates have changed (they have gone up) if you took it at a floating rate, and also see if there are any penalties whatsoever for early repayment. I was also considering refinancing my mortgage, but post doing the calculations (which included other admin fees), it made more sense for me to wait.

If your wife is looking to stay at home, and you are essentially the sole breadwinner to a household of 4 (not including your parents on both sides), it is important for you to evaluate your cashflows. Paying up fully with cash now might not make the most sense, UNLESS you have enough buffer.

Is your savings including investments?
I also worry about the loans, and I have been thinking many months about the issue as I worry about retrenchment. I could share some of my thoughts and plans.

1) I revamped my cash investments to be mostly good paying and steady reits that pay 5+% cash dividends (but I bought most during downturn last yr). I have been counting on these reits to be a cashflow generator with the plan of having those dividends to help pay some of the loans.

2) for oa, I have also been doing some investments. There are two ways to go about here, using the oa as a reserve to pay the loan (backup plan), and decent investments where over time, the dividends may grow to help pay the loan too, and when that happens, you could switch the loan to be paid from oa.

In my humble opinion, maybe you can explore using the cpf oa as buffer, and evaluate if your investments and dividends can take up the role as 2nd income to hopefully pay the loan on your wife's behalf. Takes good investing though.

If your monthly household expense is 4k, and clearly your income is above that, then I would
A) first focus on checking you have enough cash / cpf oa to cover for 12 mths payments

B) slowly evaluate and change ongoing investments to those that pay decent cash dividends to offset the expenses / loan

C) among the tips I shared on savings hacks, the two with best payoff is reviewing tv / internet / handphone expenses to shave off those you dont need, then check your insurance and see if changing from monthly to annual payments could save you a few hundred / thousand per year? These savings would greatly help. If your savings are 100+k, then managing the cashflow timing shouldnt be an issue.

Focus on slowly increasing the loan buffer till at least 6 mths, then slowly increasing cash dividend / interest income to offset your cashflow. If you do it well, this would make your cashflow better to manage / reduce the impact of the loss of one income.

When the kids go to primary school, maybe your wife would be ok to go back to work so that could be another alternative. That would reduce your stress to maybe about 7 yrs or less?

Dont pay down the loan immediately, but focusing on increasing the buffer and improving cashflow until you start having excess cash that you can do partial payment every two or three years. Its about ensuring survival for the long term. No cash on hand could be worse for you when the unexpected happens.