Asked by Anonymous
Asked on 03 Mar 2019
Recently, the bank increase interest rate for my housing loan from 1.7% to 2.4%. I I am still within lock in period, I cannot refinance yet. But bank allow me to do a lump sum partial repayment without any penalty charge.
But I do not know whether I should use cash saving or CPF for this repayment. I am risk adverse & do not have investment that give yield of above 2.4%. If i use CPF fund, i lose ordinary account 2.5% int & also mean it will take me longer to reach Minimum sum for retirement.
Cash. but actually, use the cash to pay back your CPF amount used. paying cash to the bank loan doesn't put you at a better position than paying back your own CPF.
on 04 Mar 2019
Considering that you have spare cash sitting around, best to use it to pay off your debts and reduce interest.
And I second mic mic, that using it to pay off the CPF owed is better, as the cost of using your CPF is higher vs the bank loan interest rate, even at 2.4%. There's a separate working for that which is hard to explain here.
For the topping back of CPF, the form is available on their website: https://www.cpf.gov.sg/Assets/members/Documents/FORM_HSDVR.pdf