Asked by Anonymous

Should I use cash to service my mortgage or use cpf to service ?

I’m turning 45 this year, the OA contribution will be decreased, thinking of whether should service mortgage with more cash while saving more on cpf to earn 2.5% or use the same cash to invest instead.

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  • Jason Sin
    Jason Sin
    329 Answers, 419 Upvotes
    Answered on 15 Sep 2018

    It is better to keep your money in OA cpf to earn the 2.5% unless you are confident that you could generate a better return than 2.5%.

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  • HC Tang
    HC Tang, Financial Enthusiast, Budgeting at The Society
    376 Answers, 901 Upvotes
    Answered on 15 Sep 2018

    If you have the cash monthly to service the loan, yes.

    This you can keep $ at OA for 2.5% and better if you transfer some to SA to earn 4%.

    If you can invest and return more than 4% guaranteed, but the key is "guaranteed", then should invest yourself and continue to use OA to service you loan. Do calculate if you can hit the CPF min sum first you decide to continue use CPF to service the loan.

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  • Jin Shun Chia
    Jin Shun Chia, Senior Financial Consultant at Prudential
    39 Answers, 62 Upvotes
    Answered on 13 Sep 2018

    If you are able to hit the retirement sum at 55yo, then you should use cash to pay off the mortgage. Otherwise the money would be stuck in cpf anyways until 65yo.

    I’m considering this from the perspective that you like to have more cash flow in your later years.

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