HDB loan

[Arcachon]

As I'm considering taking HDB loan to conserve cash, I'm planning to invest my CPF of about $40k each for me and my spouse in UOB SGD fund Class A to prevent it from being wiped out and compensate for the higher interest of HDB loan. Being concentrated on a single asset class, I have to consider the worst case scenario. As the fund consists of short term investment grade bonds, there should not be capital loss for an investment horizon of 2-3 years (the underlying bonds would have matured with bankruptcy of the companies highly unlikely). Are there other unknown risks that I should be aware of if I choose this option? Would like to hear your views. Hope the discussion can focus on the above and not if I should take bank or hdb loan.

[Arcachon]

There is $100,000 in CPF account, and outstanding $100,000 loan.
There is the option to either:
1) Pay off the $100,000 loan completely (CPF left $0, and loan outstanding is $0)
2) Slowly pay it off by monthly installments (CPF still have $100,000, and loan oustanding remains $100,000)

1st $40k of the CPF account earns 3.5%, and there is monthly $1000 contribution to OA.

[Arcachon]

https://fb-s-c-a.akamaihd.net/h-ak-fbx/v/t1.0-0/q82/p206x206/18447336_10210489354923067_2556671880834488095_n.jpg?oh=9199043cde6bb1f4492b132de3af03af&oe=59BBF34B&__gda__=1505520722_8978d96e235004dc8fff1f1ead72b103

https://docs.google.com/spreadsheets/d/1MKNCb9I1pLCsXtfHebMypgbbwDN1K5jPFiV1Mkexuq4/edit#gid=1895660225

[Arcachon]

https://www.facebook.com/groups/286299831788022/?multi_permalinks=322966848121320&comment_id=323189591432379&notif_t=like&notif_id=1494642893282127