Newbie
Part of the 15% downpayment was covered by CPF. Would it be advisable to payback for the CPF drawn, or to make partial repayment for the home loan ? As most home loan is typically 20 years, CPF withdrawn for the 15% would incur a sizeable accured interest. Whats your comments ?
Newbie
My view is that a lot depends on the prevailing interest rate. If interest rate is below 2.5%, then it is advisable to keep the money in CPF and not to make partial payment. This is because the money will earn you more interest if remain in CPF. It also acts as a contingency if for any reason you lost your income or bank decided to revalue your property. You can still use your CPF to service you monthly loan payment or top up any short-fall. Another advantage is that you have a sizable sum of money in CPF which you can make use to acquire a second property if a good opportunity arises (ie. sudden market downtown).Originally Posted by ngloong
However, if interest rate rises above 2.5% then maybe it is better to redeem the loan, at the same time keeping some money aside in CPF as contingency.
This is just my point of view. Some of us prefer not to have any debts so they strive to clear the loan asap. But in the meantime, they loses flexibility in the usage of funds.
I'm currently using Citibank loan with monthly interest of 1.661%
Junior
Very good advice from hkching. It will be even better if your CPF OA 1st 20k can earn 3.5%. No hurry to do partial pre-payment. you can probably lock down the interest at 2% for next 3 years and keep your CPF.
Newbie
As long as your OA + SA = < $60K. Keep in CPF as least till end of this year or when the interest rate no longer 3.5%.
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