tag:blogger.com,1999:blog-6213354074634538714.post8332884662774087149..comments2024-03-29T22:22:39.118+08:00Comments on (The) Boring Investor: Housing Loan Servicing – Cash or CPF?Lee Chin Waihttp://www.blogger.com/profile/10250390011842795509noreply@blogger.comBlogger25125tag:blogger.com,1999:blog-6213354074634538714.post-36654038665224208182017-09-24T21:42:06.113+08:002017-09-24T21:42:06.113+08:00Money Maverick,
I invest in shares and corporate ...Money Maverick,<br /><br />I invest in shares and corporate bonds.Lee Chin Waihttps://www.blogger.com/profile/10250390011842795509noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-6085998419876565772017-09-21T12:40:04.183+08:002017-09-21T12:40:04.183+08:00what do you invest in to beat CPF's interest r...what do you invest in to beat CPF's interest rate?Jhttps://www.blogger.com/profile/15010404820765277684noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-91572907279125276892017-06-26T21:40:41.543+08:002017-06-26T21:40:41.543+08:00It's because I invest the cash, hoping to achi...It's because I invest the cash, hoping to achieve a return higher than CPF's 2.5%. If I could achieve a higher return than CPF, then it is better to use CPF to service the loan.Lee Chin Waihttps://www.blogger.com/profile/10250390011842795509noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-54655590067799581422017-06-20T08:48:32.859+08:002017-06-20T08:48:32.859+08:00no worries.
reading from your post, it seems usi...no worries. <br /><br />reading from your post, it seems using cash is the most efficient use (keep cpf intact). any reason why u still cpf to service your loan then?foolish chameleonhttps://www.blogger.com/profile/05964116916697053495noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-79582889095534564932017-06-20T00:19:52.072+08:002017-06-20T00:19:52.072+08:00Sorry, I missed your comment earlier.
CPF OA inte...Sorry, I missed your comment earlier.<br /><br />CPF OA interest rate is set at 80% x banks' fixed deposit rates + 20% x banks' savings rates, subject to a min. of 2.5%. <br /><br />Banks have a type of loans that are also pegged to fixed deposit rates. The rates are set at fixed deposit rate + margin. Hence, banks' loan rates will generally be higher than HDB loan rate. They are currently lower mainly because CPF OA rate has a floor at 2.5%.<br /><br />I'm using CPF to service my housing loan.Lee Chin Waihttps://www.blogger.com/profile/10250390011842795509noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-79049291992872518502017-06-12T09:33:55.841+08:002017-06-12T09:33:55.841+08:00i am in a dilemma regarding using cpf vs bank (cas...i am in a dilemma regarding using cpf vs bank (cash) too. have been researching this for the longest time.. <br /><br />with fed due to increase in the next few years, which means, the sibor will also rise. do you think that bank i/r will be more than hdb loan? is there any precedence for this happening? <br />or once bank loan rises to the same level as hdb loan, the hdb will increase their i/r too? (ie the cpf oa has to increase too, since it is pegged +0.1%)<br /><br /><br />btw, did u use cash or cpf for your house? foolish chameleonhttps://www.blogger.com/profile/05964116916697053495noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-42965409072734426032017-01-10T23:23:00.056+08:002017-01-10T23:23:00.056+08:00Yes, you are correct. To summarise, when MA hits t...Yes, you are correct. To summarise, when MA hits the MA ceiling, MA contributions will overflow to either:<br />(a) SA, if SA has not reached FRS, or <br />(b) OA, if SA has reached FRS.<br /><br />SA has no ceiling, so SA contributions will not overflow to OA when SA reaches FRS.Lee Chin Waihttps://www.blogger.com/profile/10250390011842795509noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-24024768367883687842017-01-10T13:46:55.237+08:002017-01-10T13:46:55.237+08:00Good to clear that up. After some reading, you can...Good to clear that up. After some reading, you can overflow your MA to your SA if your MA hit the ceiling limit (Currently 52K), and if your SA has reached FRS (currently 166K) it will overflow to OA instead.Wacanbosihttps://www.blogger.com/profile/12119024587012827987noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-87236690565460791192017-01-10T00:22:06.358+08:002017-01-10T00:22:06.358+08:00Hi, you are correct. There is no limit on SA. Thks...Hi, you are correct. There is no limit on SA. Thks for pointing it out.Lee Chin Waihttps://www.blogger.com/profile/10250390011842795509noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-61194900117872019832017-01-09T17:28:25.723+08:002017-01-09T17:28:25.723+08:00Hi, I've tried to find in cpf website on what ...Hi, I've tried to find in cpf website on what is the limit of SA but i can't find it. And matter of fact, i was informed that SA had no ceiling limit, so how does SA can overflow to OA?<br /><br />Bit confused now <br /><br />Thanks in advance for your replyWacanbosihttps://www.blogger.com/profile/12119024587012827987noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-47997249201384523992017-01-08T12:32:53.806+08:002017-01-08T12:32:53.806+08:00cos houses are relatively cheaper in the USA :)cos houses are relatively cheaper in the USA :)Vikhttps://www.blogger.com/profile/08924517006343218985noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-50049359395984000792016-03-18T22:27:51.229+08:002016-03-18T22:27:51.229+08:00Hi,
Yes, accrued interest is still accumulating. ...Hi,<br /><br />Yes, accrued interest is still accumulating. The accrual interest rate is the same as the OA rate, since accrued interest reflects the amount of interest you would have if you had not used the CPF money for repayment.<br /><br />FYI, you can apply to CPF to pay back the accrued interest with cash. This is different from cash top-up.Lee Chin Waihttps://www.blogger.com/profile/10250390011842795509noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-63178749934545491462016-03-18T11:30:14.105+08:002016-03-18T11:30:14.105+08:00Hello,
Can I check something regarding the CPF to...Hello,<br /><br />Can I check something regarding the CPF top-up option. In this scenario, since I am still paying by CPF, is the accrued interest still accumulated? If so, that accrued interest is always 0.1% above OA rate and so they should cancel out right? (I may be entirely wrong on this though.)Haikalhttps://www.blogger.com/profile/09879582256775704575noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-6535767768415033142015-10-11T13:32:30.414+08:002015-10-11T13:32:30.414+08:00Hi Ivor,
No, it does not affect the decision whet...Hi Ivor,<br /><br />No, it does not affect the decision whether to use cash or CPF to service the loan. The rule just means that you need to put more money back into CPF when you sell your flat. It is akin to deciding how to distribute your profits after the investment is sold; it does not affect the original investing/ financing decision.Lee Chin Waihttps://www.blogger.com/profile/10250390011842795509noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-34550341179211350152015-10-10T07:55:37.266+08:002015-10-10T07:55:37.266+08:00Hi Chin Wai and Yong Jie,
I am thinking of applyi...Hi Chin Wai and Yong Jie,<br /><br />I am thinking of applying BTO as well and have been researching on this topic and i found out that we have to pay back the CPF money we used for HDB with accrued interest till the day we sell our HDB. I am interested to hear if this will affect your views on this matter.Ivorhttps://www.blogger.com/profile/05681582979422577473noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-49917690240519013292015-09-16T09:31:33.625+08:002015-09-16T09:31:33.625+08:00Hi Chin Wai,
Thanks! I believe using cash to inve...Hi Chin Wai,<br /><br />Thanks! I believe using cash to invest in index will provide a better yield in the long run. So I will more likely to opt for using CPF to service the loan. Thank you for your reply.Yong Jiehttps://www.blogger.com/profile/15362130690681800163noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-88106137278727075212015-09-16T00:58:44.759+08:002015-09-16T00:58:44.759+08:00Hi Yong Jie,
You can use the potential rate of re...Hi Yong Jie,<br /><br />You can use the potential rate of return of cash and CPF to guide you. If you plan to invest using cash, then cash will likely have higher potential returns than CPF, so it'll be better to use CPF to service the loan. On the other hand, if cash is left in the bank at low interest rates, then it is better to service the loan using cash.Lee Chin Waihttps://www.blogger.com/profile/10250390011842795509noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-62639950496291580932015-09-15T11:39:16.339+08:002015-09-15T11:39:16.339+08:00Hey Chin Wai,
Interesting perspective from you.
...Hey Chin Wai,<br /><br />Interesting perspective from you. <br />I'm planning to apply for BTO next year and this post got me thinking.<br />Paying with cash leaves little cash flow for me, and thus, giving me lesser cash for investing in index,bonds and endowments.<br /><br />(I prefer to hold investments for long term to accumulate and reinvesting dividends)<br /><br />What is your advice?Yong Jiehttps://www.blogger.com/profile/15362130690681800163noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-19897631414292224252015-07-30T23:46:35.663+08:002015-07-30T23:46:35.663+08:00Thanks for your encouragement. I'm glad that i...Thanks for your encouragement. I'm glad that it is useful to you :)Lee Chin Waihttps://www.blogger.com/profile/10250390011842795509noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-5009530860514707672015-07-30T23:41:01.994+08:002015-07-30T23:41:01.994+08:00Thank you for the clarification, Chin Wai. Your bl...Thank you for the clarification, Chin Wai. Your blog is indeed one more of the more pragmatic ones around. Carry on writing yeah; I know it can be tough at times!fitreehttps://www.blogger.com/profile/10306370010139732397noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-47904894251910356872015-07-30T23:35:36.235+08:002015-07-30T23:35:36.235+08:00Hi fitree,
Yes, the computation is comparing savi...Hi fitree,<br /><br />Yes, the computation is comparing saving money on hand with saving money in OA.<br /><br />Is your second question about whether it is better to take a bank loan or CPF loan? As you've correctly mentioned, bank loan interest rate is on the rise, so it's safer to take CPF loan instead.Lee Chin Waihttps://www.blogger.com/profile/10250390011842795509noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-28583480294523532722015-07-30T22:58:40.351+08:002015-07-30T22:58:40.351+08:00Hello Chin Wai,
I just wish to understand this a ...Hello Chin Wai,<br /><br />I just wish to understand this a little further. Your assumption is based on saving monies on hand vs saving monies in OA hence 0.05% vs 2.5%, am I right to say so? But that's if we have ready cash.<br /><br />Does this apply to using bank loan (1.8% and rising) vs using OA (2.5%) to service mortgage as well? Which of the two will you advocate?fitreehttps://www.blogger.com/profile/10306370010139732397noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-10548667103404133322015-07-09T23:45:17.141+08:002015-07-09T23:45:17.141+08:00Yes, the loan interest is quite low as it caters f...Yes, the loan interest is quite low as it caters for public housing and is provided by a provident fund managed by the state. The fund currently pays 2.5% for the savings and charges 0.1% more for the housing loans. The savings interest rate is tied to commercial deposit rates, but has a floor at 2.5%.Lee Chin Waihttps://www.blogger.com/profile/10250390011842795509noreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-66359184637184727452015-07-09T07:20:04.336+08:002015-07-09T07:20:04.336+08:00Wow, it's interesting that singapore has a ver...Wow, it's interesting that singapore has a very favorable mortgage term. Here in the US, the government give the bank the money at 0% interest, but by the time it gets to me, I had to pay 4.375%. Double the amount of interest you pay there in singapore.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6213354074634538714.post-59255213730247400652013-09-30T15:37:24.672+08:002013-09-30T15:37:24.672+08:00When you are near 55 and you still have outstandin...When you are near 55 and you still have outstanding housing loan and plenty of idling cash in the bank and too worry to invest; then it make more sense to pay up with cash.CreateWealth8888https://www.blogger.com/profile/04870750974362417154noreply@blogger.com