HDB Loan - Early redemption

[Ixat]

Hullo bros, I understand that for HDB loans there are no penalty for early redemption.

 

Since home loans are based on reducing principle (right?) would I have paid out same amount based on either scenario below:

 

Scenario A loan 10 years paid up 10 years exactly.

 

Scenario B loan 30 years paid off in 10 years via early redemption.

 

Thanks for advising!

[Qpik]

u saved on interest. based on reducing balance method.

 

what i did last round was to make yearly lump sum payment & reduce the loan period but not before doing some calculations.

[Ixat]

u saved on interest. based on reducing balance method.

 

what i did last round was to make yearly lump sum payment & reduce the loan period but not before doing some calculations.

 

I intend to do yearly lump sum repayment too via leftovers in CPF.

 

I understand that I would saved on interest. So would the final figure paid for both scenario after interested paid be the same or very close?

 

Thanks!

 

 

[Hokk7777]

Sometiimes, it may not be wise to pay off quickly by lump sums.

 

You better make sure that you have enough cushion inside your CPF just incase "lost of income".

I think you should have at least 5years of cushion inside your CPF first. (Example if you are paying $800/mth, then $800x5x12 = $48,000)

 

And HDB loan very low only 2.6%, if can, owe them as long as possible.

[Jman888]

I did that, manage to dump the balance in CPF to hdb. if there is any balance loan, they will askif you wish either

 

1) maintain the loan period with lower monthly repayment.

2) maintain the monthly repayment amount and shorten the loan period.

[Icecold]

How about the withdrawal limit? Would you not hit that limit faster if you do early repayment? Anyone know how to calculate this limit?

[Ixat]

Sometiimes, it may not be wise to pay off quickly by lump sums.

 

You better make sure that you have enough cushion inside your CPF just incase "lost of income".

I think you should have at least 5years of cushion inside your CPF first. (Example if you are paying $800/mth, then $800x5x12 = $48,000)

 

And HDB loan very low only 2.6%, if can, owe them as long as possible.

 

We have 2yrs worth of installment set aside in UT in the event we both lose our job. If either one loses job, installment payment goes on as per normal via CPF still.

 

Can you explain the rationale for 5 years? I think that is a very large buffer. Is there any other use you are suggesting this large buffer like investments, 2nd property?

 

Thanks bro!

[Jamstart]

I am not sure if the rule still applies. Years back when I tried to repay back my HDB loan, I was told I could not pay all even if my CPF is enough to do so. You have to leave behind about 45K loan and if you really want to clear all, then it has to be in CASH.

[Ixat]

I did that, manage to dump the balance in CPF to hdb. if there is any balance loan, they will askif you wish either

 

1) maintain the loan period with lower monthly repayment.

2) maintain the monthly repayment amount and shorten the loan period.

 

Bro i assume 2 would be a better choice?

[Hokk7777]

We have 2yrs worth of installment set aside in UT in the event we both lose our job. If either one loses job, installment payment goes on as per normal via CPF still.

 

Can you explain the rationale for 5 years? I think that is a very large buffer. Is there any other use you are suggesting this large buffer like investments, 2nd property?

 

Thanks bro!

 

5 years is my personal opinion only. I am a bit of kaisu when comes to cashflow and debts.

2 years is good, but 5 years makes you sleep better.

[Altivo]

excluding my wife's CPF, i have about 3 yrs of buffer. Should i use the excess to do some lump sum payments? hmmm any advice

[Jman888]

Bro i assume 2 would be a better choice?

 

of course and it cut down the interest cost and at that time, I left with less than 12 months to repay.

[Ixat]

I think this calculators are useful. Valid for our HDB loans?

 

http://mortgage-x.com/calculators/extra_pa..._calculator.asp

 

http://mortgage-x.com/calculators/default.htm

[Siemens60]

dunno if i am right... since CPF also pays interest (difference is 0.1%)... if you pay off lump sum of $30k/yr

 

so your savings in interest is $30/yr...

 

[Aimnfire]

I am not sure if the rule still applies. Years back when I tried to repay back my HDB loan, I was told I could not pay all even if my CPF is enough to do so. You have to leave behind about 45K loan and if you really want to clear all, then it has to be in CASH.

 

you were smoke by them

[Aimnfire]

for me my house cost abt $150 000

 

down payment is $50 000

 

Loan $100 000

 

Period 30 years

 

Monthly about $300+

 

BUT

 

within 5 years I clear my house loan by dumping my investment back to CPF. Together with wifey we manage to clear it as the 5 years they only deduct my cpf $300+ while wifey cpf left untouched.

 

thats mean if 30 years instead of $150 000 my house price is actually $100 000 x 2.6% x 30 yrs will be $178 000 + $50 000 = $228 000...................................$78 000 interest leh why give them that? the 5 years already they makan $13 000 of interest.

 

some of my friends said i goondo/stupid etc etc. should just let it be 30 years. i dont care what. now anything were to happen to me, my family have a roof over their head fully paid for. you can argue that we have home protection scheme (HPS). correct, that is if you die what if you become vegetable? i believe HPS only cover death.

 

for those who wants to drag 30 years go ahead but when 30 years reaching.....they will give you upgrading.....pay some more lah interest.

 

 

[Ixat]

for me my house cost abt $150 000

 

down payment is $50 000

 

Loan $100 000

 

Period 30 years

 

Monthly about $300+

 

BUT

 

within 5 years I clear my house loan by dumping my investment back to CPF. Together with wifey we manage to clear it as the 5 years they only deduct my cpf $300+ while wifey cpf left untouched.

 

thats mean if 30 years instead of $150 000 my house price is actually $100 000 x 2.6% x 30 yrs will be $178 000 + $50 000 = $228 000...................................$78 000 interest leh why give them that? the 5 years already they makan $13 000 of interest.

 

some of my friends said i goondo/stupid etc etc. should just let it be 30 years. i dont care what. now anything were to happen to me, my family have a roof over their head fully paid for. you can argue that we have home protection scheme (HPS). correct, that is if you die what if you become vegetable? i believe HPS only cover death.

 

for those who wants to drag 30 years go ahead but when 30 years reaching.....they will give you upgrading.....pay some more lah interest.

 

Bro mortgage loans are based on reducing principles unlike car loan, so your calculation might not be correct i think? (pls correct me)

 

You paid up with cash + cpf or only CPF?

[Jamstart]

Maybe ba, but why smoke me? I dont pay to the staff, he/she got nothing to earn from it. On the other hand, to think of it, it is also possible that you need to settle the last 45k by cash, otherwise, they earn what? This is to deter people to settle all in one shot with their CPF, HDB wanna earn interest mah.

Edited August 25, 2009 by Jamstart