HDB Loan - Early redemption

[Aimnfire]

btw....it stated its only for bank loan

[Alechi]

over the extent of my loan ... i pay HDB interest amounting to $81K ... Wah lao !! I could have bought a car in cash !

 

hahaha .. that's life.

[Newbie2006]

If one loans $100K, for simple calculation without reducing the principal, one will have to pay $2,600 per year.

If one has $100K in OA, one will earn $2,700 in interest from CPF ($20K @3.5% = $700, $80K @2.5% = $2K)

 

In addition, if property market were to crash, one will have the opportunity fund to buy a private, rent it out, for Retirement planning purpose.....

 

So for me, I will never redeem earlier even though i have the sum in my OA.

 

My 2 cents worth....

[Ixat]

I am confused by all the people who had done early repayment. Did you pay by cash or CPF? If CPF, any problem of exceeding the housing withdrawal limit or did you had already set aside half of the prevailing Minimum sum in your OA & SA. I checked CPF website, it mentioned about the valuation limit and limit for housing withdrawal.

 

http://mycpf.cpf.gov.sg/CPF/my-cpf/buy-hou...5.htm?popup=yes

 

So from what I read there is no withdrawal limit for HDB loan?

 

a)A new flat bought directly from HDB

 

If you are taking a HDB concessionary loan

You can use up to 100% of your CPF Ordinary Account savings to pay the initial 10% deposit as well as the balance of the purchase price.

 

If your existing CPF balance is not enough for full payment of the purchase price, you may take up a housing loan from HDB subject to credit assessment by HDB, and use all the monthly contributions to your Ordinary Account for the instalment payment of the loan.

 

Also, HDB requires you to exhaust all your CPF Ordinary Account savings first before granting you any housing loan.

[Mingsect]

looking at the summary,

 

seems like interest was deducted before the loan get repaid ..

 

for my case

took the loan in 2005 sep , think total loan amt was 260k,,, loan for 25years.

 

 

at 2006 jan amt was 254k

 

every month paying 1.165 k from cpf combined so 1 year is 13.98k

 

 

at the end of the 2006year , statement still show outstanding 246.6k instead of 240k

 

so i guess 6 .6 k, went to the interest..

 

 

last week, just down to a hdb branch went to pay 22k.. from cpf also..

 

hoping the faster pay finish the better..

 

 

 

 

Edited August 25, 2009 by Mingsect

[RadX]

What I did was reduce the term. REduced from 30 yrs, then now to 20 yrs, left 5 yrs to pay...if have lump sum, clear everything

[Newbie2006]

looking at the summary,

 

seems like interest was deducted before the loan get repaid ..

 

for my case

took the loan in 2005 sep , think total loan amt was 260k,,, loan for 25years.

 

 

at 2006 jan amt was 254k

 

every month paying 1.165 k from cpf combined so 1 year is 13.98k

 

 

at the end of the 2006year , statement still show outstanding 246.6k instead of 240k

 

so i guess 6 .6 k, went to the interest..

 

 

last week, just down to a hdb branch went to pay 22k.. from cpf also..

 

hoping the faster pay finish the better..

 

Your calculation is loop-sided. You didn't calculate the amount in the OA if not use to repay off the loan, can also earn 2.5% and 3.5% interest....

 

[Mingsect]

you might be right ..

 

 

so if the 22k stay in the OA, how much interest can i earn for the next 20 year ?

 

if i pay 22k, how much interest i save from the loan for the next 20 year ?

Edited August 25, 2009 by Mingsect

[Ultramega]

so if let's say someone has a outstanding hdb loan, and has more than enough in his ordinary account to pay off the loan with hdb, is it better to do so, or not to (and conitnue paying monthly instalment) ?

 

anyone understand the rationale, pls advise, thanks.

 

I guess what he means is that if you have some way of using your CPF money to earn more than 5.1% of the remaining loan amount a year, then you are better off continuing paying monthly installments (ie, DON'T pay off the loan).

 

Earn 5.1% = earn back the OA interest that you lost + earn back the loan interest you paid.

 

Earn more than 5.1% = earn back the OA interest that you lost + earn back the loan interest + EXTRA.

 

 

Edit: No, wait....the more i type the more confused i get. I don't think i'm right. haha :)

Edited August 25, 2009 by Ultramega

[Icecold]

What I do with my extra money in OA is to invest in STI ETF. Dividend yield is about 4.5%. Am betting the appreciation of share value will cover the other 0.6% and hopefully more.

 

Is this a wise move, any comments?

[Newbie2006]

you might be right ..

so if the $$ 22k stay in the OA, i can earn how much interest a year ?

 

If you have $22K in OA, you will earn 3.5% for the 1st $20K - $700 per year. the next $2K earns you $50, so $750 in total.

 

For that $22K loan amount, you are paying $572/yr in interest.

[Rainman]

looking at the summary,

 

seems like interest was deducted before the loan get repaid ..

 

for my case

took the loan in 2005 sep , think total loan amt was 260k,,, loan for 25years.

 

 

at 2006 jan amt was 254k

 

every month paying 1.165 k from cpf combined so 1 year is 13.98k

 

 

at the end of the 2006year , statement still show outstanding 246.6k instead of 240k

 

so i guess 6 .6 k, went to the interest..

 

 

last week, just down to a hdb branch went to pay 22k.. from cpf also..

 

hoping the faster pay finish the better..

 

 

Clear liability first, got lump sum dump all in, unless u r worry abt job security.

 

Simple maths will tell u the 3% of cpf interest is not enough cover your servicing loan of 2.6% annually.

 

 

 

[Newbie2006]

Clear liability first, got lump sum dump all in, unless u r worry abt job security.

 

Simple maths will tell u the 3% of cpf interest is not enough cover your servicing loan of 2.6% annually.

 

Strange to me....if one has lump sum, there is no need to worry about job security.

 

Also strange to me, simple maths... if I have $200K lump sum earning 3%, why can't I cover the $200K loan that is charging me 2.6%?

 

 

[Kiario04]

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?

 

for simple laymen calculation, it's better to assume $XXX loan x loan interest x Loan duration.

 

Easier to see & understood.

 

 

[Kiario04]

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.

 

u really kena smoked by the HDB staff.

 

No such rulings. U shld ask them to show to u in black & white.

 

[Kiario04]

If one loans $100K, for simple calculation without reducing the principal, one will have to pay $2,600 per year.

If one has $100K in OA, one will earn $2,700 in interest from CPF ($20K @3.5% = $700, $80K @2.5% = $2K)

 

In addition, if property market were to crash, one will have the opportunity fund to buy a private, rent it out, for Retirement planning purpose.....

 

So for me, I will never redeem earlier even though i have the sum in my OA.

 

My 2 cents worth....

 

If market crash or property crash, and you have yet to make full payment for your 1st house, dont expect HDB or bank to lend ya $$$ to buy 2nd properties.

 

During recession or market crashes, money flow tighten, hence no loans available to debtors.

 

Only available to those who can mortgage their fully paid 1st hse to finance the next hse.

 

 

[Ixat]

u really kena smoked by the HDB staff.

 

No such rulings. U shld ask them to show to u in black & white.

 

 

Could they be refering to this -> http://mycpf.cpf.gov.sg/CPF/my-cpf/buy-hou...sing_Leaflet.ht

[Jrage]

hmm..

 

If you pay up you HDB loan in full using CPF, when you sell your house, you still need to pay "yourself" the 2.5% interest of the amt you have taken out from your CPF. In this case, I dun see the point of paying HDB board early when we are either paying CPF (2.5%) or HDB (2.6%).

 

I think i rather earn interest from gov then pay int to gov to pay myself... ha ha ha

At the same time, i can chose to use the CPF in other things.. like topup for my parents etc.

Edited August 25, 2009 by Jrage