Using CPF to settle HDB Loan in full?

[Icedbs]

settle fully.

 

that way IF u decide to sell house, u also can get cash. no need put back into CPF.

 

Wrong....only COV and your profits are cash.

 

Whatever CPF you have use, you need to put it back plus interest.

[Icedbs]

Hi there,

 

Assuming you have just bought a resale HDB flat and have sufficient CPF to clear off your loan at one go, would you do it at the prevailing market situation? What are the plus and minus in doing so?

 

Please comment.

 

Thank you very much.

 

Regards,

 

This question is easy to answer.

 

Are you an investment savvy guy? If no, then pay fully. If yes, then don't pay fully.

 

People who are investment savvy would want to use their CPF to generate more than the 2.5%. But if you dunno how to do it or don't bother, then just pay the housing loan fully.

[Darryn]

I think the banks offer attractive rates only for limited time, say, 3 years. Subsequently it goes up to market rate of 4%+.

 

But you'll be advised to re-finance the loan with another bank, anyway, at the end of 3 years, to continue enjoying favourable rates. However, this will involve some research and paperwork on your part.

 

Yep I refinanced our loan at the end of the lock in period for a lower rate.

 

Unfortunately I can't ddo it again as very few (I think) banks are willing to lend less than $150k.

[Tigershark1976]

Hi there,

 

Assuming you have just bought a resale HDB flat and have sufficient CPF to clear off your loan at one go, would you do it at the prevailing market situation? What are the plus and minus in doing so?

 

Please comment.

 

Thank you very much.

 

Regards,

 

 

how old are you?? what is the outstanding amount and how much do you have after clearing the loan?

 

if you are still between 30 to 40 yrs old, I would suggest u to use these most of your CPF for investment and leave only some buffer in the ordinary account that is sufficient to cater for 1 yr installment.

 

[Darryn]

If you are on HDB loan there is no advantage to settling early using CPF - just comes back to square one. Yes you will save on interest for the loan, but you will have to pay extra interest to CPF because you are borrowing you own money earlier.

 

 

[Tigershark1976]

Yep I refinanced our loan at the end of the lock in period for a lower rate.

 

Unfortunately I can't ddo it again as very few (I think) banks are willing to lend less than $150k.

 

 

dont worry, most bank will lend so long the loan is >100K, some even 80K....

 

i know bcause im stucked.... if I were to clear partial of HDB loan from the bank, i may stuck with around 70k balance when my contract expire. When this happen, i either have to suck thumb and stay with the existing bank loan package where interest rate will be less attractive compare to a new loan package, or i have to loan more than the outstanding amount from another bank in terms to get their loan package...

[Stanong11]

If you are on HDB loan there is no advantage to settling early using CPF - just comes back to square one. Yes you will save on interest for the loan, but you will have to pay extra interest to CPF because you are borrowing you own money earlier.

 

Yes, but the interest still belongs to you. And don't belittle the 0.1%.

[Darryn]

dont worry, most bank will lend so long the loan is >100K, some even 80K....

 

i know bcause im stucked.... if I were to clear partial of HDB loan from the bank, i may stuck with around 70k balance when my contract expire. When this happen, i either have to suck thumb and stay with the existing bank loan package where interest rate will be less attractive compare to a new loan package, or i have to loan more than the outstanding amount from another bank in terms to get their loan package...

 

If HDB cannot BORROW (no loan, you take a loan, and you lend money to someone else) more than the outstanding balance - you cannot take the extra in cash.

[Tigershark1976]

If HDB cannot BORROW (no loan, you take a loan, and you lend money to someone else) more than the outstanding balance - you cannot take the extra in cash.

 

Not from HDB lah... i mean the comercial bank... say if your HDB is worth of 500K, you still have 70K oustanding but Bank min loan package is 100K, you still take a 100K loan from them.

[Darryn]

Not from HDB lah... i mean the comercial bank... say if your HDB is worth of 500K, you still have 70K oustanding but Bank min loan package is 100K, you still take a 100K loan from them.

 

Cannot.

 

Where is the extra 30K going to go?

 

Under HDB rules, you cannot take an "equity loan" on a HDB flat. (an equity loan is when you take a loan for more than the existing interest of your current mortgagor (sp?)

[Tigershark1976]

Cannot.

 

Where is the extra 30K going to go?

 

Under HDB rules, you cannot take an "equity loan" on a HDB flat. (an equity loan is when you take a loan for more than the existing interest of your current mortgagor (sp?)

 

 

confirm + chop chop can lah... i check with the bank liao... the bank loan is depends on the value of your hdb, not your outstanding.

[Darryn]

Cannot.

 

Where is the extra 30K going to go?

 

Under HDB rules, you cannot take an "equity loan" on a HDB flat. (an equity loan is when you take a loan for more than the existing interest of your current mortgagor (sp?)

 

 

Here is a cite for you...

 

HDB flats can only be mortgaged to banks or financial institutions to finance the purchase. HDB owners are not allowed to use their HDB flat, which has been fully paid for, as collateral to raise credit facilities."

 

HDB flats have no equity and cannot act as collateral to raise money. The

 

only way to raise money from a HDB flat is to sell and buy back another unit.

 

From HERE

 

[Darryn]

confirm + chop chop can lah... i check with the bank liao... the bank loan is depends on the value of your hdb, not your outstanding.

 

Bank is pulling your left tit. Or the Loan Officer knows nuts.

 

You cannot get cash out of your HDB house. Which is what you are doing if you borrow $100k but only have to pay $70k for the existing mortgage.

[Darryn]

Another cite for you..

 

For refinancing, the loan amount is up to the full outstanding loan amount with existing financier, subject to the Bank's approval.

 

Look at FAQ 5 - how much can I borrow....

[Tigershark1976]

Bank is pulling your left tit. Or the Loan Officer knows nuts.

 

You cannot get cash out of your HDB house. Which is what you are doing if you borrow $100k but only have to pay $70k for the existing mortgage.

 

 

wah lao... like that siao liao lo... i must make sure that my loan doesnt goes below 100K before i intend to sell it...

Edited April 18, 2011 by Tigershark1976

[Darryn]

And just for completness another source..

 

http://www.masteryourfinance.com/forum/php...0067d426103638f

[Darryn]

wah lao... like that siao liao lo... i must make sure that my loan doesnt goes below 100K before i intend to sell it...

 

I just looked at Maybank - they say no minimum quantum for house loan.

 

The policy may have changed since two years ago when I refinance, now at the very least, can get a loan from maybank.

[Tigershark1976]

I just looked at Maybank - they say no minimum quantum for house loan.

 

The policy may have changed since two years ago when I refinance, now at the very least, can get a loan from maybank.

 

 

but most bank's are having it.... around 100K, only a few at 80K.... haiz.... sianz, such law really doesnt make sense at all.... its my property and I cant even refinance it when I need cash??? die die must sell and buy again??