Use CPF to pay off HDB house

[KIV]

Hi all, my mother was asking me this question. She enquired whether it is a good idea to use her CPF ordinary account to pay off the remaining HDB flat amount.

She's around 50 this yr, and the reason why she enquired is because she finds that the CPF interest rate that she needs to pay is quite a sore to her eye. It amounts to around 3k annually.

Is it advisable to pay off the house with your CPF ordinary account?

Dennis did mention in his lesson that it is better to keep your housing loan. But can we apply the same ideal with regards to CPF context?

Pls enlighten me.

Many tks~

[Dennis Ng]

Hi all, my mother was asking me this question. She enquired whether it is a good idea to use her CPF ordinary account to pay off the remaining HDB flat amount.

She's around 50 this yr, and the reason why she enquired is because she finds that the CPF interest rate that she needs to pay is quite a sore to her eye. It amounts to around 3k annually.

Is it advisable to pay off the house with your CPF ordinary account?

Dennis did mention in his lesson that it is better to keep your housing loan. But can we apply the same ideal with regards to CPF context?

Pls enlighten me.

Many tks~

Hi KIV,
interest on Housing Loans is on a declining basis. So you can ask her to check her current interest (if it is S$3,000).....vs loan amount. You might realise it works out to be less than 2.6%... and if she multiply the loan amount (which she intends to pay off, or CPF savings) by 2.5% (interest earned on CPF), it might turn out to be more than interest she pays on Housing Loans.

As long as a person can earn higher returns on his/her savings, compared to interests on Housing Loans, then he/she should just focus on investing the Savings (be it Cash or CPF savings) instead of paying off Debts.

Even CPF can be used to invest into ETF (yes, this is better deal than ILP or Unit Trusts)...

Most people in Singapore cannot afford to retire by age 62 becos most people do NOT know how to Grow their money. Why I can have over S$2 million by age 41 is becos after losing half my wealth in 1998's Asian Crisis, I started to learn how to manage and grow my money...

It's possible for the Average Person in Singapore to achieve at least a million dollars, as I have personally shown this can be done...(my average income from 1993 (when I graduated) to year 2008 was only S$6,000 or I earned total income of S$1.08 million in 15 years, yet at the end of 15 years, (in year 2008), I reached my first Million.

How I did it? By saving at least 20% of my income and growing that savings through investing into Stocks and Property.

If you observe the Rich around you, you would realise that these are the 2 Things they invest in, Stocks and Property, NOT Forex, not Option Trading, not Stock Trading.

[KIV]

Let me see if I get it right.

As long as she can use her current CPF ordinary account $$ to put it in a place that can outgrow the housing interest rate of ~2.6%, it should be ok, am i correct?

What's more, by paying off the remaining house loan, she will more or less wipe out her ordinary account. This leaves her with little or no resources to grow her money.

[Dennis Ng]

Let me see if I get it right.

As long as she can use her current CPF ordinary account $$ to put it in a place that can outgrow the housing interest rate of ~2.6%, it should be ok, am i correct?

What's more, by paying off the remaining house loan, she will more or less wipe out her ordinary account. This leaves her with little or no resources to grow her money.

Hi KIV,
yes, that's what I said.

In fact, if she has been paying her loan for many years, even 2.5% earned on her CPF savings would turn out to be MORE than 2.6% interest charged on Housing Loan (reduced Outstanding Balance), this is something you/she might NOT realise.

[KIV]

Hi Dennis,

Thanks alot for your input.
Really appreciate it.