aloyluvu Keep cash or quickly clear of your housing loan
Should we keep cash or quickly clear our housing loan.
If you can earn more than the interest your loan is charging you, i think it's safe to consider investing the sum instead of paying it towards your home loan. This depends on what your options are though. At this point, think about consulting a financial planner so they can look at your situation and give you solid advise.
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@spyder Hello! This really depends on what are your plans. If you're still remaining as staff, you have a chance to earn higher interest elsewhere with your funds as you continue to enjoy your staff benefit!
@heyanna what if our loan is from DBS Staff Housing Loan...and we have remaining balance which is comfortable to clear off...is it better to payup now and be done with it?
It depends on whether your housing loan is with banks or HDB.
If its with banks, your CPF payment will be maxed out due to the CPF withdrawal limit (120% of valuation limit if you hit BRS or 100% of valuation limit if your SA do not have BRS), and you will need to cough out cash.
If your cash is not generating interest above your home loan, please put them to better use. I personally would put to CPF SA and MA as monies above BHS and FRS will flow to OA, and that CPF OA can then be used to repay the loan.
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Very good question! One of our community mangers is actually getting her first home pretty soon and has been battling 101 questions on financing the place.
First thought would be on whether the type of loan you have. While taking a bank loan can be very painful upfront, it can be restructured every couple of years to make it as beneficial to you as possible, taking advantage of low-interest environments or trying to hedge against high interest rates. More here: <go.dbs.com/3p3QflH>
If you're on a HDB loan, paying it off ASAP will mean paying less interest. Make sure to always review how much you're repaying monthly as it could make a difference. However, you can also look into investing in blue chip companies or even our own STI ETF, and consider if it reaps higher returns in the long term vs interest repayments.
But for sure, use cash where possible and let your CPF OA continue to grow!