Hi @GEORGESIM98 , thank you for your question on payment for your home loan instalments.

On the surface, we are looking at the opportunity cost of using cash to pay for your home loan instalments compared to using CPF balances to fund the home loan. We would suggest considering your overall affordability and financial goals, could the monthly cash payments go further if not used for the home loan instalments?

Like an earlier question, everyone will have different financial goals and priorities that would require different ratio of savings, investment, and liquidity. Although using cash to pay for your home loan instalment could be a way to build your retirement nest egg, it might not be for everyone and even a luxury for some.

We have some materials to better explain this dilemma and hopefully bring you closer to your financial goals.

The DBS Property Marketplace Team.

Hi @bryan ! Interesting question on buying a home and retirement; both of which are close to our hearts!

A single person embarking on your journey towards home ownership could be both exciting and daunting. Our focus has always been on affordability and prudence. We have some tools here to work out your affordability whether the condo being purchased is a building under construction or a resale unit, as there are different cashflow requirements for each purchase scenario.

We would suggest building a holistic financial plan working towards retirement, this plan should encompass the home and CPF balances among other tools to build towards the individual’s retirement goal. Our colleagues from the financial planning team has done up some articles on retirement, and we believe in the power of starting your plan early.

The DBS Property Marketplace Team

Hi @Calvin ! Thank you for your question.

In general, when refinancing, homeowners are looking for potential interest savings on their home loan.

There is no best time to refinance your home loan, as there are always trade-offs that must be considered. To help you make an informed decision, our wonderful colleagues have written an article here.

Timing usually would be related to the home loan’s current interest rates and if the loan is still within lock-in period, if the loan is within the lock-in period additional penalty charges will be applied.

At the moment, it seems like we are one of the few banks that publish our interest rates online! You may check out the current rates here or get in touch with our lovely colleagues who would be happy to assist you.

The DBS Property Marketplace Team

wow that's a really comprehensive explanation. Thank you!

Hi @brownbear32 , glad you asked about refinancing.

There seems to be a few people just like you who are looking on with great interest on this topic and that’s fantastic because we love all your questions.

To clarify, Refinancing, is the process of closing your current home loan account with your current financial institution and setting up a new home loan account with another financial institution.

On the other hand, Repricing, is the process of switching to a new home loan package within the same financial institution.

Refinancing would generally require the borrowers to engage a lawyer to serve notice of redemption to the current financial institution, serve a notice period, repay the loan in full, and set up a new home loan account with the new financial institution, this would also mean that small things such as payment arrangements and statements will also need to be addressed.

Repricing is actually a shorter process starting with the borrowers contacting the bank to initiate the repricing process, select the preferred home loan package, the bank will prepare the offer and share it with the borrower for acceptance.

To help you decide which is better for your situation, we would recommend taking a look at our Refinancing vs Repricing Article.

The DBS Property Marketplace Team

Hi @nerdry ! Thank you for the interesting perspectives and questions.

A residential property is a big-ticket item so affordability is key. We do not know when the next round of property cooling measures will be so it is prudent to assess your financial situation and needs properly before making a decision.

To help you work this decision into your individual financial plan, we have built NAV Planner. We believe that by viewing each financial decision as part of a whole, you can see how it impacts your situation, helping you navigate your life journey better.

If you prefer, you may also discuss and formulate your bespoke financial plan with our friendly wealth planning managers.

The DBS Property Marketplace Team

Hi @Wc ! Thanks for the questions!

Doing partial repayment at any time should in theory result in interest savings. However, we think that the opportunity cost for the funds intended for the repayment must also be considered, if these funds are currently earning some interest, these interest earnings could potentially offset the interest of the home loan.

This is the opportunity cost we are referring to and should be accounted for when doing a partial repayment and be taken into consideration as part of a holistic financial plan. To help you with the math, we have built some calculators to assess and evaluate your options.

Refinancing and repricing a housing loan are similar but are very different processes with very different processing fees. In general, when refinancing or repricing, there should be some potential interest savings on the home loan before committing to a refinance or reprice offer. This is a topic that our colleagues have crafted into an article, you may click here to read more.

The DBS Property Marketplace Team

Hi @Wilson ! Thank you for the interesting question.

When making payment for your home loan, it would be useful to have a holistic financial plan. Paying home loan instalments with cash presents the opportunity to earn interest on the CPF balances. However, this would very likely mean that cashflow would be reduced, and this is an opportunity cost that should be considered.

Having different financial goals and priorities would require varying ratio of savings, investment, and liquidity. Although using cash to pay for your home loan instalment could be a way to build your retirement nest egg, it might not be for everyone and even a luxury for some.

We have some materials to better explain this dilemma and hopefully help you arrive at an informed choice.

The DBS Property Marketplace Team

Hello there @sjh1993 ! Here are some points to consider when taking a loan to finance your home.

If you are buying a HDB flat, you will have the option to either take a HDB Loan or a bank loan. The instalments for both could be paid using CPF, Cash or a combination of both.
If you have taken a HDB loan and would like to switch to a bank loan that is possible. However, you will not be able to switch from your bank loan to a HDB loan.

There are many considerations when choosing to take a loan for your home, downpayment, monthly instalments, and the list goes on, but fret not, our kind colleagues have penned some thoughts that you might be interested in.

The DBS Property Marketplace Team

Thanks @UncleSam for these very thoughtful questions!

Personal preference and expectations would play a big part in making this decision over the various trade-offs of pouring funds to frontload a hefty home loan. Here we would recommend taking these decisions as part of a holistic financial plan, where the home becomes one of many other considerations. Good thing there’s lots of help and support available and we found this list quite useful to begin that journey.

To aid you in visualising the interest savings of a higher initial downpayment to minimise loan amount and tenure, we have a tool that takes into consideration how different cash injections would change the cashflows of the home loan. We hope that this would help you decide if it is better to realise interest savings or use the funds intended for the higher downpayment for investment opportunities.

Regarding the perspective treating home as an investment asset, taking on additional leverage to invest, these we feel vary greatly based on just investment preferences and risk appetite of the individual and there are no sure-win plans.

Instead, we would advise to take on any investment with serious consideration, even more so with property, heavy capital requirements that are not easily liquidated and longer time horizons are just the some of the considerations to be accounted for. That said, we have an article here with a video too! where we discuss some of these considerations.
Assuming that you’re using CPF to fund your housing loans, there are slightly different considerations at different age groups, but largely is about optimisation of your cashflows, with the trade-offs being having liquidity and the opportunity cost of interest to be earned in your CPF account.

Just curious UncleSam, have you spoken to any of our wealth planning managers? It seems like you’re considering your investment options, why not hear what we have to offer? We hope you would choose us, DBS.

The DBS Property Marketplace Team

@ponie4prez We’re glad you enjoy this AMA session as much as we do!

This is the perennial debate around home loans. We think it all boils down to personal preference. If you're someone who prefers certainty in your monthly budget and manage more consistent cashflows, a fixed interest rate home loan could work better for you.

On the flip side, if you're prepared to ride on market interest rates movement, floating packages might work well for you. As this will present opportunities for you to enjoy savings from a potentially lower monthly instalments into investments and/or savings! We will still recommend prudence to have additional liquidity in the event that the interest rates increase.

Our homes are possibly the biggest purchase in our lifetime, as such it is always wise to adopt a long term perspective when making decision around our homes. Always have enough cash and liquid assets over the course of your home ownership journey to tide you through any unforeseen circumstances.

Click here to find out more!