cacabi111

Hi, cos eample if i have excess $20K in OA, if used for prepayment, it will reduce principal by $20K, thus interest saved is 2.6% of $20K. but if i leave $20K in CPF OA, it collects 2.5% in interest. Like not much difference isn't it? Cos i thought that since hdb got insurance, anything happens, the remaining loan may be covered partially. So no need to clear off the loan so quickly. Pls correct me if my understanding is wrong, thanks.

Hi, will appreciate some advice, thanks. Current situation: I bought HDB two years ago, and took a 20 year HDB loan. My CPF Ordinary Account has saved some excess cash over a period of time. I am considering to use this excess cash to make prepayment on the HDB loan, aiming to cut down on total interest payments and reduce the number of years for loan. (I have already kept some savings as buffer However, as Ordinary A/C savings gets 2.5% and HDB loan is 2.6%, it seems to me there is no real advantage to make a prepayment on the loan rite? I save on interest payment at 2.6% to HDB, but also have to forgo the 2.5% interest that CPF pays me..... Perhaps better not to prepay? Hope to hear some advice, thank you.

With CPF money OA earning 2.5% and HDB loan at 2.6%, actually it seems there is not much difference. Cos now my CPF OA has accumulated some cash, i was considering using this cash to prepay some of the HDB loan, but since the interest earned and paid are similar there is no substantial advantage to make a prepayment. Do correct me if i am wrong, thanks.