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HDB Mortgage Strategy

Several years ago, when I bought my first HDB flat, I am shocked to find out that I have paid more than S$20K of interest in 4 years time. As a result, I cleared out my CPF Ordinary Account for the second time to reduce the monthly repayment amount. Probably most of you can guess when is the first time, bingo, when you purchase HDB, HDB will clear off all the amount in Ordinary Account and loan you the balance. In another word, if one has about 30% of money in Ordinary Account for example, he/she can only get 70% loan. The reason why I don't reduce the mortgage tenor is because who knows, I might face financial difficulty in the future and keeping the 30 years loan period with lower monthly installment will be a better choice. I feel relief thereafter.

Nevertheless, I start to regret now! I shouldn't have done this!

As of current rate (history shows that this is quite a stable rate), CPF is paying interest of 3.5% per annum for the first S$20K in Ordinary Account and 2.5% for the amount thereafter. 

I have a wish. I wish that I am able to afford 2nd property (condo in Singapore) in 2017 without selling off my HDB. Therefore, I think not going for partial repayment will be a better strategy. By living in for so many years, I really can't bear to sell it off, the emotional is there. The property market shows sign of going south now. I hope that by 2017, private property should be affordable to me and all the current cooling measure by government will no longer be there.

Adding one more property needs bullet. Hence, the sum that I spent on lump sum payment is the bullet that I need since I do not have much cash on hand.   

By sharing this, hope that this can help the rest who are in similar situation as me to better plan your best suit strategy before making any decision.


~~Cheers!!!~~

  
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