HDB Loan - Early redemption

[Notsogoodman]

If one loans $100K, for simple calculation without reducing the principal, one will have to pay $2,600 per year.

If one has $100K in OA, one will earn $2,700 in interest from CPF ($20K @3.5% = $700, $80K @2.5% = $2K)

 

In addition, if property market were to crash, one will have the opportunity fund to buy a private, rent it out, for Retirement planning purpose.....

 

So for me, I will never redeem earlier even though i have the sum in my OA.

 

My 2 cents worth....

 

not to mention u can buy insurance when there's co-owners. Like my late uncle who took as much loan as he could then (HDB 5-Bedroom at prime estate only $150K); when he passed away, the housing insurance settled the whole thing and my aunt now owns a near $600K HDB

[Guyver]

Hullo bros, I understand that for HDB loans there are no penalty for early redemption.

 

Since home loans are based on reducing principle (right?) would I have paid out same amount based on either scenario below:

 

Scenario A loan 10 years paid up 10 years exactly.

 

Scenario B loan 30 years paid off in 10 years via early redemption.

 

Thanks for advising!

 

I thought of that before also but this is what I've heard.

 

1. When we take $$ from our own CPF account, when we sell the property, we have to "pay back" the interest back to CPF for lending out our own $$.

 

2. If you take 30yrs loan ... then let's say worst case .... die on the 10th yr ... property becomes fully paid.

 

Anyway I have set aside CPF equivalent to 10yrs of installment as backup.

 

 

[Ixat]

hmm..

 

If you pay up you HDB loan in full using CPF, when you sell your house, you still need to pay "yourself" the 2.5% interest of the amt you have taken out from your CPF. In this case, I dun see the point of paying HDB board early when we are either paying CPF (2.5%) or HDB (2.6%).

 

I think i rather earn interest from gov then pay int to gov to pay myself... ha ha ha

At the same time, i can chose to use the CPF in other things.. like topup for my parents etc.

 

Bro correct me if I am wrong but the 2.5% you pay yourself goes into your pocket whilst the 2.6% you pay HDB do not go to you? End of the day after you finish paying the 2.6% to HDB you still have to pay back that 2.5% right?

 

I am reading up on how to put the CPF monies to better use also.

[Ixat]

I thought of that before also but this is what I've heard.

 

1. When we take $$ from our own CPF account, when we sell the property, we have to "pay back" the interest back to CPF for lending out our own $$.

 

2. If you take 30yrs loan ... then let's say worst case .... die on the 10th yr ... property becomes fully paid.

 

Anyway I have set aside CPF equivalent to 10yrs of installment as backup.

 

Point 1 is correct. We pay interest for using our own money. Luckily interest goes back to us

 

Point 2 is something I guess nobody will plan or hope for ba...hehehe

[Kiario04]

Point 1 is correct. We pay interest for using our own money. Luckily interest goes back to us

 

Point 2 is something I guess nobody will plan or hope for ba...hehehe

 

very true, pt 2 i dont want to think.

 

i dont think i will RIP knowing the hse is yet fully paid & saddled with huge debts ... i dont want my wife or children to be without any roof over their heads.

 

[Vtim]

What I did was reduce the term. REduced from 30 yrs, then now to 20 yrs, left 5 yrs to pay...if have lump sum, clear everything

 

Bro, how to request to reduce the terms?

[RadX]

Bro, how to request to reduce the terms?

 

 

Go to your HDB office branch and at counter request to reduce loan term. Then an office will look at your cpf and if your wife cpf also used, she must go down and she will give u the figure before u commit

[RadX]

Go to your HDB office branch and at counter request to reduce loan term. Then an office will look at your cpf and if your wife cpf also used, she must go down and she will give u the figure before u commit

 

 

wats good abt hdb is that you can reduce and increase anytime without any penalty....i did that when i 'retired' and lengthened the loan...then last yr, i shortened it again. v flexible.

 

the last time i not free, i asked them to e-mail me the necessayr forms and they did, and signed and sent back to them and they rescheduled the loan term

Edited August 26, 2009 by RadX

[Ixat]

wats good abt hdb is that you can reduce and increase anytime without any penalty....i did that when i 'retired' and lengthened the loan...then last yr, i shortened it again. v flexible.

 

the last time i not free, i asked them to e-mail me the necessayr forms and they did, and signed and sent back to them and they rescheduled the loan term

 

Bro what reasons you cite for lengthening of loan?

[RadX]

Bro what reasons you cite for lengthening of loan?

 

 

my income was not stable......so let the $$$ride on longer loh

[Vtim]

wats good abt hdb is that you can reduce and increase anytime without any penalty....i did that when i 'retired' and lengthened the loan...then last yr, i shortened it again. v flexible.

 

the last time i not free, i asked them to e-mail me the necessayr forms and they did, and signed and sent back to them and they rescheduled the loan term

 

Roger that , I'll check on my wife & my CPF first before we do that

[Sgnick]

I am not sure if the rule still applies. Years back when I tried to repay back my HDB loan, I was told I could not pay all even if my CPF is enough to do so. You have to leave behind about 45K loan and if you really want to clear all, then it has to be in CASH.

 

That is called the CPF Withdrawal Limit for housing. Doen't matter how much CPF u have, there's a limit u can use for each property.

 

See this link http://mycpf.cpf.gov.sg/Members/HSG-Site/Hsg-ValnLimit2.htm

[Sgnick]

I am confused by all the people who had done early repayment. Did you pay by cash or CPF? If CPF, any problem of exceeding the housing withdrawal limit or did you had already set aside half of the prevailing Minimum sum in your OA & SA. I checked CPF website, it mentioned about the valuation limit and limit for housing withdrawal.

 

http://mycpf.cpf.gov.sg/CPF/my-cpf/buy-hou...5.htm?popup=yes

 

See here http://mycpf.cpf.gov.sg/Members/HSG-Site/Hsg-ValnLimit2.htm

[Guyver]

Point 1 is correct. We pay interest for using our own money. Luckily interest goes back to us

 

Point 2 is something I guess nobody will plan or hope for ba...hehehe

 

Of course nobody hopes for the 2nd part unless one kana terminal illness or whatever.

 

My friend's hubby ....34yrs old ... kana stroke ..... scary man ...

[Ngck]

not to mention u can buy insurance when there's co-owners. Like my late uncle who took as much loan as he could then (HDB 5-Bedroom at prime estate only $150K); when he passed away, the housing insurance settled the whole thing and my aunt now owns a near $600K HDB

 

whats the use when she is going to spent the rest of her life alone and unfilial kids are already aiming for her flat

[Ixat]

Of course nobody hopes for the 2nd part unless one kana terminal illness or whatever.

 

My friend's hubby ....34yrs old ... kana stroke ..... scary man ...

 

Wah sianz stroke. Haiz...today dunno tomorrow what happen man.

 

Hope he gets well soon.

[Damonfong]

Hope this help. Edited, forgotten to deduct the payment.

 

If you have $100K and keep in CPF, you earn interest of $30.9K after 25 years.

You will pay $36.1K interest for your loan of $100K.

Which means you will pay $5.2K more.

 

If you do not take loan pay in full, or redeem your loan, $0 gain.

 

Calculation as follows:

Loan Years Loan Int CPF Int

100000 25 2.6% 2.5%

 

Year Interest Principal Total Interest

2001 Total ($2,565.86) ($2,878.17) ($5,444.03) $2,363.90

2002 Total ($2,490.13) ($2,953.90) ($5,444.03) $2,286.90

2003 Total ($2,412.41) ($3,031.63) ($5,444.03) $2,207.97

2004 Total ($2,332.64) ($3,111.39) ($5,444.03) $2,127.07

2005 Total ($2,250.77) ($3,193.26) ($5,444.03) $2,044.14

2006 Total ($2,166.75) ($3,277.28) ($5,444.03) $1,959.14

2007 Total ($2,080.52) ($3,363.51) ($5,444.03) $1,872.02

2008 Total ($1,992.02) ($3,452.02) ($5,444.03) $1,782.72

2009 Total ($1,901.19) ($3,542.85) ($5,444.03) $1,691.19

2010 Total ($1,807.97) ($3,636.06) ($5,444.03) $1,597.37

2011 Total ($1,712.30) ($3,731.74) ($5,444.03) $1,501.20

2012 Total ($1,614.11) ($3,829.93) ($5,444.03) $1,402.63

2013 Total ($1,513.33) ($3,930.70) ($5,444.03) $1,301.60

2014 Total ($1,409.91) ($4,034.13) ($5,444.03) $1,198.03

2015 Total ($1,303.76) ($4,140.27) ($5,444.03) $1,091.88

2016 Total ($1,194.82) ($4,249.21) ($5,444.03) $983.08

2017 Total ($1,083.02) ($4,361.02) ($5,444.03) $871.56

2018 Total ($968.27) ($4,475.76) ($5,444.03) $757.24

2019 Total ($850.50) ($4,593.53) ($5,444.03) $640.07

2020 Total ($729.64) ($4,714.40) ($5,444.03) $519.98

2021 Total ($605.59) ($4,838.44) ($5,444.03) $396.87

2022 Total ($478.28) ($4,965.75) ($5,444.03) $270.70

2023 Total ($347.62) ($5,096.41) ($5,444.03) $141.36

2024 Total ($213.53) ($5,230.51) ($5,444.03) $8.80

2025 Total ($75.90) ($5,368.13) ($5,444.03) $(127.09)

Grand Total ($36,100.85) ($100,000.00) ($136,100.85) $30,890.33

 

Difference ($5,210.52)

 

Edited August 26, 2009 by Damonfong

[Little_prince]

wow. tks...