There are many schools of thoughts regarding paying up your loans for your housing. This post serve as a summary of what I heard about what people did with their HDB housing loans of 2.6% p.a.
(1) Should borrow as much as possible since it is only 2.6% p.a. It is the cheapest and safest loan around. If one has extra money, should not pay up, should use it to get investment return of greater than 2.6% p.a.
(2) Should pay up as soon as possible. Pay whenever you got lump sum so that you can be debt free as young as possible. A debt free person is a carefree person.
(3) Should pay up with anything in excess of 20k in your CPF OA account. Base on current CPF rules, you will earn 3.5% (2.5% + 1%) for the first 20k in your account, anything above it earn 2.5%. 3.5%-2.6%=1.9%. You are earning 1.9% p.a for keeping 20k in your account.
Which is your choice? Please feel free to suggest if you could think of other options!
Just to add, regardless of which option you take, please remember to keep at least few months of your installments money in your CPF just in case that you lose your job due to whatever reasons. Example, if your monthly installments are 1000, please keep at least few times (6000, 12000) of it according to your comfort/risk level.
5 days ago
