hdb loan to take the max?
    
 
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  1. #1
    Junior Member yuroko is on a distinguished road
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    hdb loan to take the max?

    hi,
    was thinking do i take the hdb loan to the max 30 years? or should i take lesser year?

    should the payment be all fully paid thr cpf or partially meaning pay some cash (if monthly contribution is 1000 and monthly payment is 1000, 800 from cpf, 200 cash)?

  2. #2
    Senior Member honeydew is on a distinguished road
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    hey yuroko, nowadays taking 30 years is common, they even have 40 years loan. for our generation 30 years is pretty much the norm now. if take 30 years, negative aspect is that interest compounded over the years is higher. But if you take lesser years, the monthly payment can be much higher. It depends on how much money you have to pay monthly, and whether you want to pay off your house faster.

    as much as possible, try to pay monthly installments through CPF instead of cash. only if your CPF not enough then top up with cash. CPF is there to be used for all these things like paying for house, good to make use and save your cash for rainy day instead.

  3. #3
    Moderator PerfectPixie is on a distinguished road
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    Ya I agree totally with honeydew! if your CPF have enough its better to use CPF fully to pay for your house. Cash is good and handy, keep it with you unless your CPF not enough then top up with cash ba. Store so much in CPF is kinda wasted to me.

    As for loan period, I think 30 years is ok. You can try 30 years first then if you make lots of money sometime later you can consider paying the remaining sum in full so that you can save a lot on the compounded interests.

  4. #4
    Junior Member nottyjas is on a distinguished road
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    Yes try to max it. Anyway interest is so low why worry. Importantly time to time remember to do refinance to ensure you are getting the best rate.

  5. #5
    Member rainne is on a distinguished road
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    Interest rate does not always remain low, it will go up over time, up and down.. If you are able to pay off for the flat soon you get to save on the interest, the compounded interest can go over 100k for a 400k flat for a 30 yr loan lea...not cheap.

  6. #6
    Junior Member sandyfernandes1 is on a distinguished road
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    I totally agree with Honeydew. If you take a loan for a period of 30 years then interest compounded over the years will be higher. But if you take loan for lesser years, the monthly payment can be much higher. It depends on how much money you have to pay monthly. You can use mortgage calculator (http://www.propertyguru.com.sg/mortgage_loan_calculator) for calculating the amount you want to borrow and see the impact of interest rate and loan term to your monthly payments of your HDB loans.

  7. #7
    Member gypsy2000 is on a distinguished road
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    Yeah, i think using CPF to pay is better too.. the remaining can then be paid by loan. For the loan period, i think it really depends on the financial status of the owners. Some people may have other financial commitments or would like to have more free cash on hand, and hence opt for longer repayment period. Others may not want to incur so much interest or dun wan to owe the banks etc, and hence opt for a shorter repayment period.

    The repayment period to take up really depends on the owners. Hope that helps = P

  8. #8
    Member jadene33 is on a distinguished road
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    In my opinion, no matter how low interest is, the compounded interest can be quite crazy, so i would suggest take up a lesser year if possible. Paying thru cpf is better than thru cash. agreed.

  9. #9
    Senior Member rojak is on a distinguished road
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    i agree, that the compounded interest over the years will be quite overwhelming. I would choose to pay in the least amount of time, within my means, and still have some cash available for other uses. However, if you're good in investing your money, then it would be better to choose to pay your flat over max number of years, leaving yourself more cash rich and thus can invest and gain more from the extra cash. however, this is only applicable if you're confident of earning more than the interest accrued.

  10. #10
    Member gypsy2000 is on a distinguished road
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    yeah, the compounded interest over the years is quite scary, especially if you stretch the loan for many years. As much as possible, i would try to loan the least amount (by paying as much down payment as possible), within the shortest number of years, of possible. My target is to pay off the loan in ten to twenty years time, if possible, to incur the least amount of interest, within my means. But based on my combined income now, think i may have to pay within 20 years fastest.. ha ha ha.a

    Is it better to loan from Housing Development Board or private banks ah by the way? If its private bank, which is your preferred bank with the lowest interest rate??

    Please advise! Hope to hear from you all!

  11. #11
    Member mellowhearts is on a distinguished road
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    Hmm...hubby and I also had a long discussion about this before we got the flat and we worked on the principle of having just one income to pay for the housing loan which we took from HDB. And we don't max out his CPF paying for the house so whatever contribution is made, after the deduction for the housing loan, there's still some that will accumulate inside his CPF account. Mine is wiped out when we got the flat but contributions since then will just accumulate in case of changes to his employment status. Haha...

    Not needing to pay cash for the flat also leaves us with more disposable cash since we aren't cash-rich to begin with! Haha

    gypsy2000: Different pros and cons for loaning from HDB or private banks. Would definitely have to do your own research and set your household financial goal as you decide along the way.

  12. #12
    Member kimchoo is on a distinguished road
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    i won't want to top up cash for the monthly installment on the flat while maxing out the CPF. it leaves us CPF poor and cash poor too!

  13. #13
    Member rainne is on a distinguished road
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    loans from bank is it alot higher than HDB? Also in terms of criteria wise, is it easier to get loan approved from HDB or from bank anyone know?

  14. #14
    Senior Member Ning87 is on a distinguished road
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    actually when buying a flat, when hdb ask u how many yrs u want to loan. my advise is to say 30. of course, you will not really need 30 yrs to pay.. but remember, hdb loan u can shorten, cannot lengthen. means if u say 20, u die die have to pay in 20 yrs. but if u say 30, 10 yrs later, u strike toto or what, u can pay full.

    when u tell hdb how many yrs consider the following:
    1) if one of us lose our job, can we continue to pay monthly installment?
    2) if we have a kid, can we continue to pay monthly installment?
    3) do i know what happen if i default payment for one month, what will happen?

    Also, i dont advise on paying cash on top of CPF for the hdb.. tt cash can be used for utility and u are not giving urself any safety net at all.. all will be left hand in, right hand out. means for the next few yrs, u cannot quit ur job, cannot get paid lesser than what u are getting now etc..

  15. #15
    Member lassymoo is on a distinguished road
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    ning87, thank you for sharing that! i think while we may be eager to pay off the loan quick must also consider changes in circumstances. nobody's job is guaranteed anymore so better not to overcommit from the start...

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