To pay down HDB housing loan faster or not?

Not only do all of us have different financial circumstances, we also have different capacities to stomach stress.

What works for one might not work for another (i.e. what might give someone peace of mind might be quite stressful for another).

So, listen to what others have to say but, ultimately, make our own decision, one that will not rob us of our precious sleep.



Chat with Reader #1

Reader:
 Hi there Ak. I have a question. I have a new bto flat that im staying in with abt 200k hdb loan spread over 25 years. It takes up abt half of my oa contribution every mth to pay it. Should i use the excess oa funds to channel it to sa or focus on paying off the house asap?

Like · Reply · 1 hr

Assi AK
I would max out my SA first. Money should go to where it is treated best. Doing so, I would maintain a buffer in my OA sufficient for 24 months of loan repayment in case something goes wrong.

Like · Reply · 2 · 33 mins

Chat with Reader #2

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  12:31pm
  

  
  

  Reader:
  

  Hi AK, do you think i should pay off 10k of hdb housing loan whenever my OA accumulates to 20k so that it stays below 20k to enjoy the additional 1% interest? i.e. 3.5% instead of 2.5%

  
  
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  12:51pm
  

  
  

  Assi AK
  

  Earning more interest is always appealing to me. ;)

  
  

  
  
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  1:11pm
  

  
  

  Reader:
  

  Cos I have a friend who says it's more impt to pay off housing loan as the 0.1% on a big loan is more than 1.5% on the 10k transferred. I.e. It only makes sense if the housing loan is less than 150k, correct?

  
  

  
  
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  2:37pm
  

  
  

  Assi AK
  

  It depends on what you are after. :)

  
  

  
  
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  2:38pm
  

  
  

  Reader:
  

  Maximized returns lor

  
  

  
  
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  2:41pm
  

  
  

  Assi AK
  

  You have to remember to compare like for like

  
  

  
  
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  2:41pm
  

  
  

  Reader
  

  Meaning?

  
  

  
  
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  2:41pm
  

  
  

  Assi AK
  

  Compare $10K with $10K, $150K with $150K

  
  

  It is meaningless to compare 0.1% on a $200K loan and 1.5% on a $10K savings

  
  

  
  
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  2:42pm
  

  
  

  Reader:
  

  Ah. So for 10k, where can it get maximum returns

  
  

  
  
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  2:43pm
  

  
  

  Assi AK
  

  By paying $10K of your loan, what are you saving? By putting $10K in your SA, what are you gaining?

  
  

  You will have your answer then

  
  

  
  
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  3:00pm
  

  
  

  Reader:
  

  Ok, I get it. Only that the SA monies cannot be used for other purposes in future.

  
  

  Thanks AK! 👍🏻

  
  

  
  
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  3:01pm
  

  
  

  Assi AK
  

  Yesh... ;)
  

  
  

  If you are saving for retirement, go for it. :)

  
  

  
  
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  3:02pm
  

  
  

  Reader:
  

  姜还是老的辣

Whenever we do something, it is important to be clear what our motivation is. Then, we will know if we are doing the right thing.

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