Purchasing a home in Singapore is a rite of passage for many Singaporeans. Due to its hefty price, many will require a housing loan to foot this expense. These home loans can come as an HDB loan or mortgage loan from banks and licensed moneylenders.
When homeowners pay their housing loans with CPF, they are able to keep a larger proportion of their salaries for other purposes.Assuming that the monthly repayment for your home loan is 20% of your monthly salary, paying with CPF means that the 20% needed to foot your home loan does not come from your take-home salary. This leaves you with more cash-on-hand to save or pay for expenses apart from your mortgage loan.
With CPF paying their home loans, the salary of homeowners will be left untouched. This allows homeowners more money to save for household expenses, including shopping for necessities, setting aside rainy day funds or emergency funds, and more., having more liquid savings will help with the immediate rising cost of living.
Nevertheless, this consistency in the HDB loan rate means that you are likely to pay these same interest rates regardless of how volatile the economic market conditions are. Upon reaching the age of 55, the legal age to begin receiving your CPF payouts, you can continue to pay for your housing loan using CPF.
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