everyone also serving hdb loan so long what. any problem?
or should i use my all cpf(OA） + cash to settle the outstanding hdb loan?
like that, i will be very broke:(
Historically, I agree
everyone mostly takes up the 2.6% HDB loan and max. the loan duration. The historical average for SIBOR is between 2-5% in my memory. When SIBOR is trading above 1.5%, there is absolutely nothing wrong for taking a long loan from HDB because 2.6% loan is considered very very very cheap when SIBOR is 2-5%.
Besides, back then, people cannot choose bank loans for HDB loans. When SIBOR collapses below 1% in recent years, then risk-takers like GG789 decides to take up bank loans for HDB. Nothing wrong also, and your current 1.7% bank loan is also lower than 2.6% HDB loan. In financial context, you are still positively rewarded for your risk at this moment.
However, if you are a risk-taker, you will not want to be exposed to risks for an extended period of time. There is a saying in chinese, "If you keep going to the mountains, eventually you will run into the tiger one day".
This is why, the prudence ones who are exposed to bank-loans are less likely to loan 35years and have the firepower to reduce their loan exposure within a shorter notice when interest rates trend upwards.
I wish to take this opportunity to share the story of a PMET who bought a condo 6 years ago.
His timing was very good, his property value shot up a lot by now.
He was enjoying flexible 1.8 to 2.7% flexible rates for his loan in the first 5 years (depending on SIBOR).
However, he lost his job at the end of last year, coincidentially, the offer rates for 5-years ended.
Without an income, he couldn't refinance and stuck with the same bank, paying NON-PROMOTION Board Rates of 4.5-5.4% in the past 8 months.
His only choice now is to sell the condo, and resettle his family.
This is a true story.
