according to sinkapore economist leong sze hien,one should apply for the maximum hdb loan permissible,the rest should be kept in cpf as a buffer if one relies on CPF to pay off ur mortgage loan.this is so that ur cpf do not run out of money and u have to service the loan by cash which can be quite heavy,and having ur flat repossessed after six months of default if u cannot afford to pay,for example u lost ur job or something.
while ur money is lieing inside cpf dormant,it shouldnt be sitting idly doing nothing,invest ur cpf money using the investment program into a mix of index funds and bond etfs,the annualised returns u get from ur investment should be far higher than the cost of capital which is the interest u pay for ur home loan which is 2.5% or could be even lower as low as 1% in the current promotion.this way u get to employ the power of leverage and compound interest,borrowing large sums of money six figures at low interest environments while investing ur money to get far higher returns.liquidate ur investments slowly as they appreciate and use the funds to pay off ur hdb mortgage loans.
while ur money is lieing inside cpf dormant,it shouldnt be sitting idly doing nothing,invest ur cpf money using the investment program into a mix of index funds and bond etfs,the annualised returns u get from ur investment should be far higher than the cost of capital which is the interest u pay for ur home loan which is 2.5% or could be even lower as low as 1% in the current promotion.this way u get to employ the power of leverage and compound interest,borrowing large sums of money six figures at low interest environments while investing ur money to get far higher returns.liquidate ur investments slowly as they appreciate and use the funds to pay off ur hdb mortgage loans.
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