Don't understand why want to use CPF to pay PC loan.
CPF is charging 2.6% and the Bank is charging less than 2.6% and is a reducing rate.
http://www.moneysense.gov.sg/life-ev...ng-a-home.aspx
http://www.moneysmart.sg/home-loans/...t-affects-you/
http://www.moneysmart.sg/housing-pro...ts-your-loans/
1. Potentially Lower Interest Rates for the Rich
Okay, between rich and poor people, who pays more for their property?
It should be the rich right? I mean, HDB flats cost less and stuff. And that’s true if you’re talking about loan quantums (the total amount borrowed). But when it comes to home loan interest rates, most private property owners actually pay lower rates than HDB dwellers.
How much less? Try anywhere from 0.9% – 1.2% less.
Let me explain the witchcraft: if you can afford a cash down-payment of 5% (minimum) on your house, you can opt for a bank loan (and for private property, you always use bank loans). The typical rates for a bank loan range from 1.4% to 1.7%. They’ve stayed at that level for the past 10 years or so.
Numbers and calculator
It’s all those zeroes in their bank account. Even the bank’s calculator goes crazy.
The HDB concessionary loan (which is what the average Singaporean will end up getting for public housing) is pegged at 0.1% above the prevailing CPF rate. That’s 2.6%. So if your loan is from HDB, you are almost certainly paying higher interest than the rich guy in the condo across the road.
That’s a pretty important contributor to the whole “rich get richer, poor get poorer” scenario.
But, I hear you asking, why does everyone not rush out to get a bank loan?
In the interest of fairness (and 50,000 other good reasons), let me explain that HDB is not ripping you off. It’s just that you may not be rich enough to consider that bank loan, which comes with its own set of risks and conditions. For example, there’s your…