Eh, let me tell you one story about this guy, we call him Joseph. Most people take HDB loan like taking a life sentence, 25 years, 30 years, slowly pay until hair also white. But Joseph? This guy different. He don’t want to be “house poor.” He want to be free.
At 35 years old, he finally get the keys to his BTO. Most people will say, “Wah, 30-year loan lor, monthly installment let CPF settle.” But Joseph, he take out his calculator, eyes shine like laser. He tell his kakis, “Oi, I don’t want to pay interest to the bank until I’m a grandfather, okay? I want to ‘peace off’ this loan fast-fast.”
The Garang Down Payment
Day one already, he don’t follow the crowd. The HDB officer say, “Sir, your minimum down payment is this much.” Joseph just steady-pom-pi-pi, throw in an extra $15,000 cash straight away.
His logic? Simple. You pay more now, the principal amount drop. When principal drop, the 2.6% interest they charge you every year also drop. It’s like clearing the boss’s minions before you fight the big boss.
The “15K + CPF” Combo
Then, for the next few years, Joseph lived like a monk (but a happy one). Every year-end bonus comes, he don’t go Japan, he don’t buy latest iPhone. He take another $15,000 cash and dump it into the loan.
But wait, here is the “clever math” part.
Most people use CPF to pay everything and then spend their cash on bubble tea and Grab. Joseph, he use his cash to pay the extra $15k, then whatever balance left in his CPF Ordinary Account (OA) after the monthly installment, he don’t let it sit there. He sweep it all in to pay the principal.
Why Cash is King for Retirement?
His friends ask him, “Joseph, why you so siao? Use cash to pay house for what? Use CPF lah!”
Joseph just smirk. “You don’t know meh? If you use CPF to pay everything, when you 65 years old and you want to downgrade to a 2-room Flexi, all the money from the sale must go back to CPF with accrued interest. You see the money but cannot touch the money! But because I pay extra $15k cash every year, that portion is pure profit in my pocket when I sell next time. Cash on hand is real money, brother.”
The 6-Year Victory
Fast forward to 41 years old. While his peers are still stressing about “Will I lose my job? How to pay mortgage?”, Joseph is at the kopitiam drinking kopi-O gao.
- Year 0: Extra $15k down payment.
- Year 1 to 5: Extra $15k cash + CPF sweeping every year.
- Year 6: The final blow. The loan balance hit zero.
He reach 41, property fully paid. No more monthly installment sucking his blood. He look at his house, then look at his bank account, and just breathe.
“35 buy flat, 41 freedom,” he say. “Now I work because I want to, not because I have to. This is called peace of mind, you know?”
If no job? Nevermind lo, I rent out one room at least I won’t die of hunger
Moral of the story: Sometimes, being “kiasu” with your math is the only way to be “steady” with your life.