My HDB Purchase

I have selected a HDB flat last month, and paid an option fee of $2k. It's a build-to-order flat that costs $325.8k, and should be ready in about 2013. This is indeed a very big expenditure over the long run, and it makes me wonder how am I going to service the loan without much stress.

Extrapolating the growth of CPF savings from me and my girl's accounts, I estimate the total CPF savings to be sufficient to cover about one third of the cost by mid 2012. Basically, that leaves $200k to be serviced, still a substantial sum. In addition to that, I estimate that another $50k (at the minimum) might be needed for renovations. That puts it at a total of nearly $400k. I will need to plan financials when the time comes. For now, it shall remain as that.


I seriously wonder how most young Singaporeans are going to survive well into retirement with housing prices rising faster than the median salary. Is there any point being asset rich and cash poor?

While I know I'm ahead most of my peers, the total initial cost estimation is still at best, stifling. Guess this is what we can expect if we want to stay in a bustling city state with most amenities within tens of minutes of driving distances away.

At the moment, I have two choices crossing my head, and I've not much idea which is the best approach.

1) Allow HDB to deduct all of CPF OA amount
It will reduce the absolute loan amount, but nothing is left in CPF for a long time.

2) Use some CPF funds for CPF investments first, before letting HDB deduct the remaining amount. This will result in an overall increase in debts.

I'm unsure if number 2 would be a better choice. Granted, I could transfer most of my money into SingPost and SPH, yielding me 5% to 6% per annum. This appears to be more profitable when compared to the 2.6% interest being charged by HDB. It's slightly riskier, but in the long run, it might be more worth it.

Anyone has any thoughts? I have not run any simulations yet, but I'm still for number 2 at the moment. Afterall, it's a marathon and we have to think far ahead.


Additional Thoughts:
I have done this before for my CPF Education Loan. My spare funds were used to enter SPH and the market instead of paying my loan asap. The difference between yield and interest has benefited me much like how a bank benefits from issuing fixed deposits.