Apart from the age old argument of whether to pay off your loan early, another age old argument between Singaporeans is whether you should be using your CPF for paying off your home loan installments.
One side argued that you should keep it to accumulate interest for your retirement plans, while the other side believed that keeping CPF is not realistic as we are unable to use it till we have hit the payout age.
For my case, I decided to max out my CPF to pay for my housing loan. The below are my reasons why.
Free Cash Flow
I cannot emphasize how much important free cash flow is to me. Things always happen when you least expect it and it is always better to have immediate accessible cash on hand. Due to the purpose of CPF, it is not withdrawable till we hit the payout age, no matter the urgency of situation.
Those who argued about keeping CPF intact usually view CPF as a tool for retirement. For my case, I do not consider it in my overall retirement planning. If I reach my retirement age, and there is still monies left inside, I consider it a bonus in my golden age.
Better Management and Control of Cash
CPF is known for their high interest rate, with 2.6% being the minimum long standing interest rate given to any amount you save in your CPF accounts, without a single effort. However, if I could work my money better, it would make more sense for me to keep the money in cash for me to manage, and using my CPF to pay off my home loan installments instead.
CPF is a good system to ensure that all Singaporeans are able to minimally have a basic retirement plan once they reach their golden age, and not using them for home loans installments allow the interest to compound along the years. However, visibility and control of money is very important to me, and I will prefer to use CPF monies to pay off home loans whenever possible.