Much discussion has been going on about paying off the housing mortgage or to take the maximum loan. Well, I would like to put forth my views.

Firstly, it depends if the loan is paid using CPF or cash. If using CPF, the constrains are obvious: (1) interest rate of 2.5%; (2) Cannot use the funds till 55/62; (3) Even if invested, there are bank charges and any current income derived goes back to being locked up. If using cash, it is a sacrifice of liquidity and possible opportunity cost.

Secondly, it depends if the loan is from HDB or the bank. If using HDB loan, the constrains are again known: (1) interest rate of 2.6%; (2) Inflexibility of loan terms; (3) Not allowed to refinance internally. If it is a bank loan, rates are generally floating, loan terms like tenor and amount can be varied.

So back …