Property
Effect of Compounding Part 2 – Early Repayment for a HDB Housing Loan
By Marksman Investment Corner  •  March 31, 2018
In a previous post I mentioned I will revisit the effect of repaying HDB Housing Loan earlier (link here). I believe thoughts of repaying the HDB Loan must have crossed the minds of some homeowners out there to finish paying off the mortgage earlier with the goal of becoming debt-free. This post will explore the example of doing early repayment for a $300,000 HDB Housing Loan. Let's call this homeowner with this loan Mr A. If we recall the formula of compounding: Paying off a $300,000 HDB Housing Loan (prevailing interest rate of 0.1% above CPF-OA Interest, which is 2.6% as of this post) means you will pay a total of ~$413,500. This means you will be paying ~38% worth of interest over the course of 25 years. Because you are regularly paying off the mortgage periodically, the effect of compounding is reduced and has the effect of compounding for 12.5 years instead ......
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By Marksman Investment Corner
I am turning 30 this year, and I work as an engineer for my profession. I am also getting married to my lovely fiancee this month. In my off-hours, I enjoy reading more about investing/trading. I started my journey in investing/trading not too long ago (about 2 years ago?), with the biggest catalyst to dive into it being witnessing a sudden market crash and then realising, "Hey, these guys are overreacting! Maybe there is something to be had here." I experienced some downs and ups since then. My aim? Financial independence; Retire Early (FIRE) by 45.
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