Refinancing Your Home Loan To Meet CPF Minimum Sum

Home for Danny Tay is an HDB four-room flat in Simei that he and his wife Lynette bought for S$401,000. They’ve been living there for the last three-and-a-half years and it’s also home to their young children, Thaddeus and Judah.

Like many Singaporeans, Danny initially took up an HDB Concessionary Loan, which had an interest rate of 2.6 per cent per annum. But when the 37-year-old engineer heard about the POSB HDB loan over a year ago, he felt he would be in a position to enjoy greater savings.

An easy decision, thanks to lower interest rates

He decided to refinance and signed up for the POSB HDB loan, as it offered him significantly lower interest rates.

Said Danny: “In terms of interest per year, I am saving S$1,960, thanks to the reduced interest rate of 1.8 per cent per annum from 2.6 per cent per annum^.

“I was attracted by the guaranteed interest rate of not more than 2.6 per cent per annum for the first 10 years of the loan.”

For Danny, refinancing with the POSB HDB Loan was a straightforward decision.

The lower interest rates mean that Danny’s monthly repayments were reduced greatly.

He was able to reduce the tenure of his home loan from 30 to 20 years while paying a similar amount each month.

“I kept part of the extra savings (from the reduced monthly payments) in my CPF account to help me meet the CPF minimum sum amount.”

Doing so also allowed him to take advantage of the higher interest rates offered by the CPF Ordinary 

Said Danny: “If I can save S$1,960 a year, I will be saving S$19,600 over the first 10 years of the loan^^. After 10 years, about half of my housing loan should be paid up.

“Even in a worst-case scenario in which interest rates increase significantly after 10 years, my loan amount would still be reduced tremendously.”

Too good to pass up

Danny was so satisfied with the savings he’s enjoying that he has shared his story with his friends.

“I’ve recommended the POSB HDB Loan to six friends and three have signed up so far. I am glad I took up the loan early to enjoy the benefits while interest rates were low.”

This is the eighth story in a 10-part collab­oration between TODAY and POSB. Visit to read this story online.

^The HDB Concessionary Loan rate is 2.6 per cent per annum at the time of publication.

^^POSB HDB Loan interest rates are capped at prevailing CPF Ordinary Account (OA) 
rate which is at 2.5 per cent per annum at the time of publication. Details on CPF OA rate are available on the CPF Board website.

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Singapore dollar deposits of non-bank depositors and monies and deposits denominated in Singapore dollars under the Supplementary Retirement Scheme are insured by the Singapore Deposit Insurance Corporation, for up to S$50,000 in aggregate per depositor per Scheme member by law.




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