Dear Mr. Tan,
I currently have a housing loan with HDB. Is it a good idea to pay off as much of the loan as early as possible? I have heard different views regarding this issue. Some people say it's better to use the money in the ordinary account to invest and earn more returns. Others say paying the loan earlier will help to reduce the interest amount. What is your advice?
REPLY
Interest charge on the HDB loan is 2.6%. You should be able to earn a better return over the long term from a low cost investment fund.
If you are willing to take some risk and invest for the long term, it is better to keep the loan and invest your savings. Read the following:
http://www.tankinlian.com/faq/savings.html
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