I made a lump sum loan repayment on my BTO – here’s how

BTO homeowners will know that taking on an HDB loan has an interest rate of 2.6%. What may not be obvious is that this interest rate is compounded. That means that you are paying interest on the principal sum every month. When we did the math, this came up to 36% of the principal sum, with around 50% of the monthly repayments going into interest in the early years of repayment.

With that in mind, we decided to start expediting the repayment process by making a partial lump sum payment. This is easily done on the MyHDB page via the HDB website. Here are the steps:

  • Login into MyHDB page
    • Refer to the left menu and select Purchased Flat
      • Select Financial Info
        • Under “Other Related Services”, select Partial Capital Repayment

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Before you jump in though, you might want to do some calculations using the Housing Loan Interest Calculator. This is a very nifty tool that computes (i) how much you’d save on interest and (ii) the balance on the duration of loan repayments.

Paying a lump sum on your loan shortens the duration i.e. from 22 years to 20. It doesn’t change the repayment amount. You can pay either through CPF or by cash/credit.

When making the partial repayment, the website will prompt you to reconsider paying by CPF because the balance in your Ordinary Account is generating interest of 2.5%. Well, an option would be to split the repayment amount like we did: 50% CPF and 50% by cash.

To being mortgage free!


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