Saturday, 6 September 2014

On the road to debt-free country

I have informed the bank that I will pay up in full when my HDB loan reaches the end of its lock-in period end this year. While previously they took only a short time to approve my loan, I have to inform them 3 months in advance.

This is a milestone target for me in 2014. My outstanding HDB housing loan will dip below $100K, making it impossible for further re-financing with the bank.

I am planning to pay off the remaining HDB loan by the combination of the followings:

1. Matured endowment policy
- 21-years ago when I started this endowment policy, it looked like a substantial sum of money at maturity.  However, possibly due to inflation or perception changes, it doesn't feel like a windfall now.  Haha. 

2. Central Provident Fund (CPF)
- I will put some of this money into good use.  After all, I dutifully contribute money to this fund every month. 

3. Investment-linked Policy (ILP)
 - Timing, timing, timing.  At the last market crash, my ILP dropped 40-50%. Now, it is up 40+% its original value.

4. Housing loan "pay-up fund"
- I have started this fund after the last re-financing, contributing a fixed sum every month into it.  As the total of 1 to 3 already sufficiently covered my loan, I will inject this fund into my war chest.

Not only that I will achieve my goal to be debt-free end 2014, I also have a bigger war chest for investment.

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  1. Nice to be debt free. Entering into Financial Security phase and the next phase will be Financial Independence.

    1. Hi Createwealth8888,

      Yes. Financial Independence will be my next milestone target.


  2. Welcome to the debt-free phase of your life! Next will be continue to build your FI snowball so that it continue to roll by itself eventually. All the best.


    1. Hi David,

      Thanks. May our snowballs grow bigger and bigger!


  3. Hi Farmer,

    Which bank did you sign up your housing loan with? I'm currently with DBS bank at 1.883%, signed up with them early this year.

    No lock-in period. 8 years guarantee @ Max 2.5%, Even at max, it's 0.1% lower than HDB's 2.6%, and I was concerned over QE tapering and US Fed reserve's possible interest rates hike in 2015.

    Best Regards,

  4. Hi Invest-tigator,

    I signed up with Hong Leong Finance. Can't remember exactly. About 1.1% first year, 1.5% second year, 2% third year, etc. Lock-in period 2 years. I re-financed one round after 2 years. This time can't because remaining loan less than 100K. Do note the rates could be different now.