Earn and Save While Repaying Your Housing Loan

Understanding how housing loans work not only ensures that you have enough to pay for your home. It can also help grow your CPF Account monies and better prepare you for retirement.

Here are 2 things that will help you earn more CPF interest and accumulate savings, even as you repay your HDB housing loan.

1. Earn CPF Interest by retaining up to $20,000 in Ordinary Account when Buying a Home

Since August 2018, you can choose to retain up to $20,000 in your CPF Ordinary Account (OA) when you take up an HDB housing loan for your flat purchase. The remaining CPF OA balance can be used to pay for the flat. This will give you more flexibility to use the CPF funds for monthly mortgage instalments in times of need, e.g. in between jobs when the CPF OA monthly contributions would be halted. As the funds retained in the OA will continue to earn CPF interest, it can support and improve your retirement adequacy even if the amount is not used. A good tip to keep in mind!

2. Save with Partial Repayment or Early Repayment of HDB Loan

Apart from earning CPF interest, you can also save on interest incurred on your HDB housing loan when you make a partial or full redemption of the outstanding loan if you are financially ready. For example, contributing some of your annual bonus pay package to pay for part of the outstanding loan can reap substantial savings in the long term. By reducing the principal loan balance, you will also reduce the interest paid.

Assuming a home owner makes a $10,000 repayment towards an outstanding loan of $150,000, he/ she can save over $4,500 in interest savings. Using the prevailing 2.6% interest rate for HDB loans with the scenarios assumed below, here are the potential savings you could be looking at:

Housing loan balance

Remaining loan period

Repayment amount

Amount you will save


15 years






25 years





To estimate your interest savings, use the online Mortgage Interest Calculator via the My HDBPage (look under ‘My Flat > Purchased Flat > Financial Info > Other Related Services’). Payment can also be made via the same page. More details on the payment procedures are on HDB InfoWEB.

Find out more on how to pay for your first home in these other articles.