tag:blogger.com,1999:blog-6092311610759487605.post2769858625579200000..comments2020-09-17T07:02:50.088+08:00Comments on SG Budget Babe: (COVID-19 Questions) Should I Defer My Insurance Premiums and Mortgage Payments?Unknownnoreply@blogger.comBlogger4125tag:blogger.com,1999:blog-6092311610759487605.post-49500063939262244762020-04-22T22:49:47.996+08:002020-04-22T22:49:47.996+08:00If the i/r on your mortgage is lower than 2.5% p.a...If the i/r on your mortgage is lower than 2.5% p.a., then yes. But it then begets the question of which if you were using your OA to pay off your mortgage entirely, then what is your objective of deferring your repayments during this period? Most people who opt for the deferment is to obtain liquidity (cash) and not earn more in absolute interest by leaving it in their CPF-OA. <br /><br />Let's presume you have an outstanding mortgage loan of $400,000 at 2.1% with a remaining 25 years term. Your monthly repayments are at $1,715. If you defer this successfully for 12 months, that's $514.50 earned in OA interest. <br /><br />However, the interest owed on your principal payment for that year is still at $8,400 ($400kx2.1%) in that year. MAS said there's no interest charged on the interest during the deferment period only, but thereafter your loan amount and interest accrued on the deferred principal will be fully amortised over the remaining loan<br />tenure. Which means that you're now entering the next year with $408,400 and only 24 years left i.e. your monthly payment is now higher at $1,807 instead of $1,715. If you had paid off regularly instead, you would only owe the interest on a much smaller principal sum at the end of it i.e. $7,969 [$400k - (1715x12)]x2.1%.<br /><br />You pay $520,416 in total now at the end instead of $514,500, which is a difference of $5,916.<br /><br />Is it worth it to pay $5,916 more at the end of your loan tenure, just so you get $514.50 for this one year that you've managed to defer your mortgage payments for?<br /><br />Don't forget that the additional $514.50 you've earned is in your CPF-OA which you can't withdraw at whim, unless you're trying to invest your own CPF funds through SRS. Then again, $514.50 is hardly enough to build a sizeable investment position in any stock or counter.Budget Babehttps://www.blogger.com/profile/05940384920609566419noreply@blogger.comtag:blogger.com,1999:blog-6092311610759487605.post-21029100716333661182020-04-12T22:43:12.707+08:002020-04-12T22:43:12.707+08:00For deferring mortgage loan, doesn't the addit...For deferring mortgage loan, doesn't the additional interest earned by keeping the money in the OA outway the incremental interest paid on the deferred amount? JThttps://www.blogger.com/profile/15760481675913431498noreply@blogger.comtag:blogger.com,1999:blog-6092311610759487605.post-30043560704198341752020-04-03T23:33:51.116+08:002020-04-03T23:33:51.116+08:00The announcement states that the lender should not...The announcement states that the lender should not be charging you interest on the interest, and I doubt there will be any late interest charge imposed if you manage to get the payments deferred, but you will still be charged interest on your principal sum. Best to confirm with the bank directly though!Budget Babehttps://www.blogger.com/profile/05940384920609566419noreply@blogger.comtag:blogger.com,1999:blog-6092311610759487605.post-4203261133435165672020-04-03T20:24:12.650+08:002020-04-03T20:24:12.650+08:00Hi BB,
I hve question regarding deferred mortgage...Hi BB,<br /><br />I hve question regarding deferred mortgage payment. Currently, I am gainfully employed but would to see if I can take advantage of this opportunuty to deferred my monthly mortgage so I can conserve as much funds as possible in my cpf OA in order to milk the interest.<br /><br />Do you know if there is any extra or late interest that would be charge. Thanks for your advice.yonghttps://www.blogger.com/profile/14092968922557834131noreply@blogger.com