Treating my CPF OA as a savings account

This is what I am doing now with my new property purchase. Because of the low home loan interest rate now, instead of using CPF OA to pay off the property, I am keeping the money in my CPF OA for the higher interest. In fact I am topping up my CPF OA via Voluntary Housing Refund (VHR) to inject my spare cash into my OA and treating it as a high interest saving account.

This mean that instead of having my spare cash sitting in the bank earning close to nothing, or using it to pay off the bank loan at about 1.5%, I am putting the cash into CPF OA for the higher interest of 2.5%. You can definitely put your cash into other higher interest instrument but since I am more risk adverse, CPF OA seems like an obvious choice for me.

Besides the benefit of higher interest rate in CPF OA, there are other added benefits of putting my cash into CPF OA while having a home loan.

First, if the bank interest rate was to change for the worse and is higher than CPF OA after the fixed interest period, I have my cash in CPF OA ready to do a lump sum repayment to reduce the loan amount.

Second, I can "withdraw" from my CPF OA monthly if I needed cash in the event of any unforeseen circumstances. Technically I am not withdrawing from my CPF OA. Instead, in times of needs, I can log onto my CPF and revise the monthly installment to be paid from my CPF OA. Increasing that amount will mean that I will use less cash for my monthly installment and hence have more cash for that month.

Similarly, If I have excess cash for a particular month, I can "deposit" them into CPF OA by reducing my monthly installment via CPF OA and use more cash for the monthly installment. This will retain more money inside CPF OA earning the 2.5% interest. You can also deposit money up to the amount withdrawn from your OA for housing + accrual interest via VHR

To revise your month installment payment from your CPF OA, you just need to log into your CPF and send in a request. You can visit here for more information.

This flexibility allows me to sort of see my CPF OA as a higher interest savings account where I can safely park my spare cash. This also helps to answer a popular question of do you pay your home loan with cash or CPF? To that I say why not both.....