Should I use CPF OA to pay my HDB loan or pay cash?

The "accrued interest" thing scares people unnecessarily, let me demystify it. When you use CPF OA to pay for your flat, you must return that amount PLUS the interest it would have earned (2.5%) to your CPF when you sell. But that money goes back into YOUR CPF, it's not a penalty or lost money, it's just moving from your property back to your retirement pocket. So it's not "expensive", it's a forced savings mechanism. The real decision: your OA earns 2.5%. If you pay the loan with cash instead, your OA keeps compounding at 2.5% untouched, and your cash is used up. So the question is whether your cash could earn MORE than 2.5% elsewhere. If you're a disciplined investor getting 5-7% in the market, keep OA for the loan and invest your cash, mathematically better. If you'd just leave the cash in a low-interest account, then it barely matters, and using OA preserves your cash liquidity for emergencies. My approach: I use OA for the loan (preserves cash) and invest the cash I freed up. Just be aware that draining OA means less CPF growth for retirement, so top up later if you can. It's a liquidity vs long-term-CPF tradeoff, not free money.

Key point people miss: the accrued interest only matters IF you sell. If this is your long-term home you'll never sell, the accrued-interest repayment is a non-issue because you never trigger it. In that case using OA is a no-brainer to preserve cash. The worry mainly applies to people treating property as a stepping-stone to upgrade. Know your plan.

The trap with using all your OA is that when you sell to upgrade, so much of the sale proceeds get swallowed back into CPF (principal + accrued interest) that you have little cash left for the next down payment. I've seen people "sell for a profit" but walk away with almost no cash because it all went back to CPF. If upgrading is your plan, using some cash keeps the eventual cash proceeds healthier. Plan for the exit, not just the entry.

Middle path we chose: pay the loan with OA but leave a buffer in OA and periodically top up cash into it or make partial cash repayments when we have spare. Preserves liquidity now, limits how much accrued interest builds up. It's not all-or-nothing, you can mix. Just don't drain OA to zero, keep a cushion there for loan continuity if income dips.