The simple answer to the above is that if you are able to generate a higher returns on your savings as compared to the HDB loan interest rate, then anyone's answer would be to hold on the loan.
For example:
Assuming HDB Loan interest rate is 2.6% (as of 2006/2007) and you are a savvy investor who is able to generate an annual return of 10% (be it from the business or shares market) - if you put the lump sum repayment into your investment, you would be able to earn an additional premium (10%-2.6%=7.4%).
A second point is that debt itself is not necessarily bad - if debt is incurred because you are buying an appreciating asset then this is good debt - you borrow money to help you gain more money. Hence in the above case, assuming the HDB flat will be appreciated in the future (more often than not - I appreciate it might not do so - but that's another discussion), it makes sense to hold on the loan. The only thing we have to overcome is the asian's mentality which oftens tell us borrowing is "bad".
The third point is that HDB being HDB, has a public role to play - whilst it has its responsibility to chase outstanding payments, but really they are much more lenient as compared to the banks in terms of chuting you out of your flat if you default on payments.
So, if you are eligible for HDB loan, borrow the maximum loan amount and for the longest loan period!
