5 Dangerous Ideas Singapore Property Investors Have
Singapore's property market has always been a hot topic among investors, both local and international. With its strong economy, stable...
Read More
Discover the extent to which your CPF savings can be utilized for the acquisition of a HDB home in Singapore, as well as the various expenses for which these funds can be utilized.
TLDR
When considering purchasing property in Singapore, whether as a local or foreign investor, understanding the utilization of CPF funds, loan options, and associated expenses is crucial. Learn about the maximum CPF funds available for buying HDB or private property, how CPF savings can be used for HDB or bank loans, and the implications of selling your HDB flat. Additionally, discover the eligibility criteria for Singapore permanent residents (PRs) to use CPF for purchasing HDB flats. Explore various scenarios based on loan types, property ownership status, and CPF regulations to make informed decisions regarding property investment in Singapore.
What is the extent of CPF usage allowed for purchasing a HDB home or private property?
The Central Provident Fund (CPF) is an important financial resource in Singapore that helps citizens meet their housing needs. Whether you want to buy a Housing Development Board (HDB) flat or a private property, it is crucial to understand how to effectively use your CPF funds for purchasing a house.
This guide offers detailed information on different aspects of utilizing CPF funds for buying property.
What Is The Maximum Amount Of Cpf Funds That Can Be Used For Purchasing An Hdb Or Private Property?
The utilization of CPF funds for property purchases is contingent upon various factors, including the type of loan (bank or HDB) and the remaining lease duration of the property. The extent to which savings in your CPF Ordinary Account (OA) can be utilized differs depending on the specific scenario you fall into. In this regard, it can be used for downpayment, monthly mortgage instalments, and associated expenses.
HDB loan
If you are obtaining an HDB loan to finance the purchase of a Build-to-Order (BTO) or Sale-of-Balance (SBF) flat, you and any co-owners can utilize your respective Ordinary Account (OA) savings to cover the initial 10 percent downpayment and the remaining purchase price.
For resale flats or Design, Build, and Sell Scheme (DBSS) flats with a lease that extends until the youngest owner reaches at least 95 years old, you can use your OA savings to pay for the balance after making a cash deposit. However, the amount of OA savings you can use is limited to the lower of the purchase price or the valuation price at the time of purchase.
If you still have an outstanding housing loan, you can continue using your OA savings to repay it, as long as you have enough set aside in your CPF accounts to meet the applicable Basic Retirement Sum (BRS). The BRS requirement can be fulfilled using savings from your Retirement Account (RA), Special Account (SA), and OA.
Bank loan
As co-owners, you can only utilize your individual OA savings to cover the cost of the property once the minimum five percent down payment has been settled in cash. This also applies to the portion of the buying price that surpasses the property’s market value, and the lesser amount between the buying price or the valuation price at the point of purchase, subtracting the housing loan and approved CPF lump sum contributed towards the property, as well as the booking fee for HDB flats and the option exercise fee for resale HDB flats.
If you don’t possess any property currently financed by your OA savings, you’re permitted to use your OA savings up to the lower amount between the buying price or the valuation price when bought. Your OA savings can be harnessed to pay off any remaining housing loan provided you have reserved the relevant Basic Retirement Sum (BRS) in your CPF accounts. The total OA savings all owners are allowed to utilize will increase by 20 percent of the lower amount between the buying price or the valuation price when purchased, after which no more CPF usage is permissible.
For those who already have a property financed with OA savings, they can only draw from their OA savings to buy a new property once the applicable BRS (S$99,400 for 2023) has been secured in their CPF accounts. The OA savings can still be used until the collective CPF usage by all owners reaches the lesser amount between the buying price or the valuation price at the point of acquisition.
Stamp duty is a tax that is charged on property transactions. It is not allowed to be paid using CPF funds. This tax must be paid in cash and is a required expense when you own property.
No loan
If you do not intend to take a loan and do not have any existing property financed with OA savings, you may use your OA savings to pay for the purchase up to the lower of the purchase price or the valuation price of the property at the time of purchase. No further CPF usage is allowed thereafter.
If you have an existing property financed with OA savings, using your OA savings is only allowed after setting aside the applicable BRS in your CPF accounts. OA savings can be used until the total CPF usage by all owners reaches the lower of the purchase price or the valuation price of the property at the time of purchase, after which no further CPF usage is allowed.
Can a Singapore PR use CPF to buy HDB?
If you are a permanent resident in Singapore, you can use your Central Provident Fund (CPF) money to buy public housing apartments, known as HDB flats. However, do note some conditions apply. Your CPF funds can only be used to purchase HDB flats that have been previously owned, and you need to fulfill certain requirements. You either need to be part of a family with a Singaporean citizen or buying under the fiance/fiancee scheme, indicating that if you’re a single permanent resident, acquiring a resale HDB flat is not possible.
Can you use CPF funds to pay HDB or bank loan?
You can use your CPF savings to pay off both HDB and bank loans. These funds will be taken from your CPF Ordinary Account. If you’re planning to use a bank loan, remember to let your attorney know that you intend to use your CPF savings for repayment when you apply for the loan.
How to use CPF funds to pay HDB or bank loan?
To utilize your CPF savings for settling loan installments, it’s essential to submit an application and grant permission to the CPF Board to initiate direct payments to either HDB or your bank. This procedure requires you to file a GIRO application which enables the automatic deduction of your monthly loan payments from your CPF Ordinary Account (OA). Moreover, you are given the liberty to modify the sum and even halt your OA savings towards your monthly dues or alternatively, employ them in executing partial or complete capital repayments.
Can you pay the HDB levy with your CPF?
In the process of transitioning from your existing HDB flat to another subsidised HDB, you’ll be required to fulfill the obligation of an HDB resale levy. This specific levy is subtracted from the proceeds of your sale and in the case of any deficit, a cash payment would be necessary. The payment of this levy is strictly in cash, with no provision for offsetting it via CPF savings. Should you decide to let go of your current flat before acquiring a new one, be prepared to settle the resale levy in cash as a prerequisite to gaining ownership of your subsequent flat.
If you sell your HDB, how much must you pay back to CPF?
If you decide to sell your HDB flat, the money you receive from the sale will be used to pay back the CPF savings that you used to buy the property. This includes both the amount you initially withdrew and the interest that has accumulated, which is currently set at a rate of 2.5% per year.
Alternatively, you have the option to voluntarily repay some of the CPF savings that you used for your property. This will result in receiving more cash when you sell your flat, as the amount you need to repay will be lower. The refunded CPF savings can also be used for various CPF-approved schemes, such as the CPF Investment Scheme (CPFIS), if needed.
Should You Buy, Sell or Wait?
If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?
It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.
I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.
I can help you by:
- Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
- Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.
You May Also Like …
Should Foreign Buyers Be Deterred By the 30% ABSD?
TLDR Foreign buyers interested in private residential properties in Singapore is a common sight due to the country's positive reputation...
Read More
Would It Be More Better To Engage One Property Agent Or Multiple Agents In The Selling Process?
TLDR When planning to sell your property, you have the option to work with one agent exclusively or non-exclusively. Engaging...
Read More
Why Can’t More People Own Private Property?
TLDR The blog post discusses the aspirations of individuals like Siti and Mr. Tan regarding property ownership in Singapore. Siti...
Read More
Singapore’s Top 5 Property Investment Hotspots for 2024
As one of the world's leading financial centers, Singapore has always been a popular destination for property investment. With a...
Read More
Why It’s Not Financially Sensible to Pay Off Your HDB Flat Home Loan in Advance
TLDR When deciding whether to repay your HDB flat loan early, consider the limitations of not being able to obtain...
Read More
3 Steps to Prevent Rental Scams
TLDR: Prevent Rental Scams in Real Estate Scammers are targeting prospective tenants by impersonating Real Estate Salespersons (RES) to deceive...
Read More
6 Misleading Claims Property Agents Often Make That Savvy Buyers Are Aware Of
TLDR Real estate agents can sometimes use deceptive tactics to push sales. Be cautious of claims about other interested buyers,...
Read More
5 Factors : The Benefits Of Investing In A Property With Good Access To Green Spaces In Singapore
Real estate investment has always been considered a sound investment decision, as it offers long-term growth potential and a reliable...
Read More
Why Can’t We Buy Low, Sell High?
Madam Tan voiced that approximately two years ago, when her apartment hit its minimum occupation period, she and her spouse...
Read More
5 Reasons : Why Investing In Singapore’s Property Market Can Be A Good Retirement Plan
Investing in Singapore's property market can be a good retirement plan for several reasons. Here are five key factors that...
Read More
Why Can’t Everyone Have Homes In Good Locations?
TLDR In a nutshell, the Singapore property market is undergoing significant changes, with the introduction of a new housing classification...
Read More
Top 5 : Singapore’s Most Desirable Properties: A Look at the City’s Most Coveted Real Estate
Singapore, a bustling city-state known for its impressive skyline and thriving economy, is home to some of the most desirable...
Read More
When Should You Consider a Shorter/Longer Home Tenure?
TLDR Understanding the benefits of long-term home loans is crucial for financially conservative individuals in Singapore. Opting for a longer...
Read More
Top 5 Tips : Finding the Right Property: Location, Size, and Price in Singapore Real Estate
Singapore, known for its diverse culture, strong economy, and excellent infrastructure, is a popular destination for real estate investments. The...
Read More
Could It Be Wise to Sell Your Property After Just 3 to 4 Years?
TLDR In this blog post, the writer delves into the Singapore property market, particularly focusing on the effectiveness of quick...
Read More
Get Into Core Central Region Before Big Price Adjustments
TLDR Jayson Ang discusses the essential factors to consider when seeking a property for investment. By analyzing the safe entry...
Read More
5 Tips : How To Invest In Singapore Property Without Losing Sleep Over It
Investing in Singapore's property market can be a lucrative venture, but it's important to approach it with caution and a...
Read More
Top 5 Factors : Singapore Real Estate Investing vs Stocks and Bonds: Which is Better?
Investing is an essential aspect of wealth creation and financial planning. With a plethora of investment options available, it can...
Read More
5 Impacts Of The Singapore-Malaysia High-Speed Rail On The Property Market
The proposed Singapore-Malaysia High-Speed Rail (HSR) is a joint project between the two countries that aims to improve connectivity and...
Read More
