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Complete Guide To Using Your CPF To Pay For Your Private Property

Here’s how Singaporeans can fulfil their aspirations to own private property by tapping on their CPF monies.

Over the years, CPF has continued to revise its rules to allow Singaporeans to fulfil their aspirations to own private property by tapping on their CPF monies.

Here’s what you need to know when you plan to tap on your CPF to finance your private property purchase, whether for staying or investment purposes.

Read Also: Understanding How Much Accrued Interest You Have To Pay: 4 Common Scenarios Most Singaporeans Will Face When They Own An HDB Or Private Property

Eligibility For CPF Private Properties Scheme

The CPF Private Properties Scheme (PPS) sets out conditions under which Singaporeans can use their CPF monies for buying of private properties.

To be eligible for PPS, you must be buying a property in Singapore with remaining lease of at least 30 years. Buying overseas property using your CPF is not allowed.

In addition, if you are buying a private property with a remaining lease of less than 60 years, your current age plus your remaining lease must be at least 80 years.

Undischarged bankrupts are also ineligible for PPS. You can read the terms and conditions of PPS in detail for more information.

Read Also: Here’s What You Need To Know About Pledging Your Property To Meet The CPF Full Retirement Sum (FRS)

Ways Your CPF Be Used To Finance Your Private Property Purchase

You can use your CPF to fund your private property purchase in four main ways:

#1 Paying for the purchase of the private property.

#2 Servicing monthly repayments of your private property mortgage.

#3 Repaying of monthly loan instalments for land purchase and/or construction costs of your residential property.

#4 Paying of stamp duty, legal costs, survey fees, and other costs relating to the purchase and/or construction of your residential property.

Read Also: Here’s How CPF Accrued Interest On Your Home Affects Your Retirement Planning

How Much CPF Can You Use To Buy Private Properties?

Usage of CPF monies under PPS is subject to the Valuation Limit and Withdrawal limit. Here are the definitions of each of these limits.

Valuation Limit (VL): The valuation of your property at the point of purchase or the price you paid for the property, whichever is lower.

Withdrawal Limit (WL): 120% of the Valuation Limit

When the total CPF withdrawn by all the owners reaches the Valuation Limit, every owner must individually set aside the half of the prevailing Basic Retirement Sum (BRS) in their OA and SA (for those below the age of 55) or their OA, SA, RA (for those 55 and above) if they want to withdraw more CPF to service the outstanding housing loan.

Once homeowners’ usage of their CPF on this property hits the Withdrawal Limit, no further usage of CPF to service this home loan is allowed. If you are not aware of these rules and planned ahead, you may find yourself years down the road not being able to continue to service your mortgage payments using your CPF and have to cough up cash instead.

Read Also: How Much CPF Can You Use For Your Home?

Thus, prospective property buyers should take these limits into consideration when planning your home loan financing. Either buy within your means (from a cashflow perspective) or you need to have a plan to manage your repayments once you cannot use any more CPF monies. You can use this CPF Housing Withdrawal Limits Calculator that can help you estimate when you will reach the VL or WL.

In addition, those who are buying a private property with a remaining lease of less than 60 years, the maximum OA savings you can use is capped at a percentage of the property purchase price, or value of the property, whichever is lower. You can use this CPF lease calculator to find out exactly how much CPF you can use in such situations.

You may use your CPF to buy more than one private property, subject to the Multiple Property Rule, which enforces the prevailing Valuation Limit and lease-age conditions across multiple property purchases and co-owners.

Read Also: Accrued Interest VS Property Charge VS Property Pledge: What Are The Differences?

How To Use CPF To Pay For Your Private Property Purchase

Step 1: You first need to authorise your lawyer to submit the application form to use your CPF savings to buy the private property and a valuation report prepared by a licensed valuer.

Step 2: Upon approval, you will receive your Letter of Approval.

Step 3: Your lawyer will then need to work with CPF Board’s lawyer to complete the required legal documentation.

Step 4: You need to pay the cash downpayment of at least 5% of the Valuation Limit and any balance purchase price after taking into consideration the lump sum CPF  and the housing loan amount.

Step 5: Upon fulfilling the prior steps, your CPF savings will be released.

Read Also: 8 Little-Known Things About CPF That Most Singaporeans Are Still Unaware About

Want Some Help With Structuring Your Private Property Purchase?

Having a good, trusted broker like our friends at RedBrick can give you peace of mind, knowing that you will always get the best rates out there and enjoy unparalleled service.

The best part? The service is free for you, since brokers like them receive their commissions from the banks. If you’re considering doing a refinancing, feel free to get a non-obligatory quote and consultation.

Simply fill in the contact form and an experienced Redbrick mortgage specialist will be in touch with you for a non-obligatory consultation. The best part? Their services are free for you, since it’s the banks that are footing the bill.

Read Also: Complete Guide To Choosing The Most Suitable Home Loan For You