Back

How Much CPF Are You Allowed to Use in Total For Your Flat?


Connect With Us:

facebook page link

Share:

Share on Facebook

Like:




Valuation Limit and Withdrawal Limit


Introduction

In this article, we are going to find out how much CPF can be used on a property. This article will mainly be discussing on the Valuation Limit (VL) and the Withdrawal Limit (WL).


Valuation Limit vs. Withdrawal Limit

The Valuation Limit ($) is the lower between purchase price and valuation price, at the date of purchase or date of refinancing, whichever is later. The VL prevents over use of CPF on property so that there is a balance between CPF use on property and retirement.

The Withdrawal Limit is 120% of the Valuation Limit. The WL is higher because the bank loan is perceived as having higher interest rate in the long term, and mortgagors of banks will need more CPF for repayment of the bank loan.

Please refer to the picture below to find out which CPF limit applies to you


flowchart for vl and wl

Flowchart for VL and WL


To put it simply, HDB loan will apply only the Valuation Limit. Bank loan can choose up to the Withdrawal Limit. However, to exceed the VL and use the last 20% of the WL, there are requirements attached to it. For buyers below the age of 55, you will need to have set aside the Basic Retirement Sum (BRS) in your CPF OA and CPF SA (including monies in investment) before you can use the last 20%. For buyers aged 55 and above, you will need to have set aside the BRS in your CPF OA, CPF SA (including monies in investment) and CPF RA before you can use the last 20%.


Buying a 2nd Property

For HDB lessees (owners) who are of a Singaporean household and have completed their Minimum Occupation Period (MOP), they may be thinking of buying a 2nd property. CPF can still be used on a second property even if you have used your CPF savings your first property.

If you already have a home that can last you to at least 95 years of age, then you must have already set aside the current Basic Retirement Sum (BRS) in your CPF OA and CPF SA (including investments) for buyers below 55 years of age. For buyers 55 years old and above, you must have already set aside the current Basic Retirement Sum (BRS) in your CPF OA, CPF SA (including investments) and CPF RA. Any excess of the BRS then can be used for the 2nd property up to the VL.

If you do not have a home that can last you to at least 95 years of age, then you must have already set aside the current Full Retirement Sum (FRS) in your CPF OA and CPF SA (including investments) for buyers below 55 years of age. For buyers 55 years old and above, you must have already set aside the current Full Retirement Sum (FRS) in your CPF OA, CPF SA (including investments) and CPF RA. Any excess of the FRS then can be used for the 2nd property up to the VL.

Similarly, the assessment of whether a person can use their CPF is on the individual itself. It has nothing to do with the property. The total amount that can be used collectively will be based on the property itself. However, if there are multiple owners, then the owners will be assessed individually. Those owners that are using CPF for a 2nd property will need to adhere to the BRS requirement. This concept also applies in other cases. For example, if the property allows 100% of the VL, but owner individual assessment on how much CPF can be used individually cannot meet 100% of the VL, then the rest have to be topped up in cash.


Others

Why is the WL higher than the property price? It is because other than the property prices, there are other cost that can be paid by CPF. Stamp duties, interest of loan, legal fees all can be paid by CPF.



Continue Reading the Article?

The article you just read is a summarized version. The rest of the article below is just a version that is more lengthy and complete for people who want to learn more in depth information. You can choose to hit the back button to browse other articles if you do not require such in depth information. Give us a "Like" if you appreciate our work or if it had helped you! Please share if you think your friends will be able to benefit from it as well!



Connect With Us:

facebook page link

Share:

Share on Facebook

Like:






Valuation Limit and Withdrawal Limit


Introduction

In this article, we are going to find out how much CPF can be used on a property. This article will mainly be discussing on the Valuation Limit (VL) and the Withdrawal Limit (WL).


Valuation Limit vs. Withdrawal Limit

The Valuation Limit ($) is the lower between purchase price and valuation price, at the date of purchase or date of refinancing, whichever is later. The VL prevents over use of CPF on property so that there is a balance between CPF use on property and retirement.

The Withdrawal Limit is 120% of the Valuation Limit. The WL is higher because the bank loan is perceived as having higher interest rate in the long term, and mortgagors of banks will need more CPF for repayment of the bank loan.

Please refer to the picture below to find out which CPF limit applies to you


flowchart for vl and wl

Flowchart for VL and WL


To put it simply, HDB loan will apply only the Valuation Limit. Bank loan can choose up to the Withdrawal Limit. However, to exceed the VL and use the last 20% of the WL, there are requirements attached to it. For buyers below the age of 55, you will need to have set aside the Basic Retirement Sum (BRS) in your CPF OA and CPF SA (including monies in investment) before you can use the last 20%. For buyers aged 55 and above, you will need to have set aside the BRS in your CPF OA, CPF SA (including monies in investment) and CPF RA before you can use the last 20%.


Buying a 2nd Property

For HDB lessees (owners) who are of a Singaporean household and have completed their Minimum Occupation Period (MOP), they may be thinking of buying a 2nd property. CPF can still be used on a second property even if you have used your CPF savings your first property.

If you already have a home that can last you to at least 95 years of age, then you must have already set aside the current Basic Retirement Sum (BRS) in your CPF OA and CPF SA (including investments) for buyers below 55 years of age. For buyers 55 years old and above, you must have already set aside the current Basic Retirement Sum (BRS) in your CPF OA, CPF SA (including investments) and CPF RA. Any excess of the BRS then can be used for the 2nd property up to the VL.

If you do not have a home that can last you to at least 95 years of age, then you must have already set aside the current Full Retirement Sum (FRS) in your CPF OA and CPF SA (including investments) for buyers below 55 years of age. For buyers 55 years old and above, you must have already set aside the current Full Retirement Sum (FRS) in your CPF OA, CPF SA (including investments) and CPF RA. Any excess of the FRS then can be used for the 2nd property up to the VL.

Similarly, the assessment of whether a person can use their CPF is on the individual itself. It has nothing to do with the property. The total amount that can be used collectively will be based on the property itself. However, if there are multiple owners, then the owners will be assessed individually. Those owners that are using CPF for a 2nd property will need to adhere to the BRS requirement. This concept also applies in other cases. For example, if the property allows 100% of the VL, but owner individual assessment on how much CPF can be used individually cannot meet 100% of the VL, then the rest have to be topped up in cash.


Others

Why is the WL higher than the property price? It is because other than the property prices, there are other cost that can be paid by CPF. Stamp duties, interest of loan, legal fees all can be paid by CPF.



Date first posted on 18 June 2019; Last Edited on 18 June 2019

Connect With Us:

facebook page link

Share:

Share on Facebook

Like:



For more articles on other key topics: