Using CPF money to pay for under construction property

[MM Lovers]

Understand from my banker that the new cooling measures allow CPF to be used only at the last 10% of the progressive payment (that means 5% + 15% + 10% foundation works & 10% Structure works & the rest of the 60% from bank loan) before the bank loan kicks in. Unlike before the cooling measure which allows CPF to be used after the 5% option fee has been paid.

Question is when should the lawyer put up the application to the CPF board for their approval? This is because we do not know when the next 10% payment which is the completion of the structure works will be issued.

For my case, I have already paid 20% (option fee and 15%) and just paid 10% for the foundation works. The next 10% will be paid once the structure works are completed. Should I ask my lawyer to put the application now? If apply now, will CPF lock in the current amount? Or should the lawyer apply later? We cannot wait for the developer's request for payment than we submit to CPF, it will be too late. We want to maximize our CPF for this payment.

Any brothers or sisters having this experience? Care to share and advice? Thanks. Hope you understand my queries.

[lim99]

Believe my situation similar to yours. My lawyer just applied to cpf way ahead (upon signing of S&P) to link my name to the property for future partial/instalment payments. When the time comes all the authorisation would have been cleared. As to whether cpf block up the amount i am not sure, because i am thinking if there is shortage, i will just use cash, which i estimated wouldnt be a lot. But of course, it also means i need to monitor my balance and be extra careful when the time is near so as not to face crisis

[MM Lovers]

Believe my situation similar to yours. My lawyer just applied to cpf way ahead (upon signing of S&P) to link my name to the property for future partial/instalment payments. When the time comes all the authorisation would have been cleared. As to whether cpf block up the amount i am not sure, because i am thinking if there is shortage, i will just use cash, which i estimated wouldnt be a lot. But of course, it also means i need to monitor my balance and be extra careful when the time is near so as not to face crisis

Thanks for your reply, may I know when did you sign the S & P? before the new cooling measures or after? Did you finally use your CPF? Was the amount the current amount or as per application balance?

[Reuben]

Understand from my banker that the new cooling measures allow CPF to be used only at the last 10% of the progressive payment (that means 5% + 15% + 10% foundation works & 10% Structure works & the rest of the 60% from bank loan) before the bank loan kicks in. Unlike before the cooling measure which allows CPF to be used after the 5% option fee has been paid.

Question is when should the lawyer put up the application to the CPF board for their approval? This is because we do not know when the next 10% payment which is the completion of the structure works will be issued.

For my case, I have already paid 20% (option fee and 15%) and just paid 10% for the foundation works. The next 10% will be paid once the structure works are completed. Should I ask my lawyer to put the application now? If apply now, will CPF lock in the current amount? Or should the lawyer apply later? We cannot wait for the developer's request for payment than we submit to CPF, it will be too late. We want to maximize our CPF for this payment.

Any brothers or sisters having this experience? Care to share and advice? Thanks. Hope you understand my queries.

This is very new to me. Care to share when was this cooling measure announced?

[MM Lovers]

This is very new to me. Care to share when was this cooling measure announced?

I believe should be the cooling measures before the announcement of TDSR. I also don't know about it until my banker informed me.

[Cupcakes]

oh no, i intend to use CPF to service my 2nd property. care to share when was this measure being implemented? I took up the loan before TDSR was announce and the loan was approval on that week after the announement.

[MM Lovers]

oh no, i intend to use CPF to service my 2nd property. care to share when was this measure being implemented? I took up the loan before TDSR was announce and the loan was approval on that week after the announement.
You may check with your banker. Its a MAS ruling, you can only use CPF at the last 10% before your loan kicks in. That means 5% + 15% + stamp duties + 10% (foundation works) all have to use cash. You can only use CPF only at the next 10% if you are taking 60% bank loan.

[relax88]

Now still can loan 60% for second properties?:D

[lim99]

Thanks for your reply, may I know when did you sign the S & P? before the new cooling measures or after? Did you finally use your CPF? Was the amount the current amount or as per application balance?

I signed in Apr. Seriously, I am not sure if its due to cooling measures as I am not very updated on these matters. The CPF is still not utilised yet, the lawyer just work out the amount required like say, 10% of the sales price, and submit for application. Subesequently the cpf will have the sum accumulated over the months and if, by then, it is still not enough, we use cash to top up. So estimation must be done carefully to avoid major shortfall.

[Cupcakes]

Now still can loan 60% for second properties?:D
think he was replying to my qns, that time was 60% for 2nd property

[thomastansb]

My lawyers will just apply as soon as I exercise the option or signing the S&P if it is a new sale from developer. Just get the approval first. So one less thing to worry. If the amount need to be changed, you can change it at a later date but I don't think you need to change much.





Understand from my banker that the new cooling measures allow CPF to be used only at the last 10% of the progressive payment (that means 5% + 15% + 10% foundation works & 10% Structure works & the rest of the 60% from bank loan) before the bank loan kicks in. Unlike before the cooling measure which allows CPF to be used after the 5% option fee has been paid.

Question is when should the lawyer put up the application to the CPF board for their approval? This is because we do not know when the next 10% payment which is the completion of the structure works will be issued.

For my case, I have already paid 20% (option fee and 15%) and just paid 10% for the foundation works. The next 10% will be paid once the structure works are completed. Should I ask my lawyer to put the application now? If apply now, will CPF lock in the current amount? Or should the lawyer apply later? We cannot wait for the developer's request for payment than we submit to CPF, it will be too late. We want to maximize our CPF for this payment.

Any brothers or sisters having this experience? Care to share and advice? Thanks. Hope you understand my queries.

[PropertyHound]

I am not sure whether there is a new MAS or CPF ruling that we can only use CPF for the last 10% payment. If it is already implemented, then there is no choice. Presumably it is not implemented yet, then I think we have to judge for ourselves and not base our actions on the recommendations of the bankers or lawyers as they will want to earn the most out of you. Before the implementation of the cooling measures my banker recommended that I leave the CPF till last because he said CPF earn more interest over the years than fixed deposit. I beg to differ as CPF minimum sum keep increasing every year and I am not sure whether CPF will be sufficient for the last couple of instalment payment. Thus, for myself I would make sure CPF is used to the max first instead of having the minimum sure raised every year and may not have sufficient in the end. Also, who knows what measures the govt will implement to lock in your CPF over the next few years, we already have CPF Life etc. Thus, bros and sis, make sure you utilise CPF first. Remember, a bird in hand is worth two in the bush!

[MM Lovers]

Many thanks for the reply. So I can apply now and obtain approval first. The amount will be decided upon the developer request for payment.

[玉格格]

Thus, for myself I would make sure CPF is used to the max first instead of having the minimum sure raised every year and may not have sufficient in the end. Also, who knows what measures the govt will implement to lock in your CPF over the next few years, we already have CPF Life etc. Thus, bros and sis, make sure you utilise CPF first. Remember, a bird in hand is worth two in the bush!

hey, I disagree wif u wor ...
if a person hv only 1 ppty, he will not be affected by the min sum at all.
so for me, I would rather use cpf for the 1st ppty (I can effectively drain out the whole OA) n cash for the subsequent ppty.

[Arcachon]

Don't understand why want to use CPF to pay PC loan.

CPF is charging 2.6% and the Bank is charging less than 2.6% and is a reducing rate.

http://www.moneysense.gov.sg/life-events/buying-a-home.aspx

http://www.moneysmart.sg/home-loans/mas-latest-rules-for-property-loans-and-how-it-affects-you/

http://www.moneysmart.sg/housing-property/total-debt-servicing-ratio-tdsr-and-how-it-affects-your-loans/

1. Potentially Lower Interest Rates for the Rich

Okay, between rich and poor people, who pays more for their property?
It should be the rich right? I mean, HDB flats cost less and stuff. And that’s true if you’re talking about loan quantums (the total amount borrowed). But when it comes to home loan interest rates, most private property owners actually pay lower rates than HDB dwellers.
How much less? Try anywhere from 0.9% – 1.2% less.
Let me explain the witchcraft: if you can afford a cash down-payment of 5% (minimum) on your house, you can opt for a bank loan (and for private property, you always use bank loans). The typical rates for a bank loan range from 1.4% to 1.7%. They’ve stayed at that level for the past 10 years or so.

Numbers and calculator
It’s all those zeroes in their bank account. Even the bank’s calculator goes crazy.

The HDB concessionary loan (which is what the average Singaporean will end up getting for public housing) is pegged at 0.1% above the prevailing CPF rate. That’s 2.6%. So if your loan is from HDB, you are almost certainly paying higher interest than the rich guy in the condo across the road.
That’s a pretty important contributor to the whole “rich get richer, poor get poorer” scenario.
But, I hear you asking, why does everyone not rush out to get a bank loan?
In the interest of fairness (and 50,000 other good reasons), let me explain that HDB is not ripping you off. It’s just that you may not be rich enough to consider that bank loan, which comes with its own set of risks and conditions. For example, there’s your…

[Arcachon]

http://www.ura.gov.sg/lad/HBG/basicCheck.htm

http://vincentchan.wordpress.com/2009/12/17/limits-on-the-use-of-cpf-for-housing-revisit/

http://www.jackphanginvestment.com/2011/05/learning-to-buy-singapore-private.html

A buyer must compare the interest earned against the interest payable. If the interest earned is higher, then it is advisable to let the money remain in the CPF ordinary account.

http://www.propertyinvest.sg/can-i-use-cpf-to-buy-a-private-property/

http://propertyfreedom.net/how-to-invest-in-condos/

[Arcachon]

http://mycpf.cpf.gov.sg/CPF/Templates/MyCPF_Template.aspx?NRMODE=Published&NRORIGINALURL=%2fCPF%2fmy-cpf%2freach-55%2fReach55-2%2ehtm&NRNODEGUID=%7b6E2AD05B-A7E3-4F31-BAB5-A2349F44BC01%7d&NRCACHEHINT=NoModifyGuest#PropertyPledge

[CRViper]

hey, I disagree wif u wor ...
if a person hv only 1 ppty, he will not be affected by the min sum at all.
so for me, I would rather use cpf for the 1st ppty (I can effectively drain out the whole OA) n cash for the subsequent ppty.

Peeps with 1 property also affected by min sum when they turn 55 isn't it? I rem there's this part that states after 55, if want to continue to use CPF to service home loans, must set aside 50% of the min sum right?

[PropertyHound]

Thanks for your reply, may I know when did you sign the S & P? before the new cooling measures or after? Did you finally use your CPF? Was the amount the current amount or as per application balance?

Let me add a bit more. If you are still young say in 30s or early 40s and still contribute CPF, it may be OK to use your CPF last due to higher interest(do your sums first) because the net increase from your contributions may be more than the increase in the yearly minimum sum that will be locked in. But if you are nearer 50 when CPF contribution will drop and minimum sum increase, it is better to use CPF first to the max, IMHO. That way even if there is not enough in your CPF for your minimum sum after paying for the house, so what? You have already utilised the CPF monies to pay for house and the government cant ask you to make up the difference in the minimum sum.

[Reuben]

Don't understand why want to use CPF to pay PC loan.

CPF is charging 2.6% and the Bank is charging less than 2.6% and is a reducing rate.

http://www.moneysense.gov.sg/life-events/buying-a-home.aspx

http://www.moneysmart.sg/home-loans/mas-latest-rules-for-property-loans-and-how-it-affects-you/

http://www.moneysmart.sg/housing-property/total-debt-servicing-ratio-tdsr-and-how-it-affects-your-loans/

1. Potentially Lower Interest Rates for the Rich

Okay, between rich and poor people, who pays more for their property?
It should be the rich right? I mean, HDB flats cost less and stuff. And that’s true if you’re talking about loan quantums (the total amount borrowed). But when it comes to home loan interest rates, most private property owners actually pay lower rates than HDB dwellers.
How much less? Try anywhere from 0.9% – 1.2% less.
Let me explain the witchcraft: if you can afford a cash down-payment of 5% (minimum) on your house, you can opt for a bank loan (and for private property, you always use bank loans). The typical rates for a bank loan range from 1.4% to 1.7%. They’ve stayed at that level for the past 10 years or so.

Numbers and calculator
It’s all those zeroes in their bank account. Even the bank’s calculator goes crazy.

The HDB concessionary loan (which is what the average Singaporean will end up getting for public housing) is pegged at 0.1% above the prevailing CPF rate. That’s 2.6%. So if your loan is from HDB, you are almost certainly paying higher interest than the rich guy in the condo across the road.
That’s a pretty important contributor to the whole “rich get richer, poor get poorer” scenario.
But, I hear you asking, why does everyone not rush out to get a bank loan?
In the interest of fairness (and 50,000 other good reasons), let me explain that HDB is not ripping you off. It’s just that you may not be rich enough to consider that bank loan, which comes with its own set of risks and conditions. For example, there’s your…

The main different is. If u need cash urgently, you can withdraw from the bank. U cant tell CPF that you are in need of $ and ask them if u can withdraw to tide over yr situation. Second reason is, govt is keep increasing the minimum sum of the CPF making it harder and harder for u to touch the $ in the CPF. So why not use it when it is still allowed?

[玉格格]

Peeps with 1 property also affected by min sum when they turn 55 isn't it? I rem there's this part that states after 55, if want to continue to use CPF to service home loans, must set aside 50% of the min sum right?

I oni noe tat wif 1 ppty , u can use every single cent in OA but not sure if one will get hit by min sum when he reaches 55 onot.
anyway, I tot at 55 no more OA liao? become retirement account instead?
nvr tink until so far ... :p

[radha08]

The main different is. If u need cash urgently, you can withdraw from the bank. U cant tell CPF that you are in need of $ and ask them if u can withdraw to tide over yr situation. Second reason is, govt is keep increasing the minimum sum of the CPF making it harder and harder for u to touch the $ in the CPF. So why not use it when it is still allowed?

u can roughly gauge how much ms increase about 10k a year so if your income can match should not be a prob:cool:

[Cupcakes]

Don't understand why want to use CPF to pay PC loan.

CPF is charging 2.6% and the Bank is charging less than 2.6% and is a reducing rate.

http://www.moneysense.gov.sg/life-events/buying-a-home.aspx

http://www.moneysmart.sg/home-loans/mas-latest-rules-for-property-loans-and-how-it-affects-you/

http://www.moneysmart.sg/housing-property/total-debt-servicing-ratio-tdsr-and-how-it-affects-your-loans/

1. Potentially Lower Interest Rates for the Rich

Okay, between rich and poor people, who pays more for their property?
It should be the rich right? I mean, HDB flats cost less and stuff. And that’s true if you’re talking about loan quantums (the total amount borrowed). But when it comes to home loan interest rates, most private property owners actually pay lower rates than HDB dwellers.
How much less? Try anywhere from 0.9% – 1.2% less.
Let me explain the witchcraft: if you can afford a cash down-payment of 5% (minimum) on your house, you can opt for a bank loan (and for private property, you always use bank loans). The typical rates for a bank loan range from 1.4% to 1.7%. They’ve stayed at that level for the past 10 years or so.

Numbers and calculator
It’s all those zeroes in their bank account. Even the bank’s calculator goes crazy.

The HDB concessionary loan (which is what the average Singaporean will end up getting for public housing) is pegged at 0.1% above the prevailing CPF rate. That’s 2.6%. So if your loan is from HDB, you are almost certainly paying higher interest than the rich guy in the condo across the road.
That’s a pretty important contributor to the whole “rich get richer, poor get poorer” scenario.
But, I hear you asking, why does everyone not rush out to get a bank loan?
In the interest of fairness (and 50,000 other good reasons), let me explain that HDB is not ripping you off. It’s just that you may not be rich enough to consider that bank loan, which comes with its own set of risks and conditions. For example, there’s your…

i prefer to be cash rich than CPF rich.
i can simply place my money in TD for 1% pa... so means, i only lugi 1.5%pa.