How To Pay Back Your CPF Housing Loan


Singaporeans can use CPF contributions to cover costs such as education, healthcare, housing, and retirement. Most people utilise funds from their CPF Ordinary Account (OA).

In Singapore, OA funds can pay for the initial downpayment and monthly home loan repayment, whether you are buying a HDB flat or private property.

However, the amount of OA funds used and any interest accrued will be “owed” to your CPF account. You will reap greater benefits if you utilise your CPF to purchase a home while working toward retirement.

But first, you need to know how to refund the CPF housing loan and pay back CPF accrued interest.

In this article, we’ll go over how to pay back CPF housing loan. We’ll also examine the reasons for doing so and the procedures involved in making a voluntary repayment of your mortgage.

What Is A CPF Housing Refund?

Refunding a CPF housing loan only occurs when you sell a home you paid for with CPF savings. You are required to return the amount withdrawn to pay for the property and interest to your CPF account after the home has been sold and the sale proceeds received from the buyer.

As the seller, you are responsible for making up any financial shortfalls if the property sells for less than its market value. You can pay this money back without waiting to sell your home when you make a voluntary CPF Housing Refund.

The Cost Of Repaying CPF Used For Housing

The more money you take out of your CPF savings to purchase a home, the more you’ll have to spend in the future to credit your CPF account if and when you decide to sell it.

Homeowners must return all CPF funds used when they sell their homes. This also includes the interest that would have been accumulated if the money was not taken out of the CPF account.

Note that the interest accrued on CPF funds, loans from banks, or HDB flats accumulates rapidly.

The proceeds from the sale will cover the remaining balance on the home loan you took out to purchase the property. The CPF money used to make the purchase is also returned.

A negative sale is one in which the cost of purchase is insufficient to reimburse the CPF funds expended fully and the interest accumulated.

In a negative sale, homeowners who sold properties for more than the market value are exempt from paying the difference in cash. But more importantly, it means that they will have less CPF savings available for their subsequent home or retirement.

The seller must cover the difference between what CPF is owed and what was sold for if it was lower than the market value or a negative sale.

Since the cash from the sale of the property wouldn’t be enough to make up the deficit, most people frequently pay for it out of their pocket.

Why You Should Make A Voluntary Refund

Making money by purchasing, selling, or renting real estate is not always required for successful property investment. Saving money can occasionally be the most straightforward way to earn extra income.

A property owner can “enrich himself” in several ways, including the CPF Voluntary Housing Refund (VHR). There aren’t many people who have been using this method. Most of the time, homeowners aren’t even informed of this possibility.

Through the CPF Voluntary Housing Refund programme, you can get back the CPF funds you had used to finance a home purchase or pay off a loan.

You can refund any amount up to the total principal you withdrew to purchase the property, plus interest accrued.

However, there are several valid reasons for taking into account a Voluntary Housing Refund, some of which are discussed below.

Get More Money Back When You Sell Your Home

An early CPF repayment will increase the cash you receive from selling your property if you plan to sell it in the future. You would receive an additional $28,008.45 in cash for each $100,000 refunded to CPF over 10 years.

You can use the cash proceeds from home sales to your advantage for subsequent home purchases if you have a better idea of how much money will be generated.

In addition, you can better plan the cash portion needed for renovation, other costs, and Cash Over Valuation (COV).

Earn A 2.5% Return

It might be worthwhile to consider repaying early, given that the interest rate for the CPF OA is 2.5%. Interest rates on bank deposits are currently around 0.5% annually.

In other words, you would receive five times the returns by investing your money in the CPF interest.

If you decide to go the CPF route, you won’t need to keep renewing your fixed deposit when it matures in case you have already set aside money from savings to pay back the mortgage.

Putting your savings back into CPF makes more sense than keeping them in bank accounts and earning meagre interest.

Helps To Better Manage Your Cashflow

This is for those who use cash for regular maintenance but park their money in CPF instead. CPF could take the place of regular cash repayment.

It would enable you to manage your cashflow better month-to-month. With cash on hand, you don’t need to set aside money for home loans, and you can budget more effectively.

How Much Voluntary Housing Refund To Make

Refunds from the sale proceeds must be made when you sell your home. You must pay back two amounts.

First, the remaining balance on your current mortgage. It could be a bank loan or your HDB mortgage. Priority is given to making this refund because it is the first one made.

Second, you must return all CPF funds, including principal and interest, that you withdrew from your CPF savings. It can cover costs such as the deposit, legal fees, stamp duties, and HDB grants.

The amount you have to refund typically consists of the principal amount you withdrew from your CPF OA and the accrued interest.

It is calculated based on the date you withdrew the money from your CPF OA and compounded annually at a rate of 2.5% per annum on the principal amount.

How To Pay Back CPF Accrued Interest

The interest that would have been earned on your principal in your CPF OA over the same period is referred to as CPF accrued interest.

You would be a content Singaporean if the money was in your OA and you were receiving interest from it.

The more accrued interest you have to pay back into your CPF OA when you sell your property in the case of CPF accrued interest from your home purchase, the longer the time between your purchase and sales date.

It shouldn’t worry you if you don’t intend to sell your house. However, you should consider this if you want to downgrade your property during retirement.

There are two methods for paying back CPF interest:

  • Pay off monthly mortgage installments in cash. Your home loan installments will not be considered part of your principal, and no interest will be charged if you pay them in cash rather than with money from your CPF.
  • Make a voluntary housing refund. To lower the total amount you’ll have to repay once you sell your property, you can decide to refund cash into your CPF account periodically.

Paying back CPF interest has two major advantages:

  1. You decrease the amount of CPF funds and accrued interest that you’ll eventually have to repay.
  2. You let your CPF funds handle the work of compounding the interest.

CPF Housing Refund After The Age Of 55

When homeowners purchase a piece of property with CPF funds, they must deposit the proceeds back to the respective CPF accounts.

The current housing reimbursement policy allows those below the age of 55 to return the property’s principal withdrawn and accumulated interest when selling their property.

Those over 55 years old are required to pay back the amount needed to cover their Minimum Sum Deficiency (MSD), which is the lesser of the P+I or their Minimum Sum (MS).

As those over 55 years old are only required to set aside the MS, they are not required to return the Principal Amount.

How To Make A CPF Voluntary Housing Refund

You can make a CPF voluntary housing refund using the following steps:

  • Use your Singpass to sign into the CPF website and make a CPF Housing Refund.
  • Log in and select [My Statement > Section C > Property].
  • The total amount you have paid for the property will be displayed, along with interest accumulated up to that point.
  • Proceed to refund some or all of the money now that you know how much you owe.
  • To make a housing refund with cash, select [My Request > Property].
  • You can then pay using PayNow or eNETS by entering your Payment Amount.

Tip: Before attempting to make a CPF Housing Refund, turn off your pop-up blocker and increase the payment limits on your bank account. If you don’t, you can end up being frustrated and be forced to start the payment process from scratch.

Increase Your Retirement Savings Using CPF Accrued Interest

You have just learnt how to pay back CPF housing loan. One way to use your CPF savings before retirement age is to empty your CPF OA to pay for real estate and mortgage payments.

The CPF OA allows you to increase your retirement savings through the interest it pays and the investment options of the CPFIS. The costs of education, housing, and insurance are also reduced with its help.

To offer our clients the best services possible, we have perfected our customer service and financial management skills at BST Credit.

You can rely on us to provide you with expert advice – whether you need guidance on how to repay CPF used for your housing loan, want a loan to pay bills before the end of the month, or need a sizeable sum to remodel your home.

Apply for a loan now in just five minutes or contact us for more information. We will be more than happy to hear from you.

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