Singapore has a fantastic pension scheme called the CPF. CPF stands for Central
provident fund. This CPF is being used mainly for Singaporeans and Permanent
residents to buy their homes as well as for their retirement use.
Mr. Tan has a question: -
I own a HDB Property (Government housing). I have used my CPF mainly for my HDB
property.
I have a Balance of S$35,000 total in our joint CPF account. I am 38 years
old. I recently bought a private property. Can I use my CPF to pay for
installment for my second property?
By the way, 1 US$ ~ 1.6 S$
Answer: -
Yes, you can. But if your property is bought after 1st July 2006, you must
first set aside the CPF minimum sum.
As at this moment July 2009, the CPF minimum sum for your retirement is
$117,000. You can use your property to offset 50% against this $117,000.
This means you must have at least $58,500 set aside in your CPF ordinary
account or Special account in order to be able to use your CPF for your
second property.
When you go to your lawyers, after you sign the option to purchase, they will check your CPF balance. In case you have More than $58,500 from your CPF, the lawyer will advise you how much you can use from you CPF for your second property repayment in Singapore for your Singapore home loan.
Some people thought they could use their CPF for part of the second property installment, but realized they could not.
So next time, it is better that whenever they compare singapore properties, they had better compare singapore home loan, check their finances first. It is important to check their affordability and how they can afford a property before they even start to look at the properties.
This will give property buyers the safety level they need in terms of cash flow whilst financing their properties.
CPF savings is meant for retirement, so by setting a safe guard of 50% of funds, the government of Singapore has ensured that most Singaporeans will be able to retire with some funds. These funds will see them through their old age.
At current day value a person who is retiring at 65 has around $58,500, this is hardly enough to last the person till the average age of 80.
Whenever possible, CPF funds should not be used for property as the availability of this funds will cause property prices to become inflated.
The property developers may capitalize most from the availability of such funds by marking up their property development prices.
Currently a property buyer can use up to 15% of the CPF for a property. That means they only have to put a CASH payment of 5%. If you include the stamp duty of about 3%, they only have to put down 8% in order to own a property. This creates a lot of demand from people who otherwise would not be able to afford the properties.
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