CPF savings cannot be used for renovation, improvement, or repair work on property. If you plan to renovate or repair your property, you will need to use your own cash savings to cover the costs. You can’t withdraw your CPF savings until you reach the retirement age. The HDB Home Improvement Programme (HIP) offers various services, including structural crack repair, toilet upgrades, and Enhancement for Active Seniors (EASE).
You can use your CPF Ordinary Account (OA) savings to buy a HDB flat or private and residential properties in Singapore. CPF OA savings can be used to pay for downpayment, housing loan, stamp duties, and legal fees, depending on the law firm. Payment can be made in full or in monthly instalments. If you require further financial support, you can approach your managing HDB Branch.
The use of your CPF savings towards your HDB flat or DBSS flat is subject to the CPF housing limits. The housing loan must be secured by a mortgage on the property that CPF is built for retirement purposes. However, you can use your CPF account for investments.
Renovation loans cannot be paid by CPF, as they are built for retirement purposes. To finance your flat purchase, you may choose to take a housing loan from HDB or a financial institution regulated by the Monetary Authority of Singapore. The money in the CPF Ordinary Account can be used for your next home purchase.
You can use CPF for the initial purchase of your home and subsequently use cash or a mix of both cash and CPF for your mortgage instalments.
📹 FOOLISH HOME BUYERS OVERSTRETCHING THEMSELVES?💥 Explaining CPF Rules For Mortgage And HDB Upgrading
In this reaction video, I’d firstly like to state that I support maximising your standard of living while NOT jeopardizing retirement …
How to pay for renovations in Singapore?
A bank renovation loan is a financial assistance provided by a bank to help homeowners fix up their homes and increase their value. These loans are often given by banks or other financial institutions to help homeowners make improvements to their homes. The goal is to make the home more appealing and comfortable for family gatherings. Obtaining capital is crucial for home renovation projects, as it allows homeowners to customize the interior design of their homes.
To find the best renovation loan, it is essential to look for one with low interest rates, easy repayment options, and a quick approval process. This can help homeowners choose the best loan for their future BTO or resale HDB flat, condo, or private property.
Renovation loans in Singapore are typically given by Singaporean banks and other financial institutions to help homeowners finance home additions and repairs. Choosing the right renovation loan is crucial for making home remodelling projects affordable and effective.
How much renovation loan can I get in Singapore?
The maximum renovation loan amount that a bank is willing to extend is S$30, 000, and it is uncommon for banks to approve more than one loan. The maximum loan amount is calculated based on the applicant’s monthly income, with a cap of S$30, 000. This limitation is applicable to both individual applicants and those applying with an immediate family member.
Can I use CPF to pay my house?
CPF savings can be used to pay off a significant portion of a home loan, including downpayment, monthly repayments, legal fees, stamp duty, and other administration fees. The CPF Board is generally lenient with late repayments, with no penalties for early full repayment. CPF savings offset house payments, and if used to pay for a HDB loan, savings can be made due to the lower interest rate of 2. 6 compared to most current bank loans. With more liquid cash, individuals can invest in various assets like stocks, forex, REITS, and cryptocurrency, potentially using the profits to pay off part of their monthly home loan repayments.
What CPF Cannot be used for?
It should be noted that CPF savings can be utilized to cover stamp duty and survey fees, but not monthly service, conservancy charges, or property-related charges such as taxes, which are not covered by CPF savings.
How much CPF OA can be used for house?
CPF members can retain up to $20, 000 in their Ordinary Account (OA) for HDB flat purchases and HDB loans, with the remaining amount going towards housing loan payments. For bank loan buyers, they can retain any amount of OA savings. These funds provide a safety net for paying monthly instalments during unforeseen circumstances, such as temporary income loss. Additional emergency funds can be built by using cash or making a voluntary housing refund.
Can I use CPF to pay for renovation?
It should be noted that CPF savings are not applicable for property renovation, improvement, or repair work. In the event that one wishes to undertake renovation or repair work on their property, it is necessary to draw upon one’s own cash savings in order to cover the associated costs.
Is renovation tax deductible in Singapore?
Section 14N of the Singapore Income Tax Act 1947 permits a tax deduction for capital expenses incurred on renovation or refurbishment (R&R) works to business premises over a three-year period, with a maximum deduction of SGD 300, 000 per three-year period.
How much CPF can I use for fixed deposit?
The first S$20, 000 in your CPF OA cannot be used for CPF FD investments, and only CPF OA balances above S$20, 000 can be invested. The minimum and maximum placement amount for CPF Time Deposit (CPF TD) is S$30, 000, with a maximum of S$999, 999 per placement. Foreign currency deposits are subject to exchange rate fluctuations and may provide opportunities and risks. Earnings on foreign currency deposits depend on the exchange rates at maturity, and exchange controls may apply to certain foreign currencies. It is important to determine the suitability of foreign currency deposits based on investment objectives, financial means, and risk profile. Pre-termination costs will be deducted from the deposit.
What can CPF OA be used for?
The utilization of OA savings for property payments can facilitate the accumulation of funds for future mortgage payments, while offering the benefit of stable interest rates. Furthermore, the national MediSave scheme provides CPF members with a means of accumulating funds for medical expenses, particularly in the post-retirement period. Such savings may be utilized for hospitalizations, day surgeries, and outpatient expenses for both members and their dependents.
How can I reduce my renovation costs in Singapore?
Singapore’s home renovation projects can quickly become costly, especially for HDB flats and condos. To save on renovation costs, set a realistic overall budget, reduce built-in furniture costs, lower interior design fees, compare contractor quotes for electrical and plumbing, source low-cost materials, resell old appliances, furniture, fittings, and use vinyl instead of wood flooring. These tips help maintain a realistic overall budget and avoid breaking the bank for upgrades.
By following these guidelines and simple solutions, homeowners can avoid breaking the bank on HDB or condo renovations, ensuring they stay on track with their living space upgrades. By following these tips, they can save on renovation costs and enjoy a more affordable living space in Singapore.
Can you use CPF to pay for housing?
The procedure for utilizing CPF savings for partial or full reimbursement of a housing loan is contingent upon the specific loan type and the amount of CPF Ordinary Account savings that can be applied to the property in question.
📹 CPF staff answers your burning questions:Serving up a guide to home financing
2:34 – Why do I have to pay accrued interest to my own CPF? 3:15 – If I had used my CPF for housing, can I put the money back …
It is pitched by property agents. They sell the idea that condo price increases 80% for past 10 to 20yrs vs 20% increase of HDB. u buy a condo now (say 1.3-1.5m) and if the value increases to a certain value say 2m (they claim it as force savings), u can downgrade to a flat and get a resale HDB/BTO. They just sell u all the nice numbers. 2m minus 1.3-15m means profit of 0.5m-0.7m. I have done my sums before and it is pretty BS. They did not consider all the transactions costs, interest expense on loan, renovation costs, the loss interest income from your CPF OA account and most importantly the cost of buying a similar size home when u decide to downgrade. If i sell my 4rm HDB at 520k now and upgrade to a 1.3m 3br condo. i will be 300-400k worst off in cash for next 25 years. In future, when i sell the condo and downgrade to a similar size HDB, i will have to sell a 1.3m condo at 2.5m in 25yrs time just to even breakeven (comparing to me staying status quo and earn interest on CPF) and buyback a HDB at 620k from open market as i still need a home to stay when i sell the condo. That is just ridiculous they don’t factor in the costs of buying a new property to stay. I just tell the property agent i am better off staying in HDB and let the CPF earn interest without the pressures of cashflow and affecting quality of life now with 300 to 400k cash less now.
Our schools should introduced financial 101 (or, Financial prudent) in upper Secondary or even lower Secondary. Example, What is compound interests, CPF accounts and CPFLIFE which are very close to us, Rule 72 and so on … Some of the Maths that we have learnt are not applicable when we come out to work. Not everyone graduated as an Engineers or Technicians. Just my opinion.
The problem is not whether upgrading is good or bad. Is the article example that is wrong. Not all property decision are like this. Of course there are people that make wrong decision. But there also people that make the right decision and benefit from it. Its the example in the article that is wrong. Not the concept of upgrading to condo.
As you said this is not a complete story based on what’s reported on the article, I guess we shouldn’t call them a foolish buyer based on the limited facts. In the first case, she might not have necessarily taken up a 75% loan. The sale proceeds of her existing house and personal savings could make up her down payment, which help to reduce the loan amount required. Suppose she is taking only 55% loan ($825k), she is allowed to stretch the loan tenure until 75yo. With that, her monthly instalment is about $3631 (assuming 1% interest rate). The existing TDSR framework helps to ensure borrowers are not over-leveraged. The fact that she could get her loan approved by the bank means that she passed the stress test and has the financial means to service the loan. Well, I do agree that she needs to look into her retirement years. But she could sell the property for capital appreciation and downgrade to a smaller unit in the future if there’s a need to. Moreover, she could also choose to pass down the asset to the children who don’t mind owning a private property and continue with the loan repayments. When the children inherit the property, they could refinance the loan and potentially get a fresh 30 years loan tenure because of their younger age. And that further reduces the future monthly instalments.
Great article on prudence. Based on the limited info provided, it definitely seem that the first lady overstretched herself based on her pay. However, I think the 2nd example of school teacher purchasing a 1b unit at Treasures at Tampines is sufficiently prudent given that she’s single & has no dependents & earns a decent wage. The running cost of owning a mega development like Treasures is low due to the massive number of units (more than 2000). Maintenance fee can be below $200 in the long term. HDB town council fees + season parking + gym membership cost may well be higher than Treasures monthly maintenance fees. My personal opinion is that many Singaporeans in 20s & 30s are not stretching themselves hard enough. But many in late 40s & 50s are over stretching. Risk appetite should be calibrated according to age.
Quite sad that most Singaporean only consider 2.5% reported as the annualised inflation rate. The 7% GST is also a type of induced artificial inflation. So our spending is actually inflated by 7% + 2.5% = 9.5% ….. After factoring in GST at 7% as a part of inflation it sudden make sense we need to work till 70. GST is tax by definition but its effect is inflationary.
Thanks Josh for the candid talk. Really appreciate it. It looks like financial literacy is something that is really lacking for the mentioned people from the article. If people blindly follow the trend of property investment, considering a roof as investment, they will be in trouble at their old age. I really pity these people who over leverage. I guess people need to understand the concept of liability free, then works towards financial freedom. One step at a time.
The ST articles can be very misleading so thank you for your article. Beyond the contents found in the articles, the buyers may well afford the upgrade due to their spouses or other incomes etc. Or they simply find greater value in buying a new home than paying for a Reno, even the sums are miles apart. Our national paper can definitely do better.
look at all the property ads in YT and u know why. Today the quality of property marketing and pitching by the agents and property firms in all this ads are highly persuasive and very well presented. I mean this is a good thing as it raises the quality and standard of prop marketing. But it also ‘brainwashed’ many buyers, sellers and upgraders of property.
Reminds me of an example where many years ago in the place I’ve worked there were one driver who got his pension and he immediately go and buy a Lexus and parked beside the boss’s toyota. He also bought a new house and was super happy about his life. Later heard from some colleague that this worker had gotten heart attack as he was too excited about his pension and ways to spent it. I feel that most people had no financial literacy and thus the Govt do away with lump sum payment for CPF (also doing away with pension) and focus on giving out monthly payments to last the whole lifetime of the person. Any person who squander away his retirement money is a burden to the govt.
Yes i generally agree. Condo PSF has climbed at an astonishing rates and pple are afraid that they may be priced out of the mkt in future. Hence the buying spree. The affordability issue coupled with shorter loan tenure and employability as we age will see many in troubles especially when interest rates start to creep up.
Prices for new launch going up because singaporean dont invest anywhere else, burn finger in other areas so stick to propaty. Nowaday got many salary class family income easy 20k. Last 2 year covid reduce their expense very much, still got glc/banking job they scratch. These ppl dont know what to do with money in covid time. They dont care 2k psf. Many people see them and want to follow and over leverage. Lets see how long this propaty sun shines. Just like china, propaty is the only investment some ppl know. Garment also know, anytime can open foreiner tap again, to shoot up economy again after covid. All this moneykey see moneykey do.
We dont know people’s circumstances. The info isnt complete so you are making too many assumptions. For those who can afford ( taking into account risk potential too ) it is better to invest sooner rather than later. I remember 15 years ago when I was investing people also said it is too expensive, then subprime came and yes those who over stretched did lose money. But those of us who could hold had no problems and have done well. Prices have soared since then. At the end of the day property is the best investment in Singapore. But it is prudent to not over stretch, must always have some cash on stand by, emergency funds. Renting isnt good as you are just helping someone else pay down their unit. Rental can go up too and you will end up priced out of the mkt.
With projection of cost rising due to this pandemic in all consumers aspects and recovery is still a long way to go and real figures growth is still not there yet, owning condominium especially now is not value investing compared to hdb growth performance and landed property. The price of condominium is overpriced and the potential of good profit margins is low even sell. Very heavy burden in maintenance. Too much of condominium nowadays is eating up the profit margin of selling.. 好看不好吃。。😂😂。Look good outside, underlying no value. Our press wording is always misleading, beautiful to read the reporting but viewer or reader must know deciphering the underlying stories. Warren buffer say price is what you pay, value is what you get…As individual, we must have wisdom to difference price and value?? 🤔 🤔 What value is our press want to deliver to the reader?? 😂 😂
This irrational behavior can be attributed to the govt’s continuous skirting of the HDB lease issue and their pathetic attempt to not address the value depreciation. After Singaporeans slaved away for decades paying off their flats, a snap of the finger and all the value disappear, giving the govt a bullet to say the flat is worthless now. Very low move by the ruling party.
Why are there so much worry that HDB will eventually has zero value ? Do people know that HDB offers best rental retuen compared to private property. If a HDb has 55 years lease left, the HDB can rentb$2k/month, why bother selling at 500k? Would it not be better that the unit be rented out for 55 years and net 1.32 million a lot better ?
I agree with what you said. For example, we r a couple with combined earning of ard 11k and cpf of 300k. Peers kept encouraging us to buy EC. For a 1.2m unit, yes the 25% downpayment is no issue to us as we have quite some cpf. But the monthly repayment + maintenance can be a bit stretched as we both have elderly parents to support, and what if we have young kids in the future? Plus if we use cpf to pay for the bank loan, the interest is quite high. It really depends on what you want. We prefer to have more cash on hand to live life.