Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Friday, 11 January 2019

Paying for my HDB with CPF after 55 Years Old


We have got many readers asking us if they can utilise their CPF to pay for their homes after they reach the age of 55.
We have found the answer for you!

Answer: YES YOU CAN!

When you reach the age of 55, the money in your CPF Ordinary Account (OA) and Special Account (SA) gets transferred into a new CPF Retirement Account (RA).
2 points to note when using your CPF money to pay for your house after you reach age 55.

1) You may use the money in your Retirement Account in excess of your cohort's Basic Retirement Sum (BRS).
Eg; you turn 55 in year 2018. Your cohort's BRS is $85,500.
This means you can withdraw your RA savings above $85,500 to pay for your house.

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2) You may use the money in your OA to pay for the remaining outstanding amount (or loan).
After setting aside money into your RA, if your OA still has money to cover your outstanding housing amount, it will be used to pay for it.
However, if there is insufficient balance in your OA currently, your monthly OA contribution will then be used to pay for the monthly installment for the housing loan.

However, you cannot touch the money in your RA to pay for your outstanding home loan.
Eg; you transferred $30k from OA and $40k from SA into your RA when you reach age 55. Now your RA has $70k, but the BRS for your cohort is $85k. In this case, you will not be able to use any of the $70k to pay for your home loan. Instead, the amount for your home loan will be deducted from your monthly CPF contribution.

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5 comments:

  1. "However, if there is insufficient balance in your OA currently, your monthly OA contribution will then be used to pay for the monthly installment for the housing loan."

    You mean OA or SA?

    ReplyDelete
    Replies
    1. Hi,

      OA. So if your monthly contribution to CPF OA is $600, and your monthly home loan repayment is $800, $600 from OA will be used to pay for your home loan. You will also need to fork out $200 in cash to pay the difference.

      Hope this clarifies! :)

      Delete
  2. Enough money in CPF, anything also can! LOL!

    Can even withdraw everything above the BRS & BHS after 55. Which is what most Singaporeans do.

    In fact even those still working after 55, many opt to take out their CPF contributions instead of leaving inside for higher interest. That's how distrustful of CPF they are.

    For these people (as long meet BRS), CPF will give them their previous year's OA & SA contributions plus interest earned every January.

    ReplyDelete
  3. Wah tat means last resort ,I have to consider Lease Buy-back Scheme (LBS) for my retirement..Pls assist me,my HP no 83229874

    ReplyDelete
    Replies
    1. Hi,

      The thing about LBS is that it hinges a lot on timing. You have to do the LBS when the property market is high in order to maximise your gains.
      However, most of us would not need to sell our house if we were able to financially sustain ourselves.
      We usually need to sell when financial troubles hit us, and that is usually when the property market is not good, which will impact the returns we get from LBS.

      Delete