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Buyers given more flexibility to keep S$20,000 in CPF when taking HDB loan

SINGAPORE — From Tuesday (Aug 28), flat buyers taking a Housing and Development Board (HDB) loan will have the option of retaining up to S$20,000 each in their Central Provident Fund (CPF) Ordinary Account (OA).

Previously, flat buyers had to fully utilise the balances in their CPF OA to pay for their flat purchase, before they took up an HDB housing loan.

Previously, flat buyers had to fully utilise the balances in their CPF OA to pay for their flat purchase, before they took up an HDB housing loan.

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SINGAPORE — From Tuesday (Aug 28), flat buyers taking a Housing and Development Board (HDB) loan will have the option of retaining up to S$20,000 each in their Central Provident Fund (CPF) Ordinary Account (OA).

Previously, flat buyers had to fully utilise the balances in their CPF OA to pay for their flat purchase, before they took up an HDB housing loan to ensure that flat buyers exercise financial prudence and minimise the housing loan taken.

Announcing the change as it launched over 5,000 flats under the August Build-To-Order (BTO) and Re-offer of Balance Flats (ROF) exercise on Tuesday, the HDB said while the previous objective remains relevant, the policy change will offer flat buyers “greater flexibility in using their CPF funds”.

"The funds can be used for their monthly mortgage instalments in times of need and will improve retirement adequacy if left unutilised,” said the HDB.

This option will be available to flat buyers who have yet to collect the keys to their new flats, as well as resale applications received from Aug 28.

Flat buyers who wish to use all their CPF OA balances for their flat purchase may continue to do so.

"Some flexibility can be given to flat buyers to provide a buffer in their CPF OA to pay mortgage instalments in times of need, or to improve retirement adequacy if the buffer is evenutally not tapped upon," said the HDB.

BACKGROUND: Four years ago, Members of Parliament (MPs) had raised concerns about the amount of Central Provident Fund (CPF) monies that Singaporeans pump into housing.

Speaking in Parliament during the debate on the President’s Address in May 2014, MPs proposed tweaking the CPF system such that less CPF monies are spent on housing, leaving more for retirement needs.

Other MPs including Mr Zaqy Mohamad (Chua Chu Kang GRC) and Ms Tin Pei Ling (then Marine Parade GRC) also called for ways to provide higher returns on CPF monies to better withstand inflation. Separately, former Ang Mo Mio GRC MP Inderjit Singh — who retired from politics in 2015 — had previously suggested in an interview with TODAY that in tandem with more affordable housing, the CPF Board could further limit how much Singaporeans could use from their OA to buy property, leaving more for retirement instead.

Responding to the MPs in Parliament, then-Manpower Minister Tan Chuan-Jin reiterated the need to ensure that the CPF system caters to Singaporeans’ housing needs. “There are those who asked whether the CPF should also, apart from providing for retirement adequacy, be looking at housing adequacy,” he said. 

“We believe it is an important component and this forms part of that pillar,” said Mr Tan, who also noted that higher CPF interest rates could mean greater risk.

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