Buying a residential property, or even a second one soon? Take note that CPF minimum sum will be revised upwards to $148,000 for period between 1st July 2013 and 30th June 2014. This is a yearly revision which CPF adjusts for inflation. The Minimum Sum was set at $80,000 in 2003 and will be raised gradually until it reaches $120,000 (in 2003 dollars) in 2015.
These amounts will be adjusted yearly for inflation.
So what do you need to take note for property purchase should you use CPF?
If this is the first time you are buying a property, you may choose to use the full sum of your Ordinary Account (OA) as part of your sales proceed towards your first residential property. But should you be buying a second and/or third property onward and should you still decide to use your CPF to pay for your property sales proceed, you are to observe the minimum sum requirements. As of this upcoming adjustment, you are to have at least $74,000 in your Special and/or Ordinary Account before you can use the remaining funds to down pay your next residential property.
Would it be okay if I have 50% of the Minimum Sum (ie. $74,000) in Special Account and I would like to utilize the rest of my Ordinary Account for the next property?
Yes, having the funds in Special Account suffices.
Can I use my CPF funds to downpay investment properties such as Commercial or Industrial ones?
No. As of July 2006, CPF Non-Residential Property Scheme has already been phased out. You can only utilize your CPF account for the sole purpose of purchasing Residential properties only.
The minimum sum(MS) for your CPF account will be raised from 1st of July 2009 from the existing $106,000 to $117,000.The new MS will apply to CPF members who turn 55 from 1 July 2009 to 30 June 2010.This is in line with the Ministry of Manpower’s annoucement in August 2003 that the CPF Minimum Sum will be gradually raised to $120,000 by year 2013.
Minimum Sum was introduced to curb inflation and to ensure that Singaporeans have set aside sufficient savings for their retirement.
How Will the Minimum Sum Affect Property Buyers who is using CPF
Having an increased MS in CPF means you would have to set aside more funds in CPF (can be in the form of both Special Account and Ordinary Account) if you are using CPF to buy a second property. You can wipe out your Ordinary Account for your first purchase of a property with your CPF account, but if you’re using CPF to purchase your second home, you’ll have to set aside $58,500 (SA or OA) in your account. This is applicable to your spouse or friends whom you might purchase the 2nd property under tenancy-in-common.
Under the approved Residential Properties Scheme (RPS), you can utilise your CPF OA savings for the following:
To pay 100% of the Valuation Limit (VL). The VL is the lower of the purchase price or the value of the property at the time of purchase.
To refinance your housing loan taken for the purchase of a residential property
To pay your monthly instalments on your existing house loans.
To pay all stamp duty, valuation and legal fees on transfer or conveyance for the purchase or mortgage of a property.
The CPF Board has a very comprehensive breakdown on how the Valuation and Withdrawal Limit works on their website.
Even I’m pretty skeptical at how old I could live till, but our Government now expect a typical Singaporean life expectancy to be at 80. With that, the Government introduces a new scheme, CPF Life
We can still pak tor when we’re 80! (photo: magictoast)
With 12 types of annuity plans to choose from, Singaporeans who are aged 50 and below for now are set to get a steady retirement income till death. Payouts can start from as early as 65 or as late as 90 (my god, that’s a little ridiculous). And if you do not choose a option, the default for payout to start will be set at age 80.
CPF will be the sole Financial Institution and Government Board to manage CPF Life.
The scheme will be rolled out in 2013, 5 years from now.
What it means to us:
Social security during old age is a plus point, but that probably means setting more aside for the existing CPF minimum sum component where the premiums will be deducted from.
Psychologically, I’m not too sure about setting an age an an option which is not changeable once you’ve set it. Like with the refund or non-refund option to family, would we because of CPF Life target to live longer just to care about the payouts?
This is bewildering.
Everyone should probably get a copy of Straits Times and read on the 10 FAQs covering most questions that a typical citizen would ask. Also, this PDF file from Channel News Asia would probably cover your doubts with scenarios and explanations.