The Central Provident Fund (CPF) is a comprehensive social security savings plan that has provided many working Singaporeans with a sense of security and confidence in their old age.
The savings in the Ordinary Account can be used to buy a home, pay for CPF insurance, investment and education. But only immediate family members (e.g. spouse, parents, children and siblings) can jointly buy property with their CPFs. Married persons can only buy property with their immediate family members if using CPF.
For non-related singles (i.e. unmarried, legally divorced or widowed), they can jointly use their CPFs to purchase one property (Public housing/HDB flat or private property) provided they are currently NOT using their CPFs for any existing property.
When buying more than one property, you must set aside half of the prevailing Minimum Sum before you can use the excess savings in the Ordinary Account and the Special Account for the second and subsequent properties.
There is a limit on how much CPF you can withdraw to service the mortgage loan over the total mortgage period. This is currently set at 120% of the purchase price or valuation of the property at the time of purchase, whichever is lower, for the first property. It is set at 100% for the second and subsequent properties.
For property with a remaining lease of at least 30 years but less than 60 years, the withdrawal limit is the ratio of the remaining lease of the property when the youngest owner is 55 years old, to the lease at the point of purchase. For property with remaining lease less than 30 years, CPF cannot be used. Please refer to the CPF website for more details.
You cannot use CPF to buy non-residential or commercial property such as shops, factories and office spaces. An incorporated company cannot use its shareholders’ CPF to invest in properties.
By Eileen Tan and Ui Wei Teck, property investors and authors of Enjoying Mid-Life Without Crisis. Get dozens more tips in their new book.