|
|
|
| |
| |
|
| |
|
Make sure you plan well when you decide to buy a property or commit to a home loan. Otherwise, your dream home may turn into a nightmare when it comes to servicing the loan repayments. If you are not careful, you may end up with the option of using cash ONLY to pay your monthly housing instalment!
Here are four key issues you should be aware of: | |
| 1. The Debt Trap |
| |
|
Many have fallen into the debt trap of over-committing to a property beyond their affordability, and as a result, saddled with the burden of huge debts that left little for daily needs or savings.
As a rule of thumb, your monthly mortgage payment and other loan payments should not exceed 35% of your monthly income. Remember, the more you use for your property purchase, the less you will have for your retirement! |
| |
| 2. The Housing Withdrawal Limit |
| |
|
Do you know that there is a cap on how much CPF savings you can use for your property?
When you buy a resale HDB flat or private property and finance it with a bank loan, there is a cap known as the Withdrawal Limit on the amount of CPF you can use for the lumpsum payment towards the purchase, subsequent capital repayment, if any, and monthly instalments. The Withdrawal Limit for 2006 is 132% of the valuation of the property at the time of purchase or its purchase price, whichever is lower. The Withdrawal Limit will be reduced by six percentage points each year until it hits 120% in 2008. |
| |
| 3. Minimum Sum Requirement At Age 55 |
| |
|
On reaching age 55, you are required to set aside the Minimum Sum, currently $90,000, which you can start withdrawing monthly from age 62. The Minimum Sum will rise to $120,000 (in 2003 dollar) by year 2013. While you are allowed to pledge your property as part of the Minimum Sum, you are still required to set aside the minimum cash component or 50% of the required Minimum Sum.
If you have been over-extending your CPF savings on your property, you may not meet the Minimum Sum requirements at age 55. This means you will have no savings left in your Ordinary Account to service your loan and will have to use cash instead. |
| |
| 4. Reduced CPF Contributions For Older Workers |
| |
|
Another factor that may affect your housing loan repayment is the reduced CPF contributions for workers age 50 and older. At age 50, your total CPF contribution will be reduced from 33% to 27%. You can only use the reduced12% that will be allocated to your Ordinary Account for housing. This is a substantial reduction compared to the 22% allocated to your Ordinary Account based on a 33% contribution rate at age 35.
Be an informed home buyer, check out the CPF Housing Site at www.cpf.gov.sg.The Site contains comprehensive information on housing issues and hosts several calculators to help you calculate your home affordability, the total interest payable on your loans, and the applicable CPF withdrawal limits on your property, just to name a few. |
| |
|
|
|
|
Restriction on use of CPF to purchase multiple properties
If you already owned a property bought with your CPF and wish to buy another property after 1 July 2006, you may do so only with the excess balance in your Ordinary Account after setting aside the prevailing Minimum Sum cash component in your Special and Ordinary Accounts.
The total amount of CPF you may use is capped at the valuation of the property at the time of purchase or its purchase price, whichever is lower, if the property has a remaining lease of at least 60 years. Different limits are applicable to properties with remaining lease of more than 30 years but less than 60 years.
The Board allows a grace period before imposing the restrictions on those who are buying a second or subsequent property with the intention to sell their existing properties.
Phasing out of Non-Residential Properties Scheme (NRPS)
The NRPS scheme will be phased out. This means you can no longer apply to use your CPF to purchase non-residential properties. Those who have made the purchase before 1 July 2006 may continue to use their CPF to service their outstanding loans.
|
| |
| |
|
|
|
|
Wish to sell your discounted SingTel shares but do not have a trading account? Just go to any post office before 31 March 2007.
To sell the shares, simply bring your NRIC to any post office and complete the form for selling your discounted SingTel shares.
Your shares will be sold within the next four trading days. SingPost's partner, Phillip Securities, will send you a sales contract note advising you the shares' sale price and the sale date. SingPost charges a lower transaction fee of $17.95 (before SGX fees and GST), a savings of more than $20 compared to the charges by broking firms.
Sale proceeds will be credited into your CPF Ordinary Account and subject to the CPF withdrawal conditions. |
| |
| |
|
|
|
|
With the banks' implementation of the 5-Day Clearing Week from 15 May 2006, all cheques and requests for GIRO or Interbank fund transfers submitted to the Board on a Saturday will only be processed on the next working day.
From 1 July 2006, all CPF contributions in excess of the Medisave Contribution Ceiling (currently $32,500), will be transferred to the Special Account for members aged below 55 and to the Retirement Account for members aged 55 and above, if the members have not met the CPF Minimum Sum. However, if the members have set aside the full CPF Minimum Sum, the excess CPF contribution will be transferred to the Ordinary Account.
CPF members, whose monthly housing payments are affected by the change, may appeal to the Board to use the amount which has overflowed to the Special Account. |
| |
| |
|
|
|
|
No time to wait in the Queue? Book An Appointment With Us
If you need to visit our Service Centre for more complex CPF transactions, make an appointment with us. Simply select the date and time of your choice at the CPF website via the CPF e-Appointment Booking System and you will receive an email confirming your appointment. Alternatively, you can call our Call Centre to make an appointment. We will serve you within 10 minutes of your appointment time. |
|
|
|
|
|