Besides information that you’ll see elsewhere on the CPF website, it’s useful to keep these points in mind as you are shopping for a new loan or re-looking your existing housing commitments:
Lower CPF Salary CeilingLimit on Voluntary CPF ContributionsCPF Contribution RatesCash Down-Payment for Purchase of HDB Flats Using Bank LoanCPF Withdrawal Limit for HousingRestriction on use of CPF Savings to Purchase Multiple Properties Lower CPF Salary Ceiling
|
From |
Salary Ceiling |
|
1 Jan 2004 |
$5,500 |
|
1 Jan 2005 |
$5,000 |
|
1 Jan 2006 |
$4,500 |
The CPF salary ceiling had been lowered to $4,500. This reduces the statutory burden on employers and lowers business costs, while giving higher-income earners more flexibility to manage their finances.
Both you and your employer will not need to pay CPF contributions on the salary that exceeds the ceiling.
Point to Note: The amount of CPF available for housing may be reduced, and you may have to use more cash for your housing loan.Limit on Voluntary CPF ContributionsIn addition to mandatory/compulsory contributions, some CPF members make voluntary contributions to their CPF accounts.
There is a limit to the amount of voluntary contributions a CPF member can make. Any voluntary contributions paid in excess of the approved limit will be refunded without interest.
Information on the limit can be found
here.
Point to Note: If you make voluntary contributions and reach the limit on such contributions, you may have to pay cash for your housing loan if the amount of CPF available for housing is not enough.
CPF Contribution Rates
You should be aware that the amount of Ordinary Account savings that you can use for housing will be reduced as you get older. This is because a higher percentage of the monthly CPF contributions is allocated to the Special and Medisave Accounts for older age groups.
Click here for the current CPF contribution rates
Also, CPF contribution rates may vary over the long-term. For example, the long-term target rate is 30 – 36% for workers up to 50 years old.
Long-Term Target CPF Contribution Rates
Employee Age
(years) |
Total Contribution – Employer & Employee(% of wage) |
Employee ContributionS |
Employer Contribution |
| 50 and Below |
30 – 36 % |
20% |
10–16% |
| Above 50 to 55 |
24 – 30 % |
18% |
6–12 % |
| Above 55 to 60 |
18.5% |
12.5% |
6% |
| Above 60 to 65 |
11% |
7.5% |
3.5% |
| Above 65 |
8.5% |
5% |
3.5% |
This gives Government the flexibility to set a higher rate to save more during good economic times and to cut the rate in bad years to help businesses save costs and preserve jobs.
Point to Note: Be aware that the amount of Ordinary Account savings that you can use for housing will change as you get older, or may vary because of changes made in response to economic conditions.
CPF contribution rates for workers aged above 50 to 55 years old
Cash Downpayment for Purchase of HDB Flats Using Bank Loan
Home buyers who take up a commercial bank loan to finance the purchase or transfer of HDB flats will have to pay part of the downpayment by cash. The balance of the downpayment can be paid using CPF.
|
Effective Date* |
Cash Downpayment** |
|
1 Jan 2004 - 31 Dec 2004 |
2% |
|
1 Jan 2005 - 31 Dec 2005 |
4% |
|
1 Jan 2006 onwards |
5% |
* For new flats, it refers to the date of booking. For resale flats, it refers to the date of application received by HDB
** The cash downpayment is computed based on the purchase price or current market valuation of the flat, whichever is lower.
Point to Note: If you plan to finance your HDB flat purchase using a bank loan, you’ll have to be ready to pay some cash for the downpayment. However, if you qualify for a concessionary loan from HDB, the downpayment can be paid fully using CPF.
CPF Withdrawal Limit for Housing
(applicable to private properties bought on/after 1 Sept 2002, and HDB flats financed using bank loans)
You can use your Ordinary Account savings to pay your housing loan, for up to 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.
If the housing loan is still outstanding when the VL is reached, you may continue to use your CPF savings up to the applicable Housing Withdrawal Limit, provided you have sufficient Available Housing Withdrawal Limit (AHWL).
The housing withdrawal limit is to encourage CPF members to be more prudent when buying a property, and helps to set aside more CPF for old age needs. The limit is being gradually reduced to 120% of Valuation Limit on 1 January 2008 for HDB flats financed using bank loans, and for private properties with leases of at least 60 years.
|
Date of Property Purchase |
CPF Withdrawal Limit |
|
1 Jan 2004 - 31 Dec 2004 |
144% |
|
1 Jan 2005 - 31 Dec 2005 |
138% |
|
1 Jan 2006 - 31 Dec 2006 |
132% |
|
1 Jan 2007 - 31 Dec 2007 |
126% |
|
1 Jan 2008 onwards |
120% |
For private properties with remaining leases between 30 – 59 years, the withdrawal limit is calculated based on the ratio of the remaining lease when the member is 55 years old, to the lease at the point of purchase.
Example:
A 35 year old member buys a private property with 50 years of lease remaining. When the member turns 55 years old, the property will have 30 years of lease remaining. Hence, the withdrawal limit = 30/50 x 100% = 60% of Valuation Limit.
Point to Note: Do your sums, or ask your bank/financier to show you whether you how you might be affected before you commit to a housing loan. This is especially if you’re thinking of taking a large loan with a long repayment period (because the loan interest will increase the amount that you need to repay).