CPF withdrawal limit and housing

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CPF withdrawal limit and housing

Postby MMM » Wed Jun 20, 2012 1:08 pm

Hoping that someone here might be a expert as we are feeling :?

Below are the scenario and figures are for illustration only

Property 1 : Tenanted and think of selling
Property 2 : Own stay and no CPF involvement - OS loan 500k
Property 3 : No CPF involvement

We are exploring selling property 1. Once this happens, all the CPF monies + accrued interest (say $680k) will go back to our CPF account. I've the following questions and hoping experts here can help :

* We intend to use the CPF monies to pay off property 2.
Based on the sales proceed that goes back to CPF eg. $680K, it more than cover the outstanding loan for property 2 ($500K).
However the question is can we withdraw all the CPF to pay off property 2? I thought I heard/ read about some CPF withdrawal limit cap of $100K???? Anyone can advise. Eg. Must each of us set aside $x in our CPF account before we can pay off property 2?

As property 2 does not have any CPF involvement right now, must we engage the lawyer to write to CPF board and the bank or can we do it ourselves? I know other consideration also include the early loan repayment for property 2.

* Subsequent to that, we intend to use CPF to pay the monthly instalment of property 3. We are paying by cash now so I suppose this would also involve the communication to CPF board and bank? Must we engage lawyer for this?

Hopefully someone can shed light on this.

Also, what is the going rate for agent commission for home sales?

Any other considerations with regards to the use of CPF for property? Dh was hesitant of using CPF for property 2 and 3. But unless we are buying a new property why let the $ sit there and we might not live to see it physically since there is a moving target with regards to withdrawal age ???

MMM
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Re: CPF withdrawal limit and housing

Postby hquek » Wed Jun 20, 2012 1:17 pm

Try my best here.

CPF for first property will be pegged at I think 100% of valuation limit.

After that, you will have to set aside at least 50% of the minimum sum (ie should be about $60+K for each account) before you can use cpf for subsequent properties. And assuming you have that set aside, again the cap will be 100% of the valuation limit.

Actually, the prudent way is to use cpf in your purchase whenever you buy. Open that window even if you don't intend to service loan with it. Once approval is given, it'll be easier to increase/reduce the contribution. Also, I'm assuming your property was bought before the limits kicked in; then it'll be even better as you would have been able to use more of it to service your property.

As for the housing agent, I think it's about 1-2% of the sale amount. But this is subject to agreement. I'm sure agents will be very happy to quote.

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Re: CPF withdrawal limit and housing

Postby MMM » Wed Jun 20, 2012 1:45 pm

hquek wrote:Try my best here.

CPF for first property will be pegged at I think 100% of valuation limit.

After that, you will have to set aside at least 50% of the minimum sum (ie should be about $60+K for each account) before you can use cpf for subsequent properties. And assuming you have that set aside, again the cap will be 100% of the valuation limit.

Actually, the prudent way is to use cpf in your purchase whenever you buy. Open that window even if you don't intend to service loan with it. Once approval is given, it'll be easier to increase/reduce the contribution. Also, I'm assuming your property was bought before the limits kicked in; then it'll be even better as you would have been able to use more of it to service your property.

As for the housing agent, I think it's about 1-2% of the sale amount. But this is subject to agreement. I'm sure agents will be very happy to quote.


Hi Hquek,

Thanks.

So if based on 60k min sum each, it does appear that with the sale, the CPF can fully pay off property 2 and potentially monies for property 3. Unfortunately CPF was never build in for property 2 and 3 legal papers as we didn't have sufficient CPF for that.

What is this 100% of valuation limit? Our outstanding loan for property 2 is probably only 20% of the market value but around 55% of the original purchase price. So I assume with that, we will not be hit by the 100% valuation limit too? Property 2 and 3 were bought after year 2006.

On the note for "subsequent" property, once we sell off property 1, there is no other property using CPF. So property 2 effectively becomes the 1st property and property 3, the subsequent? So if we still have balance after the 60K min, we can use that for property 3 as well ?

I am doing a breakeven analysis. Unless we sell property 1 at certain price, otherwise we might incurr more cash outlay for those incidental costs Eg. agents, lawyers, early repayment, etc.... Need to go home to see the bank docs....

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Re: CPF withdrawal limit and housing

Postby MMM » Wed Jun 20, 2012 3:27 pm

After I have sold my property and refunded the CPF used to my CPF account, can I re-use the savings to buy another private property or redeem another housing loan with my CPF?

A: Yes, If you are below age 55, you can use the savings and the amount refunded in your Ordinary Account to buy another private property or redeem another housing loan.

If you are aged 55 and above, the CPF refund will be credited to your Retirement Account. If you intend to buy another property or redeem another housing loan, you can use the savings in your Ordinary Account and the savings in excess of the required Minimum Sum cash component in your Retirement Account (excluding interest earned) to do so. Please click here for the applicable Minimum Sum cash component for different cohorts of members aged above 55.


Extracted this from CPF website.... Does min sum only apply to those aged 55 years and above???? So if we are below, we don't have to keep min sum????

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Re: CPF withdrawal limit and housing

Postby linden2000 » Wed Jun 20, 2012 4:02 pm

MMM wrote:After I have sold my property and refunded the CPF used to my CPF account, can I re-use the savings to buy another private property or redeem another housing loan with my CPF?

A: Yes, If you are below age 55, you can use the savings and the amount refunded in your Ordinary Account to buy another private property or redeem another housing loan.

If you are aged 55 and above, the CPF refund will be credited to your Retirement Account. If you intend to buy another property or redeem another housing loan, you can use the savings in your Ordinary Account and the savings in excess of the required Minimum Sum cash component in your Retirement Account (excluding interest earned) to do so. Please click here for the applicable Minimum Sum cash component for different cohorts of members aged above 55.


Extracted this from CPF website.... Does min sum only apply to those aged 55 years and above???? So if we are below, we don't have to keep min sum????


Have to keep half the min sum(ie the cash component) in ordinary + special accounts

http://mycpf.cpf.gov.sg/CPF/my-cpf/buy-house/BH5.htm

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Re: CPF withdrawal limit and housing

Postby verykiasu2010 » Wed Jun 20, 2012 4:09 pm

CPF $ in ordinary accounts earn about 2.6% p.a. in interest, tax free

bank loan now is less than 1% p.a. -- the choice is obvious. not true that you cpf $ is idle

as you grow older, the amount you can borrow is also impacted by age limit vis a vis monthly repayment ability.
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Re: CPF withdrawal limit and housing

Postby MMM » Wed Jun 20, 2012 4:19 pm

verykiasu2010 wrote:CPF $ in ordinary accounts earn about 2.6% p.a. in interest, tax free

bank loan now is less than 1% p.a. -- the choice is obvious. not true that you cpf $ is idle

as you grow older, the amount you can borrow is also impacted by age limit vis a vis monthly repayment ability.


It's true and interesting idea too. Alternatively we can just hold the payback in CPF till our bank loan agreement is up so we are not liable for any breakage free. But need to consider that there is no more rental income to offset.

It's just that the feeling having no more housing loan commitment is just so great.

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Re: CPF withdrawal limit and housing

Postby verykiasu2010 » Wed Jun 20, 2012 4:23 pm

MMM wrote:
verykiasu2010 wrote:CPF $ in ordinary accounts earn about 2.6% p.a. in interest, tax free

bank loan now is less than 1% p.a. -- the choice is obvious. not true that you cpf $ is idle

as you grow older, the amount you can borrow is also impacted by age limit vis a vis monthly repayment ability.


It's true and interesting idea too. Alternatively we can just hold the payback in CPF till our bank loan agreement is up so we are not liable for any breakage free. But need to consider that there is no more rental income to offset.

It's just that the feeling having no more housing loan commitment is just so great.


you still get the same good feeling if your cpf $$ equals or exceed the bank loan and earning higher interest than what you pay to the bank

your have at least 3 years to arbitrage this situation because at this point in time, banks are willing to cap the loan interest rate at max 1.4% p.a. or lower
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Re: CPF withdrawal limit and housing

Postby MMM » Wed Jun 20, 2012 4:34 pm

verykiasu2010 wrote: you still get the same good feeling if your cpf $$ equals or exceed the bank loan and earning higher interest than what you pay to the bank


I know this doesn't make financial sense. But frankly... I don't feel happy with a growing CPF $$$..... With the constant change in ruling, I really wonder if I will get to see my CPF monies alive/ be able to use it when I eventually need to.

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Re: CPF withdrawal limit and housing

Postby verykiasu2010 » Wed Jun 20, 2012 4:58 pm

MMM wrote:
verykiasu2010 wrote: you still get the same good feeling if your cpf $$ equals or exceed the bank loan and earning higher interest than what you pay to the bank


I know this doesn't make financial sense. But frankly... I don't feel happy with a growing CPF $$$..... With the constant change in ruling, I really wonder if I will get to see my CPF monies alive/ be able to use it when I eventually need to.


for cpf$, whether it is in cpf cash or in property, you can't touch them till after death, unless you sell the property after age 55 and withdraw based the prevailing rules.

before age 55, can see cannot touch, might as well make it work harder to earn the higher interest instead of pumping it into the house

after age 55, withdraw the cpf if you are able to make it earn higher than 2.6% p.a. net; and of course cash in bank is better than cash in cpf

hence not wrong to say CPF = coffin purchasing fund, make it work harder lor
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