Buying Private Property with CPF

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By using the Ordinary Account savings in their CPF accounts, CPF members are able to purchase property in Singapore for occupation or investment purposes. Though most commonly known as a way to finance a purchase of a HDB flat, did you know that your CPF could be used to pay for private property as well? The Private Properties Scheme (PPS) allows CPF members to use their savings to pay for the private property, repay housing loans or service housing loans, repay construction loans or service construction loans, as well as to pay for miscellaneous housing-related expenses such as legal costs or stamp duties.

Expatriates who have obtained Permanent Resident or a Singapore Citizenship status, will naturally also be eligible to purchase private property in Singapore. Those who wish to buy property jointly with another, would also be glad to know that it’s possible for eligible CPF members purchase property together, and use their CPF savings jointly.

However, there is a limit to the amount of CPF savings that can be withdrawn for housing needs, in order to ensure that there are sufficient funds remaining in the account to finance retirement needs in one’s golden years.

When you first purchase private property, the purchase price or value of the property is known as the Valuation Limit (VL). However, it is possible to withdraw up to 120% of the VL from your CPF savings, and this is known as the Withdrawal Limit. In order to withdraw any amounts beyond VL and up to WL, however, you would need to have set aside the Basic Retirement Sum (BRS) in your CPF accounts first.

Should you decide to sell off the property at a later date, note that the sales proceeds would first go towards paying off the outstanding housing loan taken to buy the property and making a CPF refund. The CPF refund is a compulsory refunding of the CPF amount that had been withdrawn for the property as well as any interest that would have been earned had that amount not been withdrawn from the account.

Exceptions

In a few cases, buyers will not use their CPF to purchase private property:

1. The private property has a remaining lease of less than 30 years
2. The private property has a remaining lease of less than 60 years. Your age, when added to the remaining lease of the property, is less than 80 years in total.
3. You are single and you’re buying the property with a non-related single, but you have already used CPF for an existing property
4. You are married and you’re buying the property with a non-related single

How to Apply

1. Engage a lawyer to submit:
   • An application form to use the buyer’s CPF savings to purchase private property
   • A valuation report of the property by a licensed valuer
2. Wait for a Letter of Approval from the CPF Board
3. Instruct your lawyer to work with the CPF Board to complete the legal documentation

After completing the aforementioned steps, your CPF savings will be made available as soon as you have:

1. Submitted the necessary legal documentation
2. Paid a cash down payment for the property of at least 5% of the valuation limit
3. Paid any balance purchase price after considering the CPF lump sum and housing loan amount