facebookIf i have more than 50% for downpayment in my cpf ordinary account to buy a resale flat, do i still need to fork out another 5% cash if i take a bank loan? - Seedly

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Anonymous

03 Jun 2021

Property

If i have more than 50% for downpayment in my cpf ordinary account to buy a resale flat, do i still need to fork out another 5% cash if i take a bank loan?

Furthermore, what is the maximum age i can service the loan? I am 43 years old currently.

Discussion (6)

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Elijah Lee

24 Nov 2019

Senior Financial Services Manager at Phillip Securities (Jurong East)

Hi anon,

Most of what you have asked has been answered already, but I will take the opportunity to point out one thing: The decreasing allocation to CPF OA as you age. (this assumes you use your OA to pay the loan) Currently at 43, 21% of your income is allocated to OA, subjected to a cap of $6000, this equates to $1260 if you are earning $6000 and above. (For simplicity I'll use $6000 as a figure.)
Now, at 51, that allocation has dropped to 15%, or $900. If your OA is perpetually close to 0 due to you paying your bank loan from your OA, you might suddenly find yourself having to fork out ($1260-$900=$360) cash. At 61, it gets even worse. Your OA contributions will drop to $210, and you will find yourself paying $1050 in cash monthly.

Of course, we can't forget that AWS, bonuses, interest spillover, etc will help to buffer your OA to an extent. But you'll want to keep this in mind so that you don't get a shock when you near your retirement years.

Cedric Jamie Soh

24 Nov 2019

Director at Seniorcare.com.sg

No matter how much CPF you have, the bank loan requires 5% cash. (prudent requirement set by bank).

Banks usually provide mortgage term up to your age of 65 (some banks may offer till age 70).

HDB loan has no cash requirement. I will strongly stick to the bank loan because of the much lower interest payable now. You will save a lot in the long run.

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Pang Zhe Liang

24 Nov 2019

Lead of Research & Solutions at Havend Pte Ltd

For bank loans, you will need a minimum downpayment of 5% in cash. In most cases, you will be able t...

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