Should I use my CPF monies to buy a resale 3rm flat and collect cash to offset my current rental cost?

You can do so.

If you buy now, you'll buy under non-citizen spouse scheme.

Where you also have to stay for 5 years and only can rent out bedroom. as you'll be under MOP.

As such your rental might be compromised.

I guess the way to go is for her to get a private property then and pay ABSD 5%

Yes, accrued interest only applies when you want to sell your flat, but bear in mind that when your wife turns citizen and let's say you want to buy a new flat or anything - you cannot own two HDB properties. So you will have to sell your resale then.

Thanks for your reply Shaun.. Assuming i don't sell it and just rent it out all the way.. i guess accrued interest don't apply to me?