Can explain more about the accrued interest? it seems like paying with cpf will incur tons of interest that may be more than the principal after thirty years?

Hi alvin,

If you had not used your CPF OA to pay for a house, then it would have gained interest.

Thus, by using your OA, you lose that interest. In the words of CPF: "Accrued interest is the interest amount that you would have earned if your CPF savings had not been withdrawn for housing. The interest is computed on the CPF principal amount withdrawn for housing on a monthly basis (at the current CPF Ordinary Account interest rate) and compounded yearly."

Given that 2.5% compounding over 30 years on a principal of $100K is actually $209K, yes, the interest accrued can be more than your capital. That is why compounding is the 8th wonder of the world, except that it doesn't work in your favour in this case. If you sell off the house worth $209K bought with $100K downpayment (assume mortgage serviced with cash) then you would have to refund this $209K back to the OA to 'repay' yourself first.