Asked by Anonymous

Is it better to use one party’s CPF OA for BTO downpayment instead of 50-50 from both?

My partner and I selected our BTO flat and we are waiting to pay our 5% downpayment. We are in our mid-twenties, both employed full time. I have 50k in CPF OA, my partner has 23k. I remember reading somewhere that in this scenario, it’s better to deduct the 5% downpayment solely from my partner’s 23k and keep my OA there to earn more from the interest, before we pay the rest during key collection in 3 years time. May I know if this is a good option or is it even allowed? Thanks!

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  • Brandan Chen
    Brandan Chen, Financial Planner at Manulife Singapore
    Level 5. Genius
    Answered on 23 Aug 2018

    It is allowed.

    For CPF, you do earn an additional 1% interest on your OA account for the first 20k, so if you are thinking of maximising the OA interest, shouldnt you use your own OA solely so that both of you earn the full 1% interest on the 1st 20k in your OA?

    If you use your own OA solely, both of you have a combined 40k earning extra 1%, if you use your partner's, only your OA is maximised (=

    Just my 2 cents!

    Comments (2)
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    • Dee Tan
      Good point, Brandan! However I’m curious about the extra 1%. Does this mean for the first 20k we are getting 3.5%, and anything above that will be 2.5%?
      24 Aug 2018
    • Brandan Chen
      Yes Dee, that is correct. You get to earn an extra 1% on the first 60k of your CPF. The 60k limit is spread across 20k for OA and 40k for SA and MA combined. Drop me a PM on facebook https://www.facebook.com/brandan.chen if you have any further queries
      24 Aug 2018