Asked on 26 May 2019
Should i transfer my OA to SA to quickly hit the minimum so that whatever overflows from SA and MA will go into OA for my second property? I have hit my MA recently and my OA + SA is around 100k. I plan to top up 7k yearly to hit FRS asap and have hit the 2200 monthly contribution. I can only buy my second property in 5 years time. Currently using cash to pay my mortgage.
Vincent Tan Wen Bin, Assistant Vice President at Thinkers Alliance
Updated on 07 Jun 2019
If I am intending to use the money to purchase a house, I wouldn't aggressively transfer my funds over to my SA. If you are taking an approach that you would want to build your SA to hit the minimum sum fast, by all means do the transfer.
If you are still thinking to purchase a property, you might want to be careful on the top up. Funds transferred from OA to SA is permanent and irreversible. I won't wnat to be caught in the situation when I want to purchase a property and I have all my money in SA locked up for retirement.
If you have some spare in your OA, by all means do up some transfer to maximize yield. Just have to ensure you got sufficient spare in OA when you want to purchase your property.
1 more comments
Vincent Tan Wen Bin
28 May 2019
To keep things simple. You would have to reverse calculate. If the objective is to get a 2nd property, you have to take note on what is the amount that you have to set aside. Assuming you want to get a 2nd property without selling off your first property and the value of the property you are getting is $1.5million. Excluding ABSD and BSD. You have to set aside $375,000 and $75,000 must be cash and $300,000 can be contributed from CPF OA and the rest of the 75% can be loaned from the bank.
As long as you maintain a safe buffer (your savings can service the mortgage for six to 12 months), this is an approach you can consider. However, don’t do it if you’d be on a shoestring budget without savings.
One common issue of people who do this is that, when things go wrong, they start resorting to credit cards and personal loans; this would defeat the entire purpose.
You can read more abour prepping for your first home on the 99.co blog!
I did top up from OA to SA to max up the FRS earlier. Looking back from my experience, here are some...
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