The Private Properties Scheme or PPS allows you to use the CPF savings in your Ordinary Account or OA for the purchase of your private residential property in Singapore either to occupy it or to make an investment.
Private Properties Scheme - Usages
You can use PPS for the purchase of your private property in the following ways:
- Pay for the private property in full using your OA savings.
- Make monthly instalment payments on your housing loan that you take for the purchase of your private property.
- Repay the housing loan in part or whole using your OA savings.
- Make monthly instalment payments on your construction loan that you take for the purchase of the land and/or for construction on the land purchased to build your home.
- Repay the construction loan in part or whole using your OA savings.
- Make any and all payments relating to the purchase of your private property such as legal fees, stamp duty, survey fees, construction and/or refinancing of your home or any other cost pertaining to the purchase of the private property.
Private Properties Scheme – Are you eligible for this scheme?
If you are eligible to purchase a private property, then you become automatically eligible to apply for PPS.
However, you are NOT eligible for this scheme under the following circumstances:
- If the private property you are purchasing has a remaining lease of under 30 years.
- If the private property you are purchasing has a remaining lease of under 60 years but a minimum of 30 years AND your age + the remaining lease is under 80 years.
- If you are single and you are purchasing a private property with another single person you are not related to AND you have used your CPF savings for the purchase of an existing property.
- If you are married but you are purchasing a private property with a single person you are not related to.
Note – You can still use your CPF savings for the purchase of a private property that has a remaining lease of under 60 years but minimum 30 years. However, the amount eligible to be used for this purchase will be lower than what you can otherwise use if the remaining lease is longer.
How much CPF savings you can use for the purchase of your private property
Housing limits are placed on your CPF savings for the use of savings from your OA for the purchase of your private property. This has been done by the CPF Board to ensure that you have sufficient savings in your CPF Account when you retire.
The applicable limits are as follows:
- VL or Valuation Limit – You can use your CPF savings up to the purchase price or the value of your private property at the time of your purchase, whichever of the two is LOWER.
- WL or Withdrawal Limit – The maximum amount of your CPF savings that can be used for the purchase of your private property is 120% of VL.
If you wish to use your CPF savings beyond the Valuation Limit (VL) and Withdrawal Limit (WL), you can do so by meeting the eligibility criteria below:
- If you are below 55 years of age: You must first set aside the current BRS or Basic Retirement Sum (current BRS - S$80,500) in your SA or Special Account (includes any amount withdrawn for investment purposes) and OA.
- If you are 55 years of age or above: You must first set aside the current BRS or Basic Retirement Sum (S$80,500) in your RA or Retirement Account (includes any amount withdrawn for investment purposes) and OA.
Checking your eligibility to use your CPF savings to purchase a property with remaining lease under 60 years:
If you want to know if you are eligible to use your CPF savings + the maximum amount from your savings that you can use for the purchase of a property with remaining lease under 60 years, you can use the “Property with Less Than 60 Years Lease Calculator”.
Using CPF Savings for the purchase of more than 1 property:
You can use your CPF savings for the purchase of more than 1 property. However, the Multiple Property Rule restrictions will be applicable on the use of CPF.
Table 1: Multiple Property Rule restrictions on co-owners purchasing a property
|Property Purchase||Member 1||Member 2|
|1st Property bought before 1-7-2006||Using CPF savings||
|2nd Property bought in January, 2007||Using CPF savings||Using CPF savings|
|Withdrawal Limit (WL) for Member under 2nd Property||100% Valuation Limit (VL)||126% of VL|
|Withdrawal Limit for 2nd Property||126% of VL|
|Setting aside MSCC for 2nd Property||Yes||Not Applicable|
Deductions of CPF savings upon purchase of 2 private properties:
- Upon requesting the CPF Board, deductions will be made from your OA to make monthly instalment payments on both your private properties. However, note that there is no order to determine which of the 2 properties will receive payment first.
- You need to ensure that you have enough savings in your OA to make the deductions each month.
Refunding your CPF Account on the sale of your private property
You will have to refund the amount of savings used from your CPF account for the purchase of your private property in the following ways:
- Principal Amount (P) withdrawn from your CPF account for the purchase of your private property.
- Accrued Interest (I) which your savings would have earned if they were not withdrawn from your CPF account for the purchase of your private property.
- 55 years old onwards: If you have pledged your private property to withdraw cash from your RA, you have to refund P + I + Pledged Amount into your CPF account to meet the FRS or Full Retirement Sum (current FRS – S$161,000) in your RA. If there is any balance remaining, the housing refund will be made to you in cash.
Determining a suitable loan amount, repayment amount and loan tenure that you can afford
You can use “Our First Home Calculator” that will provide you with an estimate of a home you afford by taking into consideration the following aspects:
- Your gross household income.
- Your expenses.
- Your repayment amount.
- Your repayment period.
Should you use your CPF Savings to finance your private property?
Using your CPF savings to finance the purchase of your private property is an option, not a necessity. You can use your OA savings if you are unable to fund the purchase through other means. However, you must keep in mind that your CPF savings exists primarily to take care of your retirement needs. Therefore, the more savings you use now for the purchase of your home, the lesser amount you will be left with when you retire. Also, the CPF contribution rates will reduce as you grow older, thereby reducing your savings further.
Furthermore, you can also use your CPF savings to cover expenses beyond just the purchase of your private property. It can be used for various other needs including paying for your children’s tertiary education, insurance premiums etc. So if you use up all your savings on the purchase of your home, you will be unable to use the rest of your savings for other needs and emergencies should they befall on you.
Applying to use CPF savings to repay your Private Property Loan
You can apply to the CPF Board to use your CPF Savings for the purchase of your private property by following the simple steps below:
You must authorize your lawyer to submit the following to the CPF Board:
- The Application Form for using your CPF Savings for the purchase of your private property.
- A valuation report from a licensed valuer.
- Upon submission of the aforementioned documents, the CPF Board will provide a Letter of Approval.
- The legal documentation must be completed by your lawyer working alongside the lawyer of the CPF Board.
Your OA savings from your CPF Account will be released for the purchase of your private property after you have met the following conditions:
- You have submitted the required legal documents.
- You have made the required down payment of a minimum amount of 5% of VL.
- You have paid the balance amount of the purchase price of your private property that is not covered by your CPF savings and your housing loan.
Purchasing your own private home using your CPF savings no doubt sounds tempting, however you must make sure to not exhaust your savings on your home as that is not the purpose of CPF. You will need your CPF savings the most after you retire because it may be your only source of income going forward. Additionally, buying your own home might be the biggest expense in your life and you might see it fit to use up all eligible savings in your OA towards the purchase and monthly instalments. But you may be unable to use these savings in the future when you could need it for other expenses such as paying your children’s tuition for college, paying for insurance premiums for yourself and your family and so on.