• Nelson Neo

HOW DOES CPF ACCRUED INTEREST AFFECT YOUR PROPERTY!

Updated: Sep 9, 2020



Do you know that the accrued interest for CPF used for mortgage repayment is currently at 2.5% per annum and, if you use CPF for monthly mortgage payments, the key considerations are as follows:


1. Singaporeans/SPRs use CPF to service their mortgage payments, as it allows more cash savings on hand, especially if cash top-up is not required. The accrued interest of 2.5% charged by CPF, in general, is higher than the current mortgage loan interest rates given by banks.


2. Upon successful sale of the property, the sale proceeds would be used to pay off any outstanding loan and CPF with Accrued interest before the owner can claim the remaining sale proceeds.



3. If the value of the property continues to appreciate, the accrued interest can be balanced off. However, a key consideration to take note is that property appreciation will reach a peak, but the accrued interest will continue to accumulate. 4. This means there would be little or no cash left over from the subsequent sale of the property due to the CPF/accrued interest being returned back to the owner's CPF OA account. This also meant that the CPF OA account would have a lot more funds, but the usage would have limited options. 6. In conclusion, while using CPF to service monthly mortgage payment seems like a good idea to save up on cash, it is essential to monitor on the value of your property as well to avoid the pitfalls with the accrued interest later upon the sale of the property.

7. Regular review with financial calculations are needed to ensure that your property and hard-earned CPF is helping you instead of going against you. If you would like to know more about the information shared and is wondering about how this may affect you, please do leave a message at my email, nelson.neo@orangetee.com or +6592767874.


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