With effect from 10 May 2019, buyers will be able to utilize more of their CPF for home purchases as long as the remaining lease of the home can cover the youngest buyer until at least the age of 95.
If this criteria is met, home buyers will be allowed to obtain maximum CPF usage & HDB housing loan (for HDB buyers). Those who did not meet this criteria will still be able to use their CPF & HDB housing loan at a pro-rated amount.
Under the new rules, the total amount of CPF that can be used for property purchase will depend on whether the remaining lease of the property can cover the youngest buyer to the age of 95, rather than focusing solely on the remaining lease of property previously.
There will still be a minimum lease requirement for the use of CPF for property purchases, which has been lowered to 20 years from the existing 30 years.
In line with these changes, CPF members will now need to have a property with sufficient remaining lease to cover them until at least the age of 95 before they can withdraw their CPF savings above the Basic Retirement Sum (BSR). Previously, CPF members above the age of 55 can only withdraw their CPF savings above BSR if they owned a property with a remaining lease of at least 30 years.
HDB flat buyers is still able to take a HDB housing loan of up to the full 90% Loan-to-Value (LTV) limit. However, if the remaining lease of the flat cannot cover the youngest buyer to the age of 95, buyers can still take a HDB loan but the LTV limit will be pro-rated from 90%.
Summary of the updated rules on CPF usage & HDB housing loan as follow:
You can also refer to the following info-graphics from the Ministry of Manpower FB page for a more simplified illustration.
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Jason Ow S. H.
Senior Financial Consultant