Thinking of financing your new home with your CPF savings? The amount of Ordinary Account (OA) savings you can use is subject to the CPF housing limits, namely the Valuation Limit (VL) and Withdrawal Limit (WL). These limits are put in place to ensure you have enough savings for your retirement years.
Here's how the VL and WL will apply to you depending on the type of loan you are taking and the property you are buying:
Valuation Limit (VL) is the lower of the purchase price or the value of the HDB flat at the time of purchase. You may use your OA savings to pay the monthly instalments of your housing loan up to the VL.
If you wish to use your OA savings beyond the VL, you will need to:
1. Set aside the prevailing Basic Retirement Sum (BRS) in your Ordinary Account and Special Account if you are below 55, or
2. Meet the BRS in your Retirement Account, Special Account and Ordinary Account if you are 55 and above.
Withdrawal Limit (WL) is 120% of the VL. This is the maximum amount of CPF you can use for the flat. Upon reaching the WL, you will not be allowed to use further OA savings and the remaining housing loan will need to be paid in cash.
Still confused? Let's use this example to better illustrate how VL and WL will affect you:
If you are financing a resale HDB flat with a bank loan, both VL and WL will apply to you. If the purchase price is $500,000 and the valuation price is $510,000, the VL will be the lower of the two, at $500,000.
The monthly instalment on loan amount of $400,000 with a loan tenure of 30 years at 2.6% interest works out to be $1,601. The estimated time taken to hit the VL is 22 years and 1 month.
You can continue to use your OA savings beyond the VL up to the WL of $600,000 only if you fulfil the conditions mentioned above.
The estimated time taken to hit the WL is 27 years and 4 months. Once you hit the WL, you will need to use cash to pay the remaining housing instalments.
You can use the
CPF Housing Withdrawal Limits Calculator to estimate when you will reach the VL or WL.