If you are using CPF :
In addition to the CPF housing withdrawal limits which define the amount of CPF that can be used for housing, members should also be aware of factors like the CPF Minimum Sum requirements when they reach 55 years old, the effect of changes in housing loan interest rates, reductions in the amount of contributions to the Ordinary Account as they get older, etc. Please click here for the list of factors. Otherwise, a brief discussion is given below:
CPF contribution rates and allocations. The rates are lower for members in older age groups, and the percentage of contributions going to the Ordinary Account is also reduced. Thus, as homeowners get older, they may have to use more cash for instalments. Remember also that contribution rates may change from time to time.
CPF salary ceiling.
Both employer and employee do not have to contribute CPF on salary amounts which exceed the ceiling ($5,000 in 2005; $4,500 in 2006). This means more take-home pay, but employees have to remember that they won’t be able to rely on having more CPF savings for their housing.
Changes to CPF contribution levels.
Remember that one's level of contribution may change over the years. It could increase (eg. salary rise); decrease (eg. pay cut); or even stop (eg. unemployment). A useful rule-of-thumb is that we should have emergency savings of at least six times our monthly salary to cater for unexpected events, if possible.
Other commitments. Don’t forget that you may also need your Ordinary Account savings for other purposes – commitments under CPF Investment Scheme; Home Protection Scheme premiums; Dependants’ Protection Scheme premiums; usage under CPF Education Scheme.
Undischarged bankrupt: HDB flat owners who are undischarged bankrupts can continue to use CPF to pay their housing loan instalments. From 15 June 2005, private property owners and owners of privatised HUDC flats who are bankrupts may continue to use their CPF to service their housing loans taken to buy the property, if the CPF charge on the property is created before their bankruptcy.
Factors affecting only homeowners below 55 years old
Members below age 55 can transfer savings from the Odinary Account to the Special Account, to earn more interest. However, such transfers are irreversible, and homeowners with outstanding home loans should think carefully before making such transfers.
Factors affecting only homeowners aged 55 and above
Lumpsum withdrawal at 55.
You can withdraw your CPF savings when you turn 55 after you set aside your CPF Minimum Sum. Before you withdraw your CPF savings, however, do consider how you intend to continue paying any outstanding loan instalments. This is important as employees above 55 will have lower CPF contribution rates.
CPF Minimum Sum.
The CPF Minimum Sum is being raised gradually to reach $120,000 (in 2003 dollars) in 2013 (please see Table A). The sum is meant to give members a basic income during retirement, and thus only amounts in excess of the cash component can be used for housing. It has to be set aside at 55 even if members postpone or do not make any withdrawal of CPF savings at 55. Members can set aside the amount fully in cash or pledge their property for up to 50% of the Minimum Sum applicable to them.
Medisave matters: Although these do not have a significant impact on homeowners, it would be useful for members to note that their CPF withdrawal at 55 can be affected by the Medisave Minimum Sum or Medisave Required Amount.
CPF Minimum Sum shortfall. If members have a shortfall for their CPF Minimum Sum upon reaching 55, they will not have to make-up the shortfall immediately. However, they should note that the shortfall could affect the use of CPF for housing if the property’s 100% Valuation Limit has been reached.
While they may continue to use CPF if they have the Available Housing Withdrawal Limit, the AHWL would be computed based on the available Ordinary Account balance less any shortfall in member’s Minimum Sum cash component.
Lowering of Minimum Lease Period to 30 years:
Minimum Lease Period (MLP) refers to the length of lease remaining below which CPF cannot be used to purchase private residential properties
CPF can now be used to buy residential properties with remaining leases of less than 60 years but at least 30 years. This is subject to the following conditions:
i. The remaining lease must cover the member at least up to the age of 80 years; and
ii. Properties with remaining leases less than 60 years but at least 30 years will have lower CPF Withdrawal Limits based on the residual value of the property at the member’s CPF withdrawal age of 55 years old (see Annex A).
Lowering the MLP thus gives members this flexibility so that more funds can be set aside to meet their retirement expenditure. In this way, both their housing and retirement needs are better met. The lower MLP will apply to : Repayment of outstanding housing loans for properties that had been purchased without using CPF before this policy change (provided that members satisfy the age-based criteria).
In cases of joint purchases, the age of youngest owner using CPF will be used to determine the MLP and Withdrawal Limit. This is to ensure that the younger member would have a home till at least age 80 and have sufficient CPF savings for retirement should the property be sold.
2. Use of CPF for Non-related Singles to Jointly Purchase Homes
All non-related singles (unmarried, divorced or widowed) will be allowed to use CPF to jointly purchase their only residential properties. There is no age restriction. The new policy will apply to applications received for
i. New purchases on or after the effective date; and
ii. Repayment of outstanding housing loans for properties purchased without the use of CPF before this policy change.
At the time of application, the singles who are using CPF for the property purchase must not be using CPF for any other existing properties.
3. Simplification of Available Housing Withdrawal Limit (AHWL)
Previous Policy
AHWL was set at the lower of:
i. 80% of gross CPF savings in Ordinary Account and Special Account in excess of the prevailing Minimum Sum or
ii. the available Ordinary Account balance after setting aside the Minimum Sum cash component;
for members below age 55.
For CPF members aged below 55 years, the AHWL will be simplified to:
the available Ordinary Account balance after setting aside the Minimum Sum cash component (i.e. criterion (i) above has been done away with).
For CPF members aged 55 years and above, the AHWL will be:
Available Ordinary Account balance less the Minimum Sum cash component shortfall.
The new policy will apply to all members subjected to the AHWL i.e. new applicants as well as those currently under the CPF property schemes.
4. Restriction on Use of CPF to purchase Multiple Properties
Previous Policy
The CPF withdrawal rules applicable to second and subsequent properties are the same as those for the first property. Members are allowed to use at least 100% of the Valuation Limit for each property without setting aside any cash in their CPF accounts.
Change
From 1 July 2006, members can only use their CPF savings for the purchase of their second and subsequent properties provided they are able to set aside the Minimum Sum cash component. The use of CPF for the second and subsequent properties would be limited to the net amount of Ordinary Account savings in excess of the Minimum Sum cash component.
Withdrawals for the second and subsequent properties will also be subject to a Withdrawal Limit of 100% of the Valuation Limit for properties with at least 60 years of lease, and the applicable
Withdrawal Limit for properties with more than 30 years but less than 60 years of lease.
This policy is applicable to members who already own a property (HDB flat or private property) bought with their CPF savings before 1 July 2006 and wish to buy another property with CPF from 1 July 2006.
Members who own more than 1 property bought with CPF savings before 1 July 2006 will not be affected by the policy change unless they subsequently buy another property using their CPF savings.
A grace period will be granted to members who have bought the second or subsequent property with the intention of selling the existing property so as to meet the rules. The grace period for the sale of the existing property will be:
i. For completed properties – 6 months from the completion of purchase of the second property
ii. For uncompleted properties – Up to Temporary Occupation Permit (TOP) + 6 months
Once the grace period is up, they should either own only one property, or satisfy the MS cash requirement if they own more than one property. If the MS cash requirement is not met, CPFB will stop CPF withdrawals for the new property.
5. Phasing Out of Non-residential Properties Scheme (NRPS)
Previous Rule
CPF can be used to buy non-residential properties up to the purchase price or 70% of the value of the property, whichever is lower. These include office premises, shop units, factories and warehouses.
Change
CPF members can no longer use CPF to buy non-residential properties.
Rationale for Change
NRPS was intended to help members enhance the return on their CPF savings by investing in property. As CPF members are now allowed to invest in property funds under the CPF Investment Scheme, NRPS is less relevant. Property funds offer diversification, are more liquid and do not require large capital commitment. In addition, the take-up rate of NRPS has been low and the number of new NRPS applicants has also been generally declining.
Effective Date
1 July 2006 Any NRPS applications received on or after 1 July 2006 will not be approved. Members who are using CPF to service their non-residential properties before 1 July 2006 will not be affected by the policy change.
Other Implementation Details
From 1 July 2006, CPFB will allow CPF to be used only for the residential component of shop-houses under the Residential Properties Scheme. Hence, approval on the use of CPF will only be given for shop-houses with leases/titles which can be subdivided into the residential and commercial components. Members will need to subdivide the lease/title before they can apply to use CPF for the residential component.
6. Transfer of Medisave Account Overflow to Special Account/Retirement Account Instead of the Ordinary Account
Previous Policy
Contributions into Medisave Account (MA) in excess of the Medisave Contribution Ceiling (termed “MA overflows”) are transferred into the Ordinary Account.
Change
For members aged below 55 years, MA overflows will be transferred to their Special Account (SA). Once the SA balance (inclusive of amounts withdrawn under CPFIS-SA) has reached the prevailing Minimum Sum (MS), excess MA overflows would then go into their Ordinary Account (OA).
For members aged 55 years and above, MA overflows will be transferred to their Retirement Account (RA) to top-up any MS shortfall. Once the RA has been topped up to cover any MS shortfall, MA overflows would go into their OA.
Rationale for Change
This change will improve retirement adequacy of CPF members as they will enjoy a higher interest on their MA overflows (interest rate for the SA and RA is higher than for the OA).
As savings in the SA and RA cannot be used for property purchases, some members who currently rely on their MA overflows to finance their mortgages in properties may be affected.
CPF members who are using MA overflows to service housing mortgages may appeal to the Board to continue to use the overflowed amount to SA to service their loans, if their OA is depleted. They can tap on their SA savings to the extent that their mortgage payments are affected by the policy change.
BANK LOAN
Since 1 January 2003, flat buyers who are not eligible for an HDB loan will have to take a loan from bank/financial institution that is licensed by the Monetary Authority of Singapore to provide housing loans.
HDB flat purchasers / transferees are advised to check with the banks / financial institution on the granting of such housing loans. For those taking bank loans, a Letter of Offer must be obtained from the banks / financial institutions before you exercise the Option to Purchase for the HDB flat.
HDB LOAN
Eligibility Conditions for HDB Concessionary loan
HDB provides housing loans at concessionary interest rate to eligible flat buyers, subject to HDB's credit assessment and prevailing mortgage loan criteria.Since 1 January 2003, flat buyers who are not eligible for an HDB loan will have to take a loan from a bank/financial institution that is licensed by the Monetary Authority of Singapore to provide housing loans. Flat buyers can apply for an HDB loan if you and / or your essential occupiers (if any):
(a) have at least one buyer who is a Singapore citizen;
(b) have a monthly household income not exceeding $8,000;
(c) have not previously taken two or more HDB concessionary interest rate loans;
(d) have previously taken one HDB concessionary interest rate loan and one housing subsidy and buying a bigger flat type than your current flat or the flat last owned (if you currently do not own an HDB flat);
(e) have previously taken one HDB concessionary interest rate loan and one housing subsidy and the residential property last disposed off is not a private property;
(f) do not own any private residential property (including HUDC flat / Executive Condominium) in Singapore or overseas;
(g) do not own more than one market / hawker stalls or commercial / industrial property in Singapore or overseas;
(h) own one market / hawker stall or commercial / industrial property and operate the business yourself;
(i) are buying a 5 room or smaller resale flat under the Single Singapore Citizen (SSC) Scheme with a gross monthly income not exceeding $3,000.
Since 1 Jan 2003, HDB no longer grant market rate loans. Flats buyers who are not eligible for HDB’s housing loans can obtain market rate loans from any bank that is licensed to provide housing loans. They will benefit from more choices, and will be able to take advantage of the many competitive housing loan packages offered. Existing HDB market rate mortgagors can continue with their existing mortgages provided by HDB.
However, if they wish to refinance their loans with the banks, they may do so with HDB's prior consent. HDB continues to provide concessionary interest rate mortgage loans for Singapore Citizen first-time flat buyers and second-time buyers who are upgrading from smaller flats.
With bank origination, buyers taking bank loans need to have their loan applications supported by valuations that are performed by a private valuer assigned by HDB. From 1 Jan 2007, they are to obtain a Letter of Offer from the bank before they exercise the Option To Purchase.
Requirement on Use of HDB Assigned Valuers
From 1 Apr 2005, all resale flat buyers who are taking bank loans and using their CPF savings in the flat purchase or servicing of loan instalments, must have a valid valuation report from a private valuer assigned by HDB.
The valuation by the HDB-assigned valuer will be used to determine the financing limits i.e. quantum of CPF withdrawals, housing loans and the cash payment. This will also apply to those who are taking bank loans and using their CPF savings for the transfer of ownership of an existing flat at market valuation to them. From 19 July 2005, the housing loan ceiling has been raised from 80% to 90% of the purchase price or market valuation of the flat, whichever is lower.
The "cut-off" for the revised housing loan ceiling for resale transaction is based on date of resale applications received by HDB.Buyers should have a valid valuation report before they enter into an Option to Purchase with the sellers.
This is to help them to calculate the amounts of:
i) cash-over-valuation,
ii) cash payment,
iii) CPF money that can be used, and
iv) bank loan that they can take.
This will enable buyers to work out the financial plan before they submit their application to buy the resale flat. It will also facilitate the processing of their bank loan applications.
In the resale application submitted to HDB for processing, buyers will need to provide the valuation amount from a valid valuation report.The new rule is implemented to curb any illegal cashback practices. All parties must declare to HDB the flat's true resale price, and not enter into any agreement/arrangement that would inflate or understate the price.
As a further measure to curb the cashback practice, CPF Board has also announced on 21 February 2005 that it will conduct independent valuation on any suspected over-valued flats. This valuation will be used to determine the amount of CPF withdrawals and housing loan.
Procedures for Obtaining an HDB Valuation Report
Anyone can submit a request for valuation report if they have obtained prior consent from the flat owner. The requesters will have to pay the valuation and administrative fees when they submit the request.
Valuation requests submitted to HDB will be randomly assigned to the private valuers on its panel.
Submission of a valuation request
You can submit a valuation request either electronically or manually. For those who do not engage the services of a housing agent in the resale transaction, they can submit an online valuation request via e-Resale System.
For those who engaged the services of a housing agent from an agency accredited under the Singapore Accredited Estate Agencies (SAEA) scheme which subscribes to the HDB-ResaleNet System, the agent can submit the valuation request on their behalf via the exclusive HDB-ResaleNet System.For manual submission, the Valuation request form can be obtained from HDB Resale Office or any Branch Office.
Fees payable
The requestor has to pay the following fees:
Flat Type Valuation & Administrative Fee for Valuation Report
by post/hand via e-Resale/HDB-ResaleNet System
1 & 2-room
$127 Valuation Fee : $100 + $7 (*GST)Admin Fee : $20
$117 Valuation Fee : $100 + $7 (*GST)Admin Fee : $10
3-room & larger
$180.50 Valuation Fee : $150 + $10.50 (*GST)Admin Fee : $20
$170.50 Valuation Fee : $150 + $10.50 (*GST)Admin Fee : $10
Note:
i. *GST is 7%.
ii. Payment can be made in cash/cashier's order/money order.
iii.Payment can only be made by credit card/cash card for request submitted via e-Resale. iv.Payment for valuation requests submitted by agents from agencies accredited under the Singapore Accredited Estate Agencies (SAEA) scheme via HDB-ResaleNet System must be by GIRO.
The HDB valuation report is valid for 3 months from the date of report.
A valid valuation report must be submitted together with the resale/transfer application to HDB.
Advice to Buyers Taking Bank Loans
Under the new requirement, the minimum cash payment, amount of CPF withdrawal and housing loan from banks will be calculated based on the resale transacted price or the valuation by HDB-assigned valuer, whichever is lower.If the resale transacted price is higher than the valuation by HDB-assigned valuer, buyers will have to pay a cash-over-valuation.
This cash-outlay is in addition to the cash payment which is currently at 5% based on the lower of the purchase price or market value of the flat. It is important that buyers have a valid valuation report ready even before they enter into an Option to Purchase (contract) with the seller.
It will also be to the interest of the buyers to have the HDB valuation report ready at the time of applying for a housing loan from the banks. This will facilitate the processing of the loan application by the banks.
Similarly, the CPF withdrawal limit currently at 138% of the Valuation Limit (to be reduced to 120% by 1 Jan 2008) will be based on the valuation by an HDB-assigned valuer.
This withdrawal limit on the use of CPF savings by the buyers to service the mortgage loans is applicable to buyers taking bank loans. Once the CPF withdrawal limit is reached, they will have to pay their monthly instalments in cash. As home purchase is a long-term commitment, buyers should exercise financial prudence and also take into consideration the Valuation Limit requirement when buying a resale flat.
Limits on Use of CPF
Buyers taking bank loan can use the savings in their CPF Ordinary Account to service their mortgage loan. However, under the CPF Board's requirements, they are allowed to withdraw only up to a certain limit.
Since 1 January 2003, the CPF withdrawal limit for a housing loan obtained from a bank or financial institution is set at lower of 150% of the Valuation Limit or the Available Housing Withdrawal Limit (AHWL).
The 150% Valuation Limit will be reduced to 120% (2008 Jan).
Note: The Valuation Limit is the lower of the purchase price or valuation of the property at the time of purchase. Important Note:
Once the CPF withdrawal limit is reached, mortgagors will have to pay their monthly instalments in cash. The above change applies from 1 January 2003 to HDB flats bought with mortgage loans from banks/ financial institutions.
To find out how much you can withdraw from your CPF for housing, log on to CPF Board's Housing Withdrawal Calculator that can be found at the CPF Board's website @ www.cpf.gov.sg
For enquiries, please call CPF Call Centre @ 1800-2271188 (code 2) or e-mail to PHS bankloan@cpf.gov.sg
Cash Payment
HDB flat buyers who are getting a mortgage loan from banks have to pay a cash payment with effect from 1 Jan 2004. The cash payment will be eventually aligned with that of private property purchase, that is, 5% based on the lower of the purchase price or market value of the flat.
Note:
(i)The cash payment is computed based on purchase price or current market valuation of the flat, whichever is lower.
(ii)For purchase of resale flats, the cash payment is in addition to the Cash-Over-Valuation (COV) for cases where the transacted resale price is above market valuation. The COV must be paid in cash
Priority of Payment
When an HDB flat financed with a bank loan is sold, the sales proceeds will be applied in the following manner:
1st – to discharge the outstanding mortgage loan with the bank.
2nd – to refund the CPF savings withdrawn for the purchase of the property.
3rd – to pay the interest on the mortgage loan (from the date of default in payment) and interest on CPF monies withdrawn.
The housing loan to be granted is subject to credit assessment and full usage of CPF savings in the Ordinary Account.
The housing loan limit is as follow:
HOUSING LOAN LIMIT
Before 19 July 05 :up to 80%
On or after 19 July 05 :up to 90%
To go to Part 3 of HDB Purchase
No comments:
Post a Comment