New Cpf Minimum Sum Effective 1 July 2010

[musicbox 0]

Hi all,

I've just exercise my option to purchase a condo and was told by lawyer i don't have enough cpf in my cpf account in order for me to use it for my monthly installment. I've previously checked with a SC banker and this moron told me i can utilise all the amount in my cpf account, after that i learned that i need to maintain a minimum sum in my cpf account which currently is $58,500 (for second property) and i've just enough for that, and checked with another H*** banker and this banker told me even the July new min sum kick in i can still get the lawyer to activate the installment by cpf account and once i've enough amount in my cpf account it'll be deducted automatically.

But, after signing my option at the law firm, the lawyer told me this is not the case. Although i've enough min sum in my cpf account now, by the time she apply to cpf board it'll be in july already and the min sum increase every year in july. So in conclusion, i'll not be meeting the min sum requirement and i cannot apply to utilise my cpf for monthly installment now, if i were to apply later when i've the amount, i'll need to get a lawyer to submit the valuation report of my property for which i'll incur another lawyer fee (this time not born by bank).

So now my option left with to top up the cpf (so i can apply to utilise my cpf for monthly installment) or apply to use my cpf later (which i need to pay for lawyer fee).

I hope those who intend to buy a second property can consider it and if any of you who experienced the same situation pls advise what do you do?

[Warrior88 0]

Seriously, if your cpf is close to Minimum Sum. Even you don't pay cash this time, you are still at risk. Interest rate, income, investment ...etc. all may change. That's why it's better to have at least 1 year buffer. Unless, you are expecting a large sum of money that is not mature or due yet.

[therat 18]

even you had enough or more than the min sum component.

But once 120% rule reach. You can't use the CPF at all.

Read this thread

http://www.renotalk.com/forum/index.php?showtopic=28158

Has been discuss/talk about min sum component

[therat 18]

I found it.

This is the reply from CPF on 2009 when I ask about the min sum component for 2nd property

With effect from 1 July 2006, members have to set aside the Minimum Sum cash component first before they can use their savings from Ordinary Account for the purchase of second and subsequent properties. The current Minimum Sum cash component is $58,500 and it will be adjusted yearly on 1 July. Withdrawals for the second and subsequent HDB flats would also be capped at 100% of the Valuation Limit (VL) of the flat. The VL is the lower of the purchase price or valuation price of the flat at the time of purchase.

Please be informed that the Minimum Sum cash component can be set aside from both your Ordinary and Special Accounts (including investment savings in the Special Account). If you are able to set aside the Minimum Sum cash component, you will be able to use the balance in your Ordinary Account towards the purchase of your second property.

[Warrior88 0]

Q: What happens if my HDB loan is still outstanding when my total CPF Withdrawals reach the Valuation Limit (VL)? Can I withdraw more of my CPF savings?

A: If your housing loan is still outstanding when the total CPF usage for the flat reached the VL and you are below the age of 55 years, you may continue to use your CPF Ordinary Account savings to repay the housing loan if you can set aside the prevailing Minimum Sum cash component. Savings in the Special Account (including the amount used for investments) and Ordinary Account can be used to meet the prevailing Minimum Sum cash component.

However, if you are 55 years and above when the VL is reached, you may use the excess CPF Ordinary Account savings to repay the housing loan after setting aside your Minimum Sum cash component shortfall.

[chia90 0]

I found it.

This is the reply from CPF on 2009 when I ask about the min sum component for 2nd property

If the private property is going to be your second property under the

Board's charge, you can only use your Ordinary Account savings for the

property purchase after setting aside half the prevailing Minimum Sum. This

sum can be set aside from the savings in your Ordinary and Special Accounts,

including amounts withdrawn under CPF Investment Scheme-Special Account

(CPFIS-SA). The amount of Ordinary Account savings that you can use for

your second property purchase would be computed as follows:-

Ordinary Account balance - [Prevailing Minimum Sum cash component -

(Special Account balance + Amount invested under CPF-IS-SA)]

The withdrawal for the private property 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 Valuation

Limit refers to the value of the property at the time of purchase or the

purchase price, whichever is lower.

[bepgof 20]

If the private property is going to be your second property under the

Board's charge, you can only use your Ordinary Account savings for the

property purchase after setting aside half the prevailing Minimum Sum. This

sum can be set aside from the savings in your Ordinary and Special Accounts,

including amounts withdrawn under CPF Investment Scheme-Special Account

(CPFIS-SA). The amount of Ordinary Account savings that you can use for

your second property purchase would be computed as follows:-

Ordinary Account balance - [Prevailing Minimum Sum cash component -

(Special Account balance + Amount invested under CPF-IS-SA)]

The withdrawal for the private property 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 Valuation

Limit refers to the value of the property at the time of purchase or the

purchase price, whichever is lower.

What ? 120%VL already revised to 100% VL? or on conditions?

Edited June 22, 2010 by bepgof

[chia90 0]

What ? 120%VL already revised to 100% VL? or on conditions?

That was the email reply i have from CPF in Feb2009.

I think the condition is : Second and subsequent properties after Jul2006. Below is the results from askCPF just now.

http://ask-us.cpf.gov.sg/hybrid/Themes/CPF...&SourceId=0

"Q: If I purchase my second and subsequent properties after 1 July 2006, how much CPF can I withdraw for my second and subsequent properties?

A: You must first set aside half of the prevailing Minimum Sum before you can use the excess CPF savings in your Ordinary Account for the second and subsequent properties. Savings in the Special Account (including the amount used for investments) and Ordinary Account can be used to meet this required amount.

Please note that as the Minimum Sum will be raised in July each year, the amount you need to set aside will be adjusted accordingly. Please click here for more details.

For properties with remaining lease of at least 60 years, the total CPF would be capped at 100% of the Valuation Limit (VL) of the property. VL is the lower of the purchase price or valuation price of the property at the time of the purchase.

For properties with remaining lease of at least 30 years but less than 60 years, the withdrawal limit is the ratio of the remaining lease of the property when the youngest owner is 55 years old, to the lease at the point of purchase. Please refer to the following table for more details."

Edited June 22, 2010 by chia90

[chia90 0]

What ? 120%VL already revised to 100% VL? or on conditions?

And one from from askCPF... I guess the 120% VL is applicable to RPS (Residential Properties Scheme)

Q: If I have bought my property under Residential Properties Scheme (RPS) in September 2002, will the use of my CPF be affected when the Withdrawal Limit is gradually reduced to 120% of Valuation Limit (VL)?

A: No, the CPF Withdrawal Limit applicable at the time of purchase will apply throughout the loan repayment period. Therefore, the amount of CPF that you can use for your property is capped at 150% of the VL. This Withdrawal Limit will not change even if you refinance your loan subsequently.

If your housing loan is still outstanding when the total CPF usage for the property reaches 100% VL and you are below the age of 55, you may continue to use your CPF Ordinary Account savings to repay the housing loan up to 150% of the VL if you can set aside half of the prevailing Minimum Sum. Savings in the Special Account (including the amount used for investments) and Ordinary Account can be used to meet this required amount. Please click here for more details.

However, if you are aged 55 and above when the VL is reached, you may use the excess CPF Ordinary Account savings to repay the housing loan up to 150% of the VL, after setting aside half of the Minimum Sum that is applicable to you. Please click here for more information on Minimum Sum.

[Warrior88 0]

1st & 2nd property

Age group (55 below or above)

HDB or Bank Loan (HDB or PTE house)

Year Purchased

All these have different VL ?

If 120% VL, then max interest paid is (20%+5%Cash for down payment.)

So long interest paid don't exceed 25% of VL, you are okay ?

Otherwise, no cash to service loan, market good, just sell ?

[random_username 0]

sorry, just want to ask:

1) second/subsequents properties referred to here are concurrently held properties (ie. own more than 1 property at the same time)?

2) the minimum amount thingy applies to all second/subsequent properties concurrently held, whether or not residential and whether or not pte/hdb?

thanks much!

[bepgof 20]

sorry, just want to ask:

1) second/subsequents properties referred to here are concurrently held properties (ie. own more than 1 property at the same time)?

2) the minimum amount thingy applies to all second/subsequent properties concurrently held, whether or not residential and whether or not pte/hdb?

thanks much!

Answers:

1. Refer to CURRENT properties( ie, those sold not included) , and these properties have been served by CPF OA.

2. Minimum sum applies to current's "2nd and more" - can use ONLY 50% of the remaining, after setting aside "minimum sum" in OA & SA. Say Minimum sum now at $112K, OA=100K, SA=100K, the remaining in OA = (100K+100K)-112K = 88K, can use only 50% of 88K, which is 44K to pay the loan for the "2nd and/or more" properties. Spouse also can contribute another 50%.....basically it work like that, still got some conditions.....really make me blurr blurr

3. RPS applies to the 1st property, if I'm not mistaken, again blurr blurr.

The 150%VL, 120%VL, 100%VL is another issue, making all cpf holders blurr blurr. Why like that?

Edited June 22, 2010 by bepgof

[random_username 0]

means if 1st property dont use cpf, then second current property want to use cpf, then minimum sum not required to maintain for the second property is it? definitely i much more blurr than you wor.

what's RPS stand for?

Edited June 22, 2010 by random_username

[bepgof 20]

means if 1st property dont use cpf, then second current property want to use cpf, then minimum sum not required to maintain for the second property is it? definitely i much more blurr than you wor.

what's RPS stand for?

CPF board cares about $$ in OA/SA/MS, set many rules, and from time to time keep changing the rules, set many "doors" to "deter" holders from withdrawal own-money, it has no given right to hold your $$ in banks.

If 1st current property is by ALL cash, then yr "second" property to you is "first" property to CPF board, if u use cpf OA to serve the loan, 150%VL applies & no minimum sum issue. RPS =residential property scheme.

Properties can be classified into residential/commercial/industrial, and may be somemore which I'm not aware of, now.

Edited June 22, 2010 by bepgof

[chia90 0]

CPF board cares about $$ in OA/SA/MS, set many rules, and from time to time keep changing the rules, set many "doors" to "deter" holders from withdrawal own-money, it has no given right to hold your $$ in banks.

If 1st current property is by ALL cash, then yr "second" property to you is "first" property to CPF board, if u use cpf OA to serve the loan, 150%VL applies & no minimum sum issue. RPS =residential property scheme.

Properties can be classified into residential/commercial/industrial, and may be somemore which I'm not aware of, now.

yup, agreed. Can be quite confusing.

So, if anyone wishes to use CPF for purchases, it is always better to check with CPF ( black/white) 1st before committing if you do not want any surprises..