Last Updated on June 14, 2023 by Tree of Wealth

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Related: Check out Term Insurance when you are looking at properties, to protect mortgage loan repayment in times of need.

Many Singaporeans are excited to leave the nest and build a home that they can call their own. However, issues that come with purchasing a property may seem daunting to first-time owners, or even people with more than one property.

All Singaporeans are owners of a CPF account that can be used for purchasing a house in Singapore.

Therefore, to make purchasing a property  seem less daunting, here is all you need to know about purchasing and selling a property using your CPF savings.

Using Ordinary Account savings for your housing loans

Firstly, to process your application to use your CPF savings to purchase a property, you will need to appoint a law firm to take care of the legal matters involved in the property purchase.

If you are the co-owner of the property, you are allowed to utilise your Ordinary Account (OA) savings to service a housing loan that your parent(s) and/or sibling have undertaken.

However, you are not allowed to transfer your savings from your OA to your parents’ OA to help them pay for their housing loan.

Using CPF savings to pay for stamp duty

Stamp duty simply refers to a type of tax levied upon property purchases or transfers.

If you used cash to pay for your stamp duty, you are eligible to apply for a one-time reimbursement from your CPF account together with the application that you have filled up to use your CPF savings to purchase the property.

However, individuals who have taken an HDB loan would have to check with HDB on their eligibility for the one-time reimbursement of stamp duty. In addition, individuals whose stamp duty was paid for by the developer of their property are also not eligible to apply for reimbursement of the stamp duty.

Individuals who have purchased completed properties are required to apply for the one-time stamp duty reimbursement concurrently with the CPF lump sum drawdown.

Individuals who have purchased properties that are still under construction should apply for the one-time stamp duty reimbursement on, or before the date of the property’s legal completion.

Items that cannot be paid for using CPF

There are some items that cannot be paid for using your CPF savings.

The first item is your seller’s stamp duty. You would have to pay the seller’s stamp duty with cash when you sell your property.

The second item that cannot be paid using your CPF savings for your property includes any forms of renovation, repairs or improvement works.

The third item includes monthly service and conservancy charges and charges that are related to the use of your property, such as taxes.

Lastly, you are also not allowed to use your CPF savings to purchase properties located overseas.

Items that can be paid for using CPF

When you purchase a property, you are allowed to use your savings from your OA to pay for:

1. The transaction fee levied by your lawyer’s appointed bank
2. The lodgement fees that have been levied by the Singapore Land Authority for the holding and expenditure of your CPF savings

The costs should be informed to you by your lawyers.

You are also allowed to use the savings from your OA to pay for the upgrading costs from the Housing & Development Board Upgrading Programmes and Town Council Lift Upgrading Programme.

Furthermore, you can also use your OA savings to pay for the legal expense when you purchase a property.

To do so, you can apply through HDB if you have taken an HDB loan or through your lawyer if you have taken a bank loan.

Property purchase and payment using your CPF savings

If you have already used your Ordinary Account savings for your property and would like to check your latest usage and your usage limit, you can do so here

On the other hand, if you are planning to purchase a property, you can check on the amount that you can use to purchase a property here.

If you would like to use your CPF savings to pay for the recess area of your HDB flat and have taken an HDB loan, you can submit an application using your Singpass account here.

If you would like to use your CPF savings to pay for the recess area of your HDB flat and have taken a bank loan you will need to make an appointment to submit the request at any of the CPF service centers.

Valuation report for property buying using CPF savings

If you have decided not to take any loan to purchase your property but are looking to use your CPF savings to purchase your property, you are still required to produce a valuation report.

If you are purchasing an HDB flat, the CPF Board will only accept the valuation that has been determined by HDB. The valuation has to be dated no longer than three months from your application date. A valuation report that is conducted by a bank’s valuer will not be accepted.

If you are purchasing a private property, the CPF Board will only accept a valuation report that has been conducted by a licensed valuer. The valuation report has to be dated no longer than three months from your purchase date. A valuation report that has been conducted by a bank’s valuer will be accepted.

Using CPF savings for the down payment of your property

You are able to use your CPF savings to pay for the down payment of your property.

The maximum amount of CPF savings that you can utilize for the down payment would be based on the type of property you are going to purchase as well as the loan that you are taking.

If you are purchasing an HDB flat with an HDB loan directly from HDB, you are allowed to use your savings from your Ordinary Account to pay for the 10% down payment and the balance of the purchase price. However, the option fee would have to be paid in cash.

If you are purchasing a resale HDB flat with an HDB loan, the deposit will have to be paid in cash.

If you are purchasing an HDB flat with a bank loan, you are only allowed to use your savings in your Ordinary Account to pay for the property after you have paid for a portion of the property in cash.

If you are purchasing a private property, you are only allowed to use your savings in your Ordinary Account to pay for your property after you have completed all the legal documentation and have paid for a portion of the property in cash.

Tips for first-time property buyers

Before purchasing your property, you should be aware of:

1. The expenses that come with purchasing a new property. Such as renovation costs.
2. The sum of the maximum loan that you will qualify for.
3. The balance between using cash and using your CPF when you are settling your monthly installments.

You should also check if you are eligible to buy a property, whether it is a private property or an HDB flat and whether you have enough finances, such as your Ordinary Account balance.

In the event that you are unable to personally handle property transactions while you are overseas, you can appoint someone under the Power of Attorney to do so for you.

Lastly, it is also of utmost importance to check if the property that you are purchasing has any charges, such as mortgage charges or accrued interest.

Conclusion

There are many points to consider when buying a property in Singapore.

First time property buyers are encouraged to check their eligibility and familiarise themselves with the laws, rules and regulations with regards to property buying.

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