CPF Accrued Interest: What It Is and Why It Might Surprise You

Last Updated on July 14, 2025 by Tree of Wealth

If you’ve used your CPF savings to buy a home, there’s something quietly growing in the background — and it’s not your property value.

It’s CPF accrued interest. And honestly, most people have no idea it exists until they sell their house and see how much they owe their own CPF account.

Sounds weird? You’re not alone.

In this article, let’s unpack:

• What CPF accrued interest actually is

• Why it matters when you sell your property

• And practical ways to reduce or manage it — without getting overwhelmed

If you’re wondering how this might affect your retirement plans (or future cash flow), stick around. This is one of those things that’s easy to ignore… until it’s not.

What Exactly Is CPF Accrued Interest?

Here’s the gist.

When you use CPF money to pay for a property, you’re borrowing from your own future. That money would’ve been sitting in your CPF Ordinary Account (OA), quietly earning 2.5% interest every year.

So when you spend it on housing, CPF “expects” you to return it later — with interest. Just like how your savings would’ve grown if you hadn’t touched it.

That’s the accrued interest.

When you eventually sell the property, you’re required to return:

1. The CPF principal you used

2. Plus the interest it would’ve earned if it had stayed in your OA

That money goes back into your CPF account — so it’s not “lost.” But it does reduce the amount of cash you get from the sale. And if you weren’t expecting it, it can be a nasty surprise.

Why Do You Have to Pay It Back?

The short answer: to make sure you don’t short-change your own retirement.

Think of your CPF as your future income. When you take money out to buy a home, you’re pressing pause on that growth. Paying back the principal and the interest is a way of “catching up” — putting the money back where it would’ve been if it never left.

When you sell your property, the CPF Board doesn’t pocket the money. It just goes back into your CPF Ordinary Account (OA), where it’ll continue to grow and eventually help form your Retirement Account (RA) at age 55.

That RA is what funds your monthly CPF LIFE payouts later in life.

So yes — it’s an extra cost now. But really, it’s just putting your money back to work for your future self.

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Quick Recap: How to Calculate CPF Accrued Interest

Here’s the formula (don’t worry, it’s simple):

Accrued Interest = Principal × 2.5% ÷ 12 × Number of Months

Let’s say you used $100,000 from your CPF OA to buy a home and held it for 10 years. You’d be looking at about $28,000 in accrued interest by the time you sell.

That amount has to be refunded — along with the $100,000 you took out in the first place.

Why It Matters More Than You Think

Using your CPF to buy a house isn’t “free.” Over time, the costs add up. Here’s how CPF accrued interest can quietly impact your finances:

1. It Slows Down Your Retirement Savings

Every dollar used from your CPF OA is a dollar that isn’t earning interest. Over years (or decades), this can leave a noticeable gap in your retirement funds.

And when you eventually repay the accrued interest, sure — you’re topping it back up. But the time lost? The missed compounding? That can’t be recovered.

2. It Reduces Your Cash from Property Sales

Selling your home? The first thing that gets paid off is your outstanding mortgage.
Then comes your CPF refund — both principal and accrued interest.

Only after that do you get to keep whatever’s left. And in some cases, that might not be much.

If property prices haven’t gone up much, or you’re selling during a downturn, this refund can eat into most (or even all) of your proceeds. That’s a tough pill to swallow if you were counting on that cash for your next move.

3. You Miss Out on Investment Growth

When you use your CPF to buy property, you’re essentially saying no to other uses for that money.

That includes:

• Leaving it in your OA to earn 2.5% interest, risk-free

• Using it for CPF-approved investments (unit trusts, ETFs, etc.)

Now, 2.5% might not sound huge, but over 10–20 years, it adds up. And if you had chosen a long-term CPF investment scheme with higher returns? The gap could be even bigger.

That’s the opportunity cost — what you could have earned if your money had stayed put (or grown elsewhere).

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4. You Might Be Underestimating the Real Cost of Your Home

Most people don’t think of accrued interest when they’re budgeting for their home.

They see the purchase price, monthly mortgage, maybe renovation costs… but not the interest building quietly in the background.

So when it comes time to sell, they’re shocked at how little cash is left after CPF takes its cut.

It’s not a penalty. But it feels like one if you didn’t plan for it.

5. It Can Create Cash Flow Pressure Later

Imagine this: you’re selling your home expecting $200,000 in proceeds. But after repaying your CPF usage plus interest, you walk away with only $80,000.

That difference? It could throw off your plans — whether it’s for a new home, an upgrade, or just building a buffer for retirement.

In a weak property market, the problem’s even worse. The CPF refund is still required, even if your cash proceeds are low. And if you don’t have enough to cover it? You may have to top up the shortfall with your own cash, or worse, delay your plans altogether.

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How to Reduce or Avoid CPF Accrued Interest

You might not be able to avoid accrued interest entirely, but there are ways to keep it under control — or at least reduce how much builds up over time.

Here’s what you can consider:

1. Pay Your Home Loan with Cash (If You Can)

This is the simplest method — and probably the most effective.

If you use cash instead of CPF to pay your monthly mortgage, your CPF savings stay untouched. That means:

• They keep earning 2.5% interest in your OA

• No need to “repay” anything later

• No accrued interest to deal with when you sell

You’re basically letting your CPF work quietly in the background, compounding for retirement. It’s not easy for everyone, but even partial cash payments can help reduce CPF usage (and therefore the accrued interest).

2. Refinance Your Mortgage

If you’re on an HDB loan (which charges 2.6%), switching to a bank loan with a lower rate can cut your monthly repayment amount.

Lower mortgage = less CPF used = less accrued interest over time.

Refinancing can also give you:

• The option to shorten your loan tenure

• A reason to use more cash and less CPF going forward

• Some savings, which you might use for early repayments

Just one thing: once you switch from an HDB loan to a bank loan, you can’t switch back. So weigh your options carefully.

3. Make a Voluntary Refund to CPF

Yes, you can return money to your CPF account even before selling your home.

There are two options:

• Partial refund – Return some of what you used. This reduces future interest from snowballing.

• Full refund – Pay back everything (principal + interest) in advance. This stops further accrual entirely.

It’s flexible — and even a small refund can ease the burden later. Plus, the moment you return it, that money starts earning interest again.

4. Transfer CPF OA Money to SA

If you’re more focused on retirement than home upgrades, this could work.

By moving funds from your Ordinary Account (OA) to your Special Account (SA):

• The money earns up to 4% interest (instead of 2.5%)

• It’s locked in for retirement, so you can’t use it for housing

• You effectively reduce how much CPF is available for property, which limits future accrued interest

This move is permanent — once transferred, you can’t take the money back. So make sure your mortgage plans are covered before doing this.

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5. Make a Partial or Full Refund Voluntarily

Already used CPF for your home? You can still repay it early, even if you’re not selling yet.

• A partial refund means you put back a portion of what you used — it slows down how fast the interest grows.

• A full refund clears everything (principal + interest) and stops the clock completely.

Either way, your CPF account starts earning interest again right away.

And when the time comes to sell, you won’t be hit with a huge CPF bill eating into your cash proceeds.

How to Check Your CPF Accrued Interest

You can log in to the CPF portal with your SingPass.

Head to “My Statement” > “Property” section.

There, you’ll see:

• How much CPF you’ve used for housing

• How much accrued interest has built up so far

It’s worth checking every now and then — especially if you’re thinking of selling or refinancing soon.

Should You Repay It Now or Later?

Technically, yes — you have to repay CPF accrued interest. That part isn’t optional.

But when you do it? That’s more flexible.

Let’s look at both sides:

Reasons to Repay Early

• You’re sitting on spare cash and want to avoid interest compounding even further

• You’d rather return the money now than face a large refund later when you sell

• You want your CPF savings to start earning interest again, sooner

• You’re planning to buy another property later and want to preserve CPF eligibility

It’s a move that strengthens your CPF and gives you more control down the road.

Reasons to Wait

• You’re not planning to sell anytime soon

• You need your cash for other goals (kids’ education, emergency fund, investments)

• You’d rather invest that cash for potentially higher returns than CPF’s 2.5%

• You’re still building liquidity and don’t want to lock funds back into CPF just yet

As long as you understand what the interest means and account for it when planning, delaying the repayment can be a reasonable choice.

Just don’t ignore it entirely.

How Do You Repay CPF Accrued Interest?

There are two main ways:

1. Cash repayment – This is voluntary and can be done anytime through the CPF portal.

2. Automatic refund upon sale – When you sell your property, the sale proceeds first repay any outstanding mortgage. After that, CPF automatically deducts what you owe — principal and interest — and puts it back into your OA.

Whatever’s left after all that is your take-home cash from the sale.

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What If You Pass Away?

If you pass on, you don’t need to worry about CPF refunds anymore (you’re off the hook 😅).

The outstanding CPF amount — including accrued interest — won’t need to be repaid.

Instead, whatever’s left in your CPF will be distributed based on your CPF nomination.

If you haven’t made one, it’ll follow the intestate laws (default legal distribution).

Final Thoughts

CPF accrued interest isn’t something most people think about — until it’s too late. But once you understand how it works, it’s not that complicated. It’s just part of the cost of using your CPF for property.

We’ve walked through:

• What accrued interest really is

• How it can quietly affect your future cash and retirement

• And what you can do now to reduce the impact — or even avoid it completely

If you’ve used CPF to buy your home, take a moment to check where you stand. Knowing how much interest has built up (and what you can do about it) gives you more control over your next steps — whether you’re planning to sell soon, refinance, or just want peace of mind for the future.

And if all of this still feels a little confusing, that’s completely normal.

You don’t have to figure it out on your own.

If you’d like a second opinion or someone to walk you through your options, we’re here to help. No pressure, no obligation — just honest advice to help you make the most of your CPF.

Chat with one of our advisors — it’s free, and sometimes a quick conversation can save you thousands in the long run.