CENTRAL PROVIDENT FUND (CPF)
What is Private Properties Scheme (PPS)?
Under PPS, you can use your CPF Ordinary Account (OA) savings to buy or build private residential property for occupation or investment.
Am I eligible to use my CPF savings under PPS?
All CPF members who are eligible to buy a private property are eligible to use their CPF savings under PPS.
You are not eligible if:
- you are buying a private property with a remaining lease of less than 30 years;
- you are buying a private property with a remaining lease of less than 60 but at least 30 years and your age plus the remaining lease of the private property is less than 80 years;
You can check if you are eligible to buy a private property on the URA website.
Read the Terms and Conditions to use your CPF to buy a private property.
How much CPF savings can I use?
To ensure you have enough CPF savings for your retirement years, there are housing limits on the amount of CPF savings you can use to buy a private property.
Valuation Limit (VL) is the purchase price or the value of the private property at the time of purchase, whichever is lower.
Withdrawal Limit (WL) is 120% of the VL. This is the maximum amount of CPF you can use for the private property.
To continue using your CPF beyond VL, up to WL, you need to meet the following requirements:
- Below 55 years old: To set aside the current Basic Retirement Sum (BRS) in your Special Account (SA), including the amount withdrawn for investment, and Ordinary Account (OA).
- 55 years old and above: To meet the BRS in your Retirement Account (RA), SA (including the amount withdrawn for investment) and OA.
The amount of CPF you can use is lower if you are buying a private property with a remaining lease of less than 60 years but at least 30 years. Read more on buying a private property with a remaining lease of less than 60 years.
Try the Property with Less Than 60 Years Lease Calculator to find out the amount you can use for such properties.
Can I use my CPF to buy more than one property?
Yes, you can use your CPF to buy more than one property. However, there are some restrictions in place under the Multiple Property Rule.
What will happen to my sale proceeds upon the sale of my private property?
The sale proceeds will be used to pay off the outstanding housing loan taken to buy the private property and the required CPF refund in the order agreed among the owners, financiers and the Board.
How much do I need to refund to my CPF upon the sale of my private property?
If you have used your CPF savings to finance your private property, you will have to refund to your CPF:
- the principal CPF amount (P) which you have withdrawn for the private property; and
- the accrued interest (I) which you would have earned if the savings were not taken out from your CPF account.
If you are 55 years old and above, and have pledged your property to withdraw your Retirement Account (RA) savings in cash, you will need to refund the pledged amount on top of the P and I. The amount refunded to your CPF account will be used to meet your Full Retirement Sum in your RA. After this, any balance housing refunds will be paid to you in cash.
20% DOWN PAYMENT
The Sail Procedure For Completed Residential Property :
Downpayment – 20% of the purchase price :
- 1% of Purchase Price is the Booking Fee, you will be given a copy of “Option to Purchase”.
- Within 2 Weeks you have to Exercise the “Option to Purchase”. At the same Time, prepare a “Letter of Offer” if you are taking a loan before meeting the lawyer.
- 4% of Purchase Price to Exercise in the Lawyer Office.
- Within 2 Weeks from Exercise Date, you have to pay Stamp Duty and Addition Stamp Duty if any.
- 15% of Purchase Price, can be in CPF and Cash on the Completion Date. Completion Date is about 3 month from Exercise Date.
Procedure For Under Construction Residential Property :
Progressive Payment Schemes :
Downpayment – 20% of the purchase price :
Upon Booking a unit, 5% booking fee either Cashier Order or Cheque and Option to Purchase will be granted (OTP). We ‘Developer’ will then mail the Sale and Purhcase (S&P) Agreement to your banker’s solicitor or to you within 1 to 2 weeks from the OTP date. Upon received the S&P you are given 3 weeks from the received date of S&P to exercise the S&P.
Within 14 days of signing the S&P agreement (or within 30 days if the agreement is signed overseas). You will have to pay the Stamp Duty/Additional Stamp Duty (Cash/CPF) to IRAS (Inland Revenue Authority of Singapore).
eg Stamp Duty is 3% less $5,400 or 4% less $15,400 (For Purchase Price above $1m) and Additional Stamp Duty is % of the Purchase Price depend on number of houses and Citizenship.
STAMP DUTY AND ADDITIONAL STAMP DUTY
Buying or Acquiring Property at The Sail
What is the Duty that I need to pay as a Buyer or Transferee of a Property?
BSD rates of up to 3% is applicable to acquisition of non-residential properties.
For residential properties, BSD rates of up to 4% are chargeable. ABSD may also be applicable.
All buyers/ transferees (except entities) of residential properties are required to fill in an ABSD Declaration Form to be witnessed by their lawyers. The form must be retained and submitted to IRAS only upon request.
Requirement to Pay BSD
You are required to pay BSD for documents executed for the sale and purchase of property located in Singapore. BSD will be computed on the purchase price as stated in the document to be stamped or market value of the property (whichever is the higher amount)
If the benefit is stated in the document to be stamped and is a cash discount (i.e. cash, non-post dated cashier order or cheque) to be given to the purchaser upon execution of the document (and not later), the amount of discount may be deducted from the purchase price to determine what is the amount of consideration for stamp duty purpose. This is provided that the nett price is still reflective of market value.
If the document to be stamped stated a non-cash benefit to be given (e.g. furniture voucher, rental guarantee, car or lucky draw), the value of benefit is not deductible from the purchase price for stamp duty purpose.
If the cash or non- cash benefit is not stated in the document to be stamped, the value of the benefit is also not deductible from the purchase price for stamp duty purpose.
The first instrument executed relating to a sale and purchase is liable to ad valorem duty (i.e. full duty). Subsequent document(s) relating to the same sale transaction are not liable to Stamp Duty.
Rates and Computation
BSD1 is computed based on the purchase price or market value of the property, whichever is higher.
Prior to 20 Feb 2018, the BSD rate was up to 3%. With effect from 20 Feb 2018, there are differentiated BSD rates between residential and non-residential properties. The BSD rate for acquisition of residential properties on or after 20 Feb 2018 is up to 4%.
The BSD rates before and after the 2018 Budget changes are as follows:
PROGRESSIVE PAYMENT TABLE
Loan to Value
If you are taking 75% loan, the monthly bank Installment (Cash/CPF) will start after the first disbursement of the second 5% of the completion of foundation work. Monthly bank installment is calculated based on Market Interest Rate (Depend on the Package you sign with the bank) and your Loan Tenure.
If your LTV (loan to Value) is 65% then the balance amount to be paid is 35%, 20% downpayment (10% need to be in cash) minus 5% booking fee and balance 15% (Balance 10% can be paid by cash or CPF) to be paid upon 8 week. 10% (Cash or CPF) for completion of Foundation Work and 5% (Cash or CPF) for completion of Concrete Framework will be paid during progressive payment stages.
The Progressive Payment schedule and the % of purchase price payable is illustrated in the table below:
Progressive Payment Scheme :
You can finance a loan to 75% of the purchase price. The Tenure of the loan can be up to 30 years or 65 years old. (By extending the Tenure or age the amount of loan will reduce to 55%).
- 10% upon completion of foundation work – Estimated 6 to 12 months
- 10% upon completion of concrete framework – Estimated 6 to 12 months
- 5% upon completion of brick walls – Estimated 3 to 6 months
- 5% upon completion of ceiling – Estimated 3 to 6 months
- 5% upon completion of door and window frame – Estimated 3 to 6 months
- 5% upon completion of Carpark – Estimated 3 to 6 months
- 25% upon receiving Notice of Vacant Possession and Temporary Occupation Permit (TOP) – Estimated 3 to 6 months
- 15% upon Completion Date, you will receive Certificate of Statutory Completion (CSC) – Estimated 12 months.
LOAN TO VALUE
Loan To Value Table
Monetary Authority of Singapore (MAS) tightened the Loan-to-Value (LTV) limits for borrows who already have at least one outstanding housing loan.
- i) Monetary Authority of Singapore (MAS) introduced a Total Debt Servicing Ratio (TDSR) for all property loans granted by financial institutions to individuals. Banks need to ensure that borrowers’ total monthly debt repayments do not exceed 60% of their gross monthly income (Fixed Income)
Loan-to-Value Limits : Depends on the number of loan you have and Total Debt Servicing Ratio (Private housing loan) :
- 1st Housing Loan : LTV is 75% minimum cash 5% (55% if tenure > 30years or extends past age 65 minimum cash 10%)
- 2nd Housing Loan: LTV is 45% minimum cash 25% (25% if tenure > 30 years or extends past age 65 minimum cash 25%)
- 3rd Housing Loan : LTV 35% minium cash 25% (15% if tenure > 30 years or extends past age 65 minimum cash 25%)
- For corporate entities, LTV 15%
TOTAL DEBIT SERVICE RATIO
How is Gross Monthly Income calculated?
- Fixed Month Income : 100% of monthly income excluding CPF contributions
- Variable Monthly Income : Variable Income include commission, bonus and rental, Max 70% average monthly variable income in the last 12 months excluding CPF contribution or Max 70% employment in the latest NOA divided by 12 by 12
- Fixed + Variable Monthlly Income : Total (i) + (ii) or Employment income in the latest Notice of Assessment divided by 12
- Rental Income : Not more than 70% can be included, Stamped tenancy agreement with remaining rental period of at least 6 months
- Value of Financial Assets : For unencumbered financial assets, apply % deduction on the value of the assets, either 0%, 30% or 70% deduction. After deduction, amortise the value of assets over 48 months.
The outstanding debts that TDSR will take into account include:
- Credit Card Balances (including ‘instalment plans’ with retailers).
- Student lLoans.
- Personal Loans.
- Car Loans.
- Other Home Loans (if applicable).
‘Stress Test’ for Residential Properties is 3.5% and Commercial Properties 4.5%. It is used to determine a rise in interest rates without busting the 60% TDSR limit.
Borrower A, age 30 earns $3000 per month Borrower B, age 40 earns $5000 per month IWAA = (30 x $3,000) + (40 x $5,000) = 36.25 years $3,000 + $5,000 OCBC’s practice: IWAA to be rounded up, i.e. 37 years •65 years minus 37 years = 28 years (max LTV); or •75 years minus 37 years = capped at 35 years
REMISSION OF ADDITIONAL STAMP DUTY
Additional Buyer Stamp Duty
IRAS can reimburse for ABSD
ABSD Rates for Joint Purchases Made by Married Couples and ABSD Refund for Purchase of Second Residential Property
ABSD remission applies to co-purchase of residential property by married couples involving SC and SPR spouses under some scenarios denoted with # in the Tables below.
From 12 Jan 2013, a married couple with a SC spouse is eligible for ABSD refund on their second property if they sell their first property within 6 months of the date of purchase/TOP/CSC, whichever is applicable
Table 1: Married Couple who are both SC
- Properties owned included those owned wholly, or owned partially or jointly with others.
- # Subject to approval of the application for remission (by way of lower ABSD rate or full remission).
Table 2: Married Couple who are SC – SPR
Table 3: Married Couple who are SC-FR
*Properties owned include those owned wholly, or owned partially or jointly with others.
# Subject to approval of the application for remission (by way of lower ABSD rate or full remission)
Table 4: Married Couple who are SPR – FR
*Properties owned include those owned wholly, or owned paritally or jointly with others
#Subject to approval of the application for remission (by way of lower ABSD rate or full remission)
SELLER STAMP DUTY
Seller Stamp Duty
BANK MORTGAGE RATES
Bank’s Mortgage Rates
SIBOR stands for Singapore Interbank Offered Rate and is a daily reference rate based on the interest rates at which banks offer to Lend unsecured funds to other banks in the Singapore wholesale money market (or interbank market).
It is similar to the widely used LIBOR (London Interbank Offered Rate), and Euribor (Euro Interbank Offered Rate). Using SIBOR is more common in the Asian region and set by the Association of Banks in Singapore (ABS).
SIBOR comes in 3 -month tenure. At the end of the tenure, the borrowing bank returns the borrowed fund to the lending bank.
SiBOR (Singapore Interbank Offered Rate).
Interest Rate as at 3 March 2018
WAYS TO FINANCE OUR PROPERTY
What are the other ways to finances and protect our Properties?
- Pledge and Unpledge
- Overseas Cash
- Gurantor become owner
- Mortgage Insurance