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Old 04-05-2010, 05:14 PM   #1
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Minimum Sum Scheme & HDB loan

im a first time buyer thinking of purchasing a resale flat using hdb loan. would like to know what'll happen when i reach 55, where the hdb loan is still outstanding and the minimum sum is still not met

wats the difference between minimum sum and minimum cash component?

tried calling CPF but still dun quite get it.
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Old 04-05-2010, 08:09 PM   #2
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im a first time buyer thinking of purchasing a resale flat using hdb loan. would like to know what'll happen when i reach 55, where the hdb loan is still outstanding and the minimum sum is still not met

wats the difference between minimum sum and minimum cash component?

tried calling CPF but still dun quite get it.
Hope this link could help you.......http://mycpf.cpf.gov.sg/CPF/my-Cpf/r.../Reach55-2.htm
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Old 05-05-2010, 12:04 AM   #3
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thanks for the link but it still doesnt answer my question. called CPF twice and each time they contradict each other.

so lemme be more specific.

i understand that the minimum sum (MS) only applies if im buying a second property which i dun think it will ever apply to me. but there is this minimum sum cash component (MSCC) which is half of MS that puzzles me.

From CPF http://mycpf.cpf.gov.sg/CPF/my-cpf/buy-house/BH5.htm
b) A resale flat bought in the open market

If you are taking a HDB concessionary loan
You can use up to 100% of your CPF Ordinary Account savings to pay the initial 10% deposit as well as the balance of the purchase price.

If your existing CPF balance is not enough for full payment of the purchase price, you may take up a housing loan from HDB subject to credit assessment by HDB, and use all the monthly contributions to your Ordinary Account for the instalment payment of the loan. Use our Monthly Instalment Calculator to find out the monthly instalment payable on a housing loan.

If your housing loan is still outstanding when your total CPF usage for the flat had reached the Valuation Limit and you are below the age of 55 , you may continue to use the excess in your CPF Ordinary Account savings to repay the housing loan after you have 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 half of the prevailing Minimum Sum.

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.
Also from CPF, click on the link "Read "CPF Property Rules: 4 things you may not know"http://mycpf.cpf.gov.sg/CPF/my-cpf/buy-house/BuyHse.htm
After age 55
IF YOU use the monthly contributions to your CPF Ordinary Account for repaying your mortgage, chances are you will have little surplus in your account.
On reaching 55 years old, you are required to set aside the Minimum Sum, which is for you to withdraw monthly from age 62.
Beware: The Minimum Sum currently is $90,000 of which the minimum cash component is $45,000.
The Minimum Sum will rise to $120,000 by year 2013 with a minimum cash component of $60,000. The Minimum Sum comprises your savings in the Ordinary and Special Accounts.
For example, says Mr Ng, if on reaching 55 years old, you have $20,000 in your Ordinary Account and $40,000 in your Special Account, you have met the requirement. But you cannot use any of that money for mortgage repayment.
The harsh reality is you have to pay cash for the mortgage instalment.
i understand that the OA and SA will be combined to be RA when we are 55, which can be withdrawn at age 62.

so now if the MSCC is not met, i MUST top up in cash or pledge my property immediately?

wat if i do not have sufficient cash or do not wish to pledge my property but i am still working, will all my monthly CPF contributions be channeled back to fund the MSCC? meaning i have to pay my outstanding mortgage in cash?

Last edited by bardee; 05-05-2010 at 12:09 AM..
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Old 09-05-2010, 04:21 PM   #4
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I hope i am able to help.

When you hit 55, with a outstanding HDB Loan, you will only be able to use a maximum of 50% of your RA to continue paying your property. And that is if of course your OA is already empty.
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Old 11-05-2010, 01:55 PM   #5
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im a first time buyer thinking of purchasing a resale flat using hdb loan. would like to know what'll happen when i reach 55, where the hdb loan is still outstanding and the minimum sum is still not met

wats the difference between minimum sum and minimum cash component?

tried calling CPF but still dun quite get it.
Let me try....

Minimum cash component is typically 50% of your Minimum Sum applicable when you are are 55. For now, Minimum Sum is at $117K and min Cash component is 50% of it, ie $58,500 (after pledging your HDB, when you have had used CPF to pay for your HDB house).

Basically this means, at age 55, you could WITHDRAW any amount above $58,500 from your RA account. You need to set aset this min CASH component of $58,500 until age 62 (or later) that's when you will receive a monthly payout from CPF, say $297/mth.

I believe you will still be able to use your CPF to pay for your housing loan.....at age 55.

One thing to note that if you are taking a BANK LOAN instead of HDB concessionary loan, then you need to watch out the Valuation Limit.

You can use your Ordinary Account savings, and the future monthly CPF contributions in your Ordinary Account to buy the flat and/or to pay the monthly instalments on the housing loan up to 100% of the Valuation Limit (VL). The VL is the lower of the purchase price or the value of the property at the time of purchase.

If your housing loan is still outstanding when your total CPF usage for the flat had reached the Valuation Limit and you are below the age of 55 you may continue to use the excess in your CPF Ordinary Account savings to repay the housing loan after you have 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 half of the prevailing Minimum Sum.

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.

errr, I hope it's clear enough? Cheers
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Old 11-05-2010, 02:05 PM   #6
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By the way, buy within your means....
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Old 11-05-2010, 04:01 PM   #7
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yah i think i got it. thanks for the info guys. jus doing the math now to know whats our monthly mortgage is like and how all this requirements will affect us in the future.
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Old 11-05-2010, 06:14 PM   #8
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yah i think i got it. thanks for the info guys. jus doing the math now to know whats our monthly mortgage is like and how all this requirements will affect us in the future.
I am not sure how old are you....but if you can, after buying within your means and if you are getting HDB loan, go for the MAX period.
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