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CPF Housing Loan Accrued Interest - Calculation

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Old 10-11-2019, 07:56 AM   #1
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CPF Housing Loan Accrued Interest - Calculation

I have been checking my housing loan accrued interest. The figure seems to be way higher than what I calculated base on my understanding of how CPF calculates and credits to our account.

https://www.cpf.gov.sg/members/FAQ/s...folderid=13726

It takes the lowest amount we have per month, calculates and then credits that at the end/start of the year.

https://www.cpf.gov.sg/members/FAQ/s...jfaqid=2185821
How does the Board calculate the accrued interest on the amount of CPF used for my property?

Accrued interest is the interest amount that you would have earned if your CPF savings had not been withdrawn for housing. The interest is computed on the CPF principal amount withdrawn for housing on a monthly basis (at the current CPF Ordinary Account interest rate) and compounded yearly.
Since it does not reflect the interest rate for CPF housing per year in our statement, has anyone check the accuracy of their calculation? And come to a number different from what CPF is telling you?

Last edited by Lifeinmotion; 10-11-2019 at 08:00 AM.. Reason: typo
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Old 10-11-2019, 09:04 AM   #2
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I have been checking my housing loan accrued interest. The figure seems to be way higher than what I calculated base on my understanding of how CPF calculates and credits to our account.

https://www.cpf.gov.sg/members/FAQ/s...folderid=13726

It takes the lowest amount we have per month, calculates and then credits that at the end/start of the year.

https://www.cpf.gov.sg/members/FAQ/s...jfaqid=2185821


Since it does not reflect the interest rate for CPF housing per year in our statement, has anyone check the accuracy of their calculation? And come to a number different from what CPF is telling you?

If they can get accrued interest calculation wrong, shouldn't you be more worried that they might get your actual interest wrong?

Have you checked your actual interest earned, is it wrong too?
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Old 10-11-2019, 09:30 AM   #3
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By the way, it could be terrific if CPF's calculation is too high. That'd give you the option, not the obligation, to stuff more money into a weirdly high yielding (2.5% interest), government guaranteed account that turns into a piggybank at age 55 and can be used for housing before that.

So be careful what you wish for if indeed CPF's calculation is wrong. (But it probably isn't.)
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Old 10-11-2019, 09:58 AM   #4
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By the way, it could be terrific if CPF's calculation is too high. That'd give you the option, not the obligation, to stuff more money into a weirdly high yielding (2.5% interest), government guaranteed account that turns into a piggybank at age 55 and can be used for housing before that.

So be careful what you wish for if indeed CPF's calculation is wrong. (But it probably isn't.)
many people are worried abt accrued interest coz they want more cash when they sell their property.

to young people cpf oa is not very useful.

to many people, the withdrawal from oa + interest is huge. many of us are not able to pay back the full sum. adding more accrued interest does not help much.
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Old 10-11-2019, 11:20 AM   #5
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When is 2.5% p.a. interest considered "weirdly high yielding"?
2.5% seems really pathetic to me, can't even beat inflation.

By the way, it could be terrific if CPF's calculation is too high. That'd give you the option, not the obligation, to stuff more money into a weirdly high yielding (2.5% interest), government guaranteed account that turns into a piggybank at age 55 and can be used for housing before that.

So be careful what you wish for if indeed CPF's calculation is wrong. (But it probably isn't.)
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Old 10-11-2019, 12:37 PM   #6
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When is 2.5% p.a. interest considered "weirdly high yielding"?
2.5% seems really pathetic to me, can't even beat inflation.
Inflation hasn't crossed 2% in the last 5 years.
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Old 10-11-2019, 12:47 PM   #7
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You are talking about headline inflation, I am talking about real inflation on the ground (that is not captured by those statistics).

Inflation hasn't crossed 2% in the last 5 years.
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Old 10-11-2019, 01:17 PM   #8
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You are talking about headline inflation, I am talking about real inflation on the ground (that is not captured by those statistics).
What is the real inflation rate and from what sources?
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Old 10-11-2019, 01:29 PM   #9
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Bro, upon disposed of HDB... the accrued interest will be returned back to OA & able to form part of repayment for the next property.

I may not see this as too much worry... Or am missing some point.... Can u help to elaborate ... thanks



many people are worried abt accrued interest coz they want more cash when they sell their property.

to young people cpf oa is not very useful.

to many people, the withdrawal from oa + interest is huge. many of us are not able to pay back the full sum. adding more accrued interest does not help much.
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Old 10-11-2019, 02:01 PM   #10
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I am pretty sure their calculation are accurate. You can try. I tried for the hdb loan repayment calculation

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Old 10-11-2019, 02:10 PM   #11
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to many people, the withdrawal from oa + interest is huge. many of us are not able to pay back the full sum. adding more accrued interest does not help much.
You buy with some cash downpayment and then service the mortgage with CPF. If when you sell, the sale is not enough to pay back what you took out of CPF that means you are selling at a loss? Then don't sell?
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Old 10-11-2019, 02:11 PM   #12
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By the way, it could be terrific if CPF's calculation is too high. That'd give you the option, not the obligation, to stuff more money into a weirdly high yielding (2.5% interest), government guaranteed account that turns into a piggybank at age 55 and can be used for housing before that.

So be careful what you wish for if indeed CPF's calculation is wrong. (But it probably isn't.)
CPf made Tom's of errors u know
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Old 10-11-2019, 02:30 PM   #13
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Lets say u sell a 400k and upgrade to a 500k unit.

After settling the loans and CPF accrued interest, the nett cash proceeds may not be sufficient to meet the 5% cash + stamp duty + reno expenses for the 500k unit.

Accrued interest can be a huge amt if time period is long. 10yrs is 25% of amt used.

If upgrade/downgrade abv 55, FRS is locked up first for both owners acct.

Bro, upon disposed of HDB... the accrued interest will be returned back to OA & able to form part of repayment for the next property.

I may not see this as too much worry... Or am missing some point.... Can u help to elaborate ... thanks



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Old 10-11-2019, 02:44 PM   #14
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not here to discuss whether 2.5% is a lot or not.

Take a look at this
https://www.areyouready.sg/YourInfoH...r-Housing.aspx

1) They do not even dare to use a longer time frame. For someone who bought at 500K or more at 20 or more years loan, the accrued interest will be huge.

2) This is extremely simplified, if you have to pay installment from your CPF monthly, it adds up monthly loan/compound interest. e.g (150K downpayment + $1000 monthly) x 0.25% of that month's low /12. Add all interest to the beginning of the year. Repeat for that year till the loan amount is paid off, plus continuous compound interest monthly add on to the year.

Anyway, all I want to know if any bro or sis has check on their statement and did a calculation if their accrued interest or a monthly/yearly basis? Those using CPF to pay for housing.

Remember, they should always compound on the lowest figure one has in any date of the month (for normal CPF interest), so like wise, it should be the same for our accrued interest on amount use. What I am discovering is, this is not the case.
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Old 10-11-2019, 02:45 PM   #15
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Just to add, I have requested CPF for the breakdown of accrued interest.
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