The CPF Accrued Interest on your Housing loan has been a problem for many people for a very long time. The most common complaint is why do I have to pay interest when I am using MY OWN MONEY. I guess it is understandable why many people are unhappy with the government trying to micro-manage people finance. However, Accrued Interest might actually not be a bad thing.
Here are some of the reasons why your CPF Accrued Interest can be good for you (and no… CPF did not pay me to write this)
- First and foremost, if the selling price (including the option monies) after paying the outstanding housing loan is not enough to fully refund the CPF principal amount withdrawn together with the accrued interest, you do not DO NOT need to top up the shortfall in cash, provided the property is sold at market value. The principle loan and accrued interest is still YOUR MONEY and not money that you owe CPF that you have to return. So don't get too overly concern with the accrued interest.
- The Accrued Interest is actually there to remind you on the interest you would have earned if your CPF savings had not been withdrawn for housing. This will actually prompt you to think carefully before your housing purchase. Is it better to use cash or CPF OA to finance your home purchase? It also serves as a good gauge on how good the return on your home purchase is. Can your property beat the 2.5% interest CPF OA is giving you?
- Lastly, the Accrued Interest is actually a good way for you to do a lump sum top up to your CPF OA. If you have hit the Full Retirement Sum, this is a good way to treat your CPF as a bank with 2.5% interest. If you have not reached 55, you can perform SA shielding to have those monies earn 4% interest instead.
If you understand what accrued interest is and what it is for, it can actually be a tool to help you reach your retirement goals.
CPF is a bit like compound interest…. He who understands it, earns it. He who doesn't, pays it.
Happy value investing!
Why CPF Accrued Interest on your Housing loan might actually be good
![Why CPF Accrued Interest on your Housing loan might actually be good]()
Reviewed by Valuewarrior
on
July 05, 2020
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This will actually prompt you to think carefully before your housing purchase. Is it better to use cash or CPF OA to finance your home purchase?
ReplyDeleteReally?? You obviously are very much detached from the majority of Singaporeans who purchase hdb flats. Use cash to finance our Hdb purchase???
Perhaps you are in the majority of one who can afford it as opposed to most average working class Singaporeans.
Its plainly obvious you have no clue as to what you are talking about. BUT more significantly your article is insulting our intelligence if you think the reader is not able to see through your motives and the timing of the article at this particular point in time.
Do singaporeans a favour. Stop spouting nonsensical dribble aligned to your hidden political agenda.
Whoever you are, please do your check before you pass your judgement.
DeleteFor a person who lost job at middle age and sold his HDB to cash out to support his family. Will he have a choice to decide if he can cash out the so call accrued interest to meet ends need? What you have mention are "good" for the so call "ideal" case. But this world is not ideal. And when it is not ideal, does people have choice of what they going decide with their own money ? Or they just have to get fine by town council , xxx authority for not paying their bills and get themselves into deeper debts ?
ReplyDelete