CPFB | Retain $20,000 in your OA if you are taking a housing loan

Home Ownership

Retain $20,000 in your Ordinary Account if you are taking a housing loan

Members who take an HDB housing loan have the option of retaining up to $20,000 in their Ordinary Account (OA), with the remainder going towards their housing payment.

Members taking a bank loan can choose to retain any amount in their OA, and we recommend you retain at least $20,000.

These savings can provide a safety net and earn risk-free interest.

Eligibility
Benefits
Things to note
Impact on Monthly Instalment

Eligibility

Who is it for?

CPF members who purchase an HDB flat and take an HDB loan can choose to retain up to $20,000 in their Ordinary Account (OA), with the remainder going towards their housing loan payment.

Buyers taking a bank loan can choose to retain any amount of their OA savings.

Benefits

Setting aside $20,000 in exchange for a peace of mind

A safety net and peace of mind

These funds* provide a safety net for you to pay your monthly instalments during unforeseen circumstances, such as a temporary loss of income.

* You can also build more emergency funds in your OA by using cash to pay for part or all of your monthly instalments, or making a voluntary housing refund.

Attractive risk-free interest rate on your emergency savings

This sum of money will provide greater convenience to be used for emergency housing needs as compared to liquidating fixed deposits which may result in interest losses due to early withdrawal.

In addition, your OA savings earn risk-free interest of 2.5% annually, which allows you to accumulate more funds in your OA for future retirement or housing needs.

*Additional 1% is paid on the first $60,000 across all CPF accounts, which is capped at $20,000 for the OA. It will first be credited to the RA or SA.

Retire with more

The OA savings retained may earn an additional 1% interest, which is used to build your Special Account (SA) or Retirement Account (RA) savings and better prepare you for retirement. It can also be transferred to the SA or RA to earn up to 6% interest subjected to the prevailing limits.

Things to note

When do I need to decide how much to retain in my OA?

For HDB housing loan

You must decide how much (up to $20,000) to retain in your OA at the point of purchase. For more details, please visit the HDB site.

The remainder of your OA savings after retaining up to $20,000 will be used to pay for the down payment of your flat before HDB disburses your housing loan.

For bank loan

You can apply to manage the use of your OA savings for your down payment and bank housing loan at any time.

We recommend that you retain at least $20,000 in your OA as a safety net and earn attractive risk-free interest.

Impact on Monthly Instalment

Find out how retaining $20,000 affects your monthly instalments

Find out how setting aside $20,000 in your OA affects your monthly instalment

Ben and Lexie are looking to take up a home loan. These are the assumptions that apply to both:

The maximum loan that can be taken: $470,000

Ben and his partner retain $20,000 each in their Ordinary Account

Lexie and her partner used up their entire Ordinary Account

$40,000*

Remaining balance in their Ordinary Account

$0*

Remaining balance in their Ordinary Account

Based on their respective decisions on the amount to retain in their Ordinary Account, their outstanding loans and monthly instalment are as follows:

Outstanding housing loan amount

$470,000

Outstanding housing loan amount

$430,000

Monthly instalment**

$2,514

Monthly Instalment**

$2,300

With an approximate increase of $200 per household on the monthly instalment, Ben and his family enjoy better financial security, where they have enough OA to cover at least 15 months of housing repayments in times of hardships.

^*Assumption: Initial OA balance: $20,000, interest rate is at 2.6% and the number of years for loan repayment is 20 years

^**Assumption: The total monthly instalment is divided between 2 co-owners

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