2 Aug 2024
SOURCE: CPF Board
A home is one of the most important and worthwhile purchases in your life. It’s also a long-term commitment, as your housing journey doesn’t end with just selecting a home and forking out the downpayment. You have to think about monthly loan repayments, the remaining lease on your property, as well as renovations and maintenance costs. If you already own a property, you may be looking at rightsizing or upgrading your abode, which requires its own set of calculations.
With many considerations to keep in mind, having some resources on hand to ease your calculations and expenses planning can be useful. Here are 3 useful resources to help you along your housing planning journey!
1) Home Purchase Planner
Whether you’re looking to buy your first home, upgrade or right-size your home, there are many things to consider, from choosing between Build-To-Order (BTO) flats, resale flats and private properties, to the location of your new abode.
However, it’s also important to choose a home that you can comfortably afford, without overstretching yourself in your home purchase. This allows you to have sufficient savings to spend on what you want, after setting aside for essential expenses such as utility bills and healthcare, and without compromising on your retirement in the future.
The Home Purchase Planner recommends a home purchase price that you are likely able to afford, depending on whether you opt for an HDB or bank loan. This is done through a holistic assessment of your current financial situation, by looking at various factors such as your Ordinary Account balance, gross monthly income, monthly expenses, cash savings and sales proceeds (for those who are looking to sell their current home).
In addition, the planner helps you quantify the impact of your recommended home purchase on your retirement. Simply indicate your desired level of retirement payouts, and the planner will determine if your projected retirement savings, factoring in the recommended home purchase price, will be able to meet your retirement goal.
2) CPF housing usage calculator
When funding your home purchase, a common source of funds would be your Ordinary Account (OA) savings. While it can be used to pay for your housing loan, your OA savings also function as your retirement funds in the future. Of course, that doesn’t mean you shouldn’t use your OA savings at all. In fact, many use a combination of cash and CPF savings to pay for their home! The general tip is to keep at least $20,000 in your OA to serve as a safety net for emergencies.
The CPF housing usage calculator is a tool that helps you gauge how much OA savings you can use to fund your housing purchase. The amount of OA savings you can use to purchase a property depends on several factors such as the age of the youngest owner, property type and loan type, making it challenging to keep track of all these variables on your own. This is where CPF housing usage calculator can be particularly helpful by assisting you with all the calculations.
The calculator also allows you to specify up to three co-owners and their details such as date of birth, the property purchase date, valuation price and lease-related information, all of which would determine the final amount of OA savings that you and your co-owners may use for the property.
3. Home Protection Scheme premium calculator
Your housing journey extends beyond the initial purchase of your home. It involves safeguarding yourself and your loved ones against unforeseen circumstances. The Home Protection Scheme (HPS) is designed for this purpose.
HPS is a mortgage-reducing insurance that protects you and your loved ones from losing your HDB flat in the event of death, terminal illness or total permanent disability. If you are using CPF savings to pay your monthly housing instalments, you need to be insured under HPS. If you are using cash, we strongly encourage you to apply for HPS cover. You will need to be in good health at the point of application, to be eligible for HPS coverage. HPS insures you up to age 65, or until your housing loan is fully paid up, whichever is earlier.
The Home Protection Scheme premium calculator computes the annual premium for your new HPS cover, helping you to plan ahead, for example by setting aside savings in your OA for your premium payment. You will need details of your loan amount, loan term and type of interest rate to use the calculator.
Your home is one of the biggest purchases in your life, so it’s imperative that you make proper preparations. When you’ve sorted out how much you’ll have to pay and how much you need to save for it, owning your new home will no longer be a distant dream but a goal within your reach!
The information provided in this article is accurate as of the date of publication.
