Singapore Refinance Home Loan: CPF Limits your Borrowing

Singapore Home Loan Refinancing and Mortgage: CPF limits your borrowing
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Singapore Refinance Home Loans and Mortgage: CPF limits your borrowing


How CPF can seriously limit your cash flow! Most people forget that after all these years, CPF is still king. When you sell your

place, you think you have cash, only to have the large part of your money being returned to your CPF account. You end up

"RICH" in your CPF account, but you can't use that money.


Even if you want to obtain a Term Loan "CASH OUT" from your house/Property, CPF can also severely limit the amount you will

get.


Here is an illustration on TERM LOAN - also known as "CASH OUT"

Property valuation = $1m
Loan outstanding = $200,000


In this case, the bank can usually lend you up to 80% of your valuation, that means $800,000.

So the term loan (Cash out) is = $800,000 - $200,000 = $600,000

That means the bank will lend you $600,000 of cash as Term Loan while

taking over your outstanding loan of $200k, right?


Yes, this is right if you have not used a single cent of CPF in paying for this

property.

Just as another illustration of if CPF was used: -

Property valuation = $1m
Loan outstanding = $200,000
CPF property withdrawal = $300,000

At 80%, the bank can lend you up to $800,000. After deducting the outstanding loan, they can still lend you $600,000. But

they will consider the CPF draw down.

The term loan (CASH out) obtainable = $800,000 - $200,000 (loan outstanding) - 300k (CPF accrued usage) = $300,000

The Term loan is only $300,000


So although it may seem that there is substantial equity in the property. In fact, the amount that can be borrowed is not that

much.


SOME GET CAUGHT OUT

Some home owners who initially thought they could build/ A&A or re-construct a home suddenly find themselves short of

money and go into hardship after CPF comes into the picture.

So do take note of this. It can be easy to forget about this part of the calculation.

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