Home purchasing is one of the most significant financial decisions you can make.
It also entails repaying your mortgage as quickly as possible so you can eventually own your dream home.
Unfortunately, the ongoing economic crisis has made it increasingly difficult for a huge percentage of people to make on-time monthly mortgage payments.
It is a relief that in Singapore, you can use your Central Provident Fund (CPF) to pay a housing loan for the purpose.
The CPF Board allows you to withdraw some or all of your CPF to pay off existing housing loans from any lender.
If you are cash strapped, this guide will help you understand how to adjust your CPF payment for your housing loans to make the most of it.
How Do You Use Your CPF To Pay Your Monthly Installment?
Although you can use your CPF to purchase a home, the amount you receive is often limited.
The government limits CPF usage to protect citizens’ retirement funds. However, depending on the type of loan and property, you may be able to use your savings to the maximum.
When using CPF to pay a monthly installment, inform your lawyer of your intention during the loan application process. Also, seek permission from your bank to use your savings.
Keep in mind that the bank charges all legal and processing fees to your account. Also, only Singaporeans and permanent residents are eligible to borrow from their savings.
Finally, you must sign and submit a statutory declaration to the CPF Board. The declaration states that you are only using your CPF for legal fees and nothing else.
Your savings determine the amount you can borrow, but it cannot exceed 50% of your total CPF balance.
If you want to change your monthly CPF installments, visit the CPF Board website. However, before applying for a CPF housing loan payment, you should weigh the benefits and drawbacks of this plan.
Remember, using your savings will mean you have less retirement funds in the future. As a result, you must work harder to replace the money spent and replenish your CPF account.
How To Make Changes To Your Monthly CPF Deductions For A Home Loan
Making adjustments to your current CPF is easy and straightforward. Here are quick steps on how to change CPF contributions for housing loans.
1. Log in to your CPF account
To log in, go to https://www.cpf.gov.sg/member. You can log in using your Singpass password or by scanning the QR code with your phone.
2. Return to the Homepage
The website redirects you to your personal portal after you log in. On the left side of the screen, select Homeownership. The address of your residence will be displayed on the following screen. Scroll down to find monthly deductions.
3. Follow the On-screen Instructions
You can make changes based on the style of your home. If you are paying for a HDB unit, go to the HDB website and make your changes there. Do the same for any other type of property or private residence, and then submit your changes.
4. Recheck your Changes and Click Submit.
After making any necessary changes, click confirm and submit. Remember to read the terms and conditions. You can also save or print your transaction process for future use.
Why You Should Make Changes To Your CPF Housing Payments
Thanks to the high housing cost, finding a payment plan that works for everyone is critical.
CPF Housing is one of the best housing schemes in Singapore. A CPF mortgage payment comes in handy when looking for a dependable solution.
It provides a variety of options for both homeowners and renters. With such an appealing scheme, it’s vital to understand what you’re getting into before signing on the dotted line.
Below are some factors that may justify the need to alter your housing payments.
Your CPF Ordinary Account (OA) Has No Money
When your account runs dry, you must act quickly to avoid losing ownership of your home.
In some cases, paying your installments in cash is your only option. But what if you’ve recently lost your job or lag behind on your bills?
Make the switch to avoid being kicked off your mortgage plan or the CPF system.
Change In CPF Contributions After 35 Years
When you reach the age of 35, the percentage of CPF transferred to the Ordinary Account (OA) decreases. This occurs in favour of your Medisave and Special Accounts.
You may later realise that your regular account contributions are insufficient to cover your mortgage payments.
If you still want to use CPF to pay a housing plan, you should reduce your CPF deductions first. This eventually aids in the avoidance of late mortgage fees and other overdue charges.
Save More For Retirement
Due to recent medical innovations, people tend to lead healthier and longer lives compared to a few decades before.
Therefore, saving early enables you to preserve enough money to last through your sunset years.
It is worth noting that the Special Account and Ordinary Account merge after you turn 55 years old to form the Retirement Account. The government uses the funds in this account to run the CPF Life.
This is the national annuity scheme, which guarantees citizens a steady income in old age. The more you save in your Retirement Account, the higher your CPF Life payouts will be.
If necessary, you can reduce your CPF deductions from the Ordinary Account to enjoy a more comfortable retirement.
Unable To Work Due To Illness Or Retrenchment
If you become seriously ill or lose your job, the CPF Board sets aside approximately $20,000 from your Ordinary Account as a safety cushion.
This strategy ensures that you continue to pay for your home while also saving for retirement.
Use a CPF usage calculator to calculate your usage limits. It can estimate the amount of money you need to contribute if your account does not have enough money to make a HDB monthly installment.
Why You Should Use Legal Representation For CPF And Housing Loans
When buying a home, not all do-it-yourselfers feel the need to hire legal counsel. Others prefer hiring real estate agents to help through the process.
While hiring an attorney will cost you more, it is worth every coin.
Learn how a skilled real estate lawyer can advise you on how to change CPF contributions for housing loans and the following.
Help With Property Title Searches
Title searches are essential in the legal process of purchasing a home. They ensure that the property is free of encumbrances and disputes over ownership.
The process also reveals whether the alleged owner has the authority to dispose of the property.
Even if you can conduct a title search independently, a qualified attorney provides quick and cost-effective results.
Such lawyers typically have strong relationships with title search experts and companies.
What’s more, a lawyer can advise you on the best course of action if the process reveals any issues. They can also negotiate price reductions on the house or provide advice on other reliable financing options.
Ensure Contracts Adhere To Country Laws
While you can negotiate a new property face to face, the final contract has to be legally binding. Real estate attorneys ensure that the agreement addresses specific issues according to the law.
Unknown to most people, it takes a couple of days for sellers and buyers to review a contract before it is considered legal.
In the process, qualified lawyers root out any legal glitches, make amendments, and insert helpful contingencies to the benefit of their clients.
Quick and Efficient Fillings
All real estate transactions must be reported to the state. A competent lawyer will complete the process quickly and efficiently.
He or she can also assist you in navigating the numerous state regulations associated with owning a home through a loan.
This is useful when investing in a commercial property with stricter restrictions. The lawyer will establish your sole proprietorship or corporation as a legitimate entity for tax purposes.
More importantly, the lawyer can make it easier for you to obtain business licenses. Failure to file required documents may result in serious consequences such as:
- Commercial property business closure
- Property owners may face steep fines if a building permit does not mention special clauses such as wetlands
- Incorrect tax payment
- Incorrect income from a commercial building
Assist In Property Transfers
Contract preparation is a complex process that necessitates care and attention to detail. The situation becomes dire if the parties involved are in a partnership or corporation.
A well-trained attorney is familiar with the various legal boundaries and business arrangements on property ownership.
For these reasons, such a lawyer can ensure that your home loan contracts are consistent with partnership agreements, trusts, and the law.
Conclusion
You can buy any residential property, including HDB flats and private homes, with CPF funds.
However, you cannot use your HDB loan money to buy a private house. Only people purchasing a HDB unit are eligible for HDB loans.
For private properties, you must secure a mortgage from a bank or authorised lenders.
A loan partner like CreditMaster, that you can count on, can significantly help in this situation.
We customise every loan we offer to meet the individual customer’s needs.
The best part? You can receive the money in as short as 24 hours. Call one of our helpful financial advisors today.
