A housing loan is useful because it keeps you from wiping out all your savings at the outset.
That said, repaying it can get tricky and not to mention confusing, especially if you exhausted your finances at the initial cash outlay or lack a concrete debt repayment plan.
This article discusses how to pay housing loan in Singapore quickly and easily by examining the payment options available when it comes to paying your housing loan.
Read on to find out how to pay housing loan using your CPF.
How To Use Your CPF OA To Pay For Your Housing Loan
When it comes to how to pay housing loan, you can use the savings in your CPF Ordinary Account (OA) to pay for some property-related costs. These include:
- A downpayment
- Home construction costs
- Purchase of a HDB or private residential property
- Legal fees
- Stamp duty
The first step is to use a CPF housing usage calculator to determine how much of your savings you can allocate to your payments.
Next, authorise the payments towards your housing loan. The details to enter into the calculator include the property valuation price, the property purchase date, lease details, and your co-owner’s date of birth.
If you already own a property, get onto CPF’s Home Ownership dashboard first to see the amount available for use.
Depending on how much you have available, you can then find out how to pay housing loan using your CPF in one of the following ways:
1. Pay Your HDB Loan Or A HDB Unit Without Loan Financing
To use this option, fill out a CPF withdrawal form at a HDB branch office and wait for feedback.
2. To Pay A Bank Loan Or A Private Property Without Loan Financing
For this option, you must first find a lawyer and provide him or her with a Letter of Authorisation, Declaration, Consent, and Agreement.
This gives the lawyer the authority to submit the request on your behalf. The lawyer then makes the application, and when all legal documentation has been approved, your CPF money will be available to use.
But you must pay the 5% of your valuation or purchase price in cash, along with your downpayment, the option fees, and any other balance purchase price above the property value, termed the Cash Over Valuation (COV).
3. Pay Your Housing Loan Installments Using CPF
You could also use your CPF savings to pay the loan in monthly installments by making the request online if you:
- Already have an outstanding HDB loan. Log in to your profile and make a request from the HDB website.
- Are servicing a bank loan. Use the eService request to use CPF for your property loan.
How To Pay Housing Loan Installments
There are several means by which the money from your CPF OA can be used to make your monthly installment payments.
Before you make any payments, you must first have applied to use the partial capital repayment through your My HDBPage.
You should have received email confirmation that you can proceed with whichever mode you select.
Choose from the following payment methods:
- eNETS Debit from participating banks
- AXS channels such as AXS e-Station, AXS m-Station, and AXS Station
- PayNow via SGQR from participating banks
You can use one or a combination of these to make your payments. You do not need to do anything if you’re using GIRO or CPF because the bank or the CPF board processes your monthly deductions.
But for AXS channels, PayNow via SGQR or eNETS Debit, you must issue instructions for the payment to be made.
Here’s a breakdown of the easiest payment methods and how to use them:
You must first own a flat to use your CPF savings to make your housing loan payments. You also need to be insured under CPF’s Home Protection Scheme.
Authorise the deductions from your CPF account for the monthly installments by making a CPF withdrawal application.
The deductions are made on the Sunday that falls between the 6th and 12th of every month.
To use GIRO, present a completed Interbank GIRO application to HDB. You can get a pre-filled form from your HDB account if you own the flat. If you don’t own it, there’s a different application form to fill out.
If the bank approves your GIRO application, HDB will inform you of the GIRO commencement date.
Deductions are made from your GIRO bank account on the 28th of each month. So ensure that your GIRO bank account has enough funds to support the deductions, or penalties will be imposed for unsuccessful deductions.
HDB may also impose charges for late payments.
Banks such as DBS Bank or POSB Bank, United Overseas Bank, and OCBC Bank offer internet banking services that you can use to make your housing loan monthly installment payments.
You may use HDB’s e-Service called eNETS Debit to make the payments. But you can only use this option if you bank with United Overseas Bank, OCBC Bank, Citibank, DBS Bank or POSB Bank, and Standard Chartered Bank.
Cheque Or Cashier’s Order
Make your cheque or cashier’s order payable to HDB. On the other side of the cheque, write your HDB reference number, flat address, and the purpose of your payment (e.g. partial capital repayment).
Ensure that the HDB cashier’s order or cheque reaches the HDB branch that manages your HDB loan repayment before the set partial capital repayment date.
Partial Capital Repayment
You can pay your HDB loan in partial capital repayments using various payment methods.
But to do this, you must apply to HDB, and it will schedule a date for you to do so – usually a month from the day they receive the request.
When it comes to making a partial capital repayment, you will have two options.
You can pay the partial amount and continue to pay your monthly installments, shortening your repayment period.
You can also choose to revise the monthly installment amount upwards or downwards.
The minimum amount you can deposit as partial capital repayment is $500 for loans that commenced before 1 Apr 2012, and $5,000 (with increments of $1,000) for loans that commenced on 1 Apr 2012 and after.
To make the partial capital repayment request, get on your HDB Page and click on “Other Related Services” and then on “Partial Capital Repayment”.
After you make your request, an email will be sent to acknowledge your successful submission to HDB, along with payment instructions.
Paying Off Your HDB Loan Early
Did you know that you can pay off your housing loan early in Singapore using your CPF?
To do so, you need to submit a redemption of HDB housing loan request via My HDBPage using your Singpass. The proposed payment date is set a month from when HDB receives your request.
After you submit your request, HDB will compute the redemption amount and the fees payable for discharging the loan.
This includes the outstanding housing loan at the submission month and the interest for the beginning of the redemption month up to the proposed redemption date. The fees consist of the registration and conveyancing fees for the Total Discharge of Mortgage (TDM).
Late Payment Charges
Sometimes, you may have financial challenges and fail to pay your HDB loan on time.
The monthly installment payments are due on the 1st of every month. If you do pay within the month, you incur a late payment fee. This is charged on your outstanding installment as of the end of the month.
According to HDB, the late payment charge rate is 7.5% per annum from 1 Apr 2022 to 31 Mar 2023.
Any payment made after this will first be used to settle all the late payment charges, and then the balance will be directed toward the outstanding monthly installment.
So if you’re using GIRO for your payments, ensure that your account has sufficient funds. As mentioned, the deductions are made on the 28th of each month.
If the first deduction is unsuccessful, a second attempt will be made on the 6th of the following month. If both attempts are unsuccessful, the bank and HDB may impose late charges.
It Always Helps To Understand How To Pay Housing Loan
Now that you know how to pay housing loan, you may be thinking of taking the next step towards owning a home.
If you need a loan, contact CreditMaster now. We are a reliable licensed money lender in Singapore offering some of the most affordable interest rates and no hidden fees.
Reach out to us now or apply for a loan today.