How To Adjust Your CPF Payments For Your Housing Loan
September 8, 2022
There’s no doubt that most Singaporeans tend to depend on their Central Provident Fund (CPF) savings to pay for their monthly mortgages.
That is why it is of utmost importance to learn how to adjust your CPF payment for your housing loan.
However, before you learn about the nitty gritty of using your CPF to pay monthly installments, it is important to learn what CPF is and how it came to be.
What Is The Central Provident Fund?
The Central Provident Fund (CPF) is a compulsory saving initiative aimed at helping working Singaporeans. It is also compulsory for all permanent residents in the country to contribute to the kitty.
Contributions made to the CPF kitty are meant to cater to the contributor’s healthcare, housing and retirement needs. The Central Provident Fund Board (CPFB) was formed on 1 Jul 1955 under the Ministry of Manpower.
Thanks to the efforts by those in charge to handle contributors’ money, CPFB was ranked the best in Asia and seventh globally in 2020.
How Do You Use Your CPF To Pay Your Monthly Installments?
Follow these seven steps to use your CPF to pay your monthly installment:
- Visit the CPF website and log in using your Singpass.
- Select ‘My Request’ tab.
- Under ‘Property’, select ‘Use CPF for my Property’.
- Select ‘Property Details’.
- Then select ‘Revise Monthly Installment’.
- Update the ‘Monthly Installment’ amount you’d wish to remit.
- Submit request.
But what if you need to adjust your CPF payment for your housing loan later on?
How To Make Changes To Your Monthly CPF Deductions For Your Home Loan
The question on how to adjust your CPF payment for your housing loan is not new.
In fact, many Singaporeans who in one way or another have, or had, a home loan have asked themselves that question.
Whether they got the right answer depends on how much they did their research or who they approached to find the answer.
While using your CPF to pay off your housing loan is a good option, it is not always a done deal thing.
Often, you may find yourself stuck for reasons that we will go into later. This will force you to make informed adjustments to your CPF payments for your home loan.
Thankfully, you can now make adjustments to your CPF account from the comfort of your couch, and thus pay your HDB loan using CPF.
Here is a step-by-step guide on how to adjust your CPF payment for a housing loan.
1. Login To Your CPF Account
The first step to adjusting your CPF account for mortgage repayment is to visit the CPF website. Then click on the tab ‘Member’ that is on the upper right side.
Key in your Singpass. You can either do this by inputting your Singpass password or by scanning the QR code using your mobile phone.
2. Find The Home Ownership Page
Now that you are at the CPF website, you can find all the information you want regarding your CPF account.
However, because you are not just looking for any random information, head straight to the personal CPF portal.
You can find the ‘Home Ownership’ tab on the left side of your computer or device screen. Once you click on the tab, all the important information about your home such as its physical address will pop up.
Next, scroll to ‘Monthly CPF Deduction’ section. From here, you can adjust your CPF payment for your housing loan.
3. Follow All The On-Screen Prompts To The End
At this point, you will encounter two types of homes. You will be asked to perform different tasks based on the type of home.
The first option is a private residence. The second option is if the property in question is a HDB unit.
For this, you may need to dig a little further. According to HDB home rules, you can only adjust your CPF account to finance your housing loan from its website.
Therefore, you may be asked to visit the HDB website before you come back to complete your adjustment.
Thankfully, you do not have to locate the exact page while on the CPF website. Instead, you will be redirected to the HDB website.
Whichever option you use or whatever your type of property, make sure you follow the on-screen prompts to adjust your account to effect the CPF housing loan payment plan.
4. Confirm Your Changes And Submit
After you are satisfied with the changes you’ve made, you can now submit them, with hopes that you’ve now adjusted your CPF to pay for your HDB or residential home.
For your future reference, it might be necessary to print the changes and any transactions therein.
Note: Make sure you’ve read and understood all the terms and conditions before you press the ‘Submit’ button.
Why You Should Make Changes To Your CPF Housing Payments
In the previous section, you’ve learnt how to adjust your CPF payment to pay your HDB loan. But when exactly would you need to do so?
Here are three main scenarios when you may need to change your CPF contribution for your housing loan.
CPF Contributions Change at Age 35
The government of Singapore cares about her people. As you advance in age, several things are bound to happen.
Chief among them is you lose the energy to work, which will affect how much you save.
As such, the amount you put into your CPF Ordinary Account is reduced once you turn 35 years old. The reduction, however, is strategic.
It is not that you are exempted to make your contributions, but the reduction gives you a chance to increase your savings on MediSave and Special Accounts.
Because of the automatic reduction of the funds directed to the Ordinary Account, it may eventually not be sufficient to repay your house loan.
If this is the case, then the most appropriate action is to adjust your CPF contributions.
Otherwise, you might end up falling far behind on repaying your housing loan. In fact, you might even incur late fees or face overdue charges.
There is a good side to reducing the amount that goes to the Ordinary Account, and increasing the amount that goes to MediSave and Special Accounts.
Once you are 55 years old, the two accounts will be combined to form a Retirement Account.
Your CPF Ordinary Account May Run Out
The other reason why you should take the question on how to adjust your CPF payment for your housing loan seriously is when your Ordinary Account runs dry.
Yes, it does happen and if it does, you will be left with one choice – to pay off your mortgage using cash.
Therefore, if in the event you learn that somehow, your Ordinary Account is about to run dry, do not just sit there and wait to be red-flagged. Instead, go to the CPF portal and make those changes.
When You Need Legal Representation
Although this is rare, there are times when you may need serious legal representation.
As such, you are bound to make adjustments on your CPF account to meet your legal requirements.
This happens when you need someone or a legal firm to act in your behalf, something referred to as conveyance.
Speaking of conveyance, here are some things you should know.
Legal Representation For CPF And Housing Loans
As mentioned in the previous section, it is possible to choose a legal team to act in your behalf when using your CPF account to pay for your mortgage.
But before you strike a deal with a conveyance law firm, take these points into consideration.
Bank Panel OF Law Firms
If you have a conveyancing firm in mind, you might want to check whether it is in the panel of the bank.
Note that if the law firm is not in the bank panel list, chances are you might incur additional charges.
It is also good to know that for loans above $3 million, the price may be higher.
Typically, you might expect conveyancing fees to look like these:
- Sale of property fee: from $1,300 to $2,000
- New purchase fee: from $1,800 to $2,800
- Refinancing fee: $1,500 to $1,800
- Mortgage redemption fee: $600 to $800
- Private property term loan fee: $1,300 to $2,000
Confirm The Price You Are Paying
Lawyers play an integral role by representing different clients before the courts or when handling some legal representations.
However, it is also important to mention that it is hard to tell whether a lawyer is actually helping or harming you.
Therefore, before you agree to a lawyer’s services, make sure you understand everything involved. In other words, make sure everything you are paying for is indicated ‘nett all in’.
Some conveyancing firms include such charges as CPF fee, mortgage stamping fee, GST, and Law Society Fee, among other fees – sometimes without your knowledge.
This means something that you thought would cost $2,000 may end up being $3,800.
Get A Conveyancing Calendar
It goes without saying that a conveyancing lawyer should be more informed in matters of the law than you are.
As such, make sure he or she gives you all the dates and deadlines regarding your property. The aim is to make you aware of any charges you might incur in case you miss the deadlines.
Before you end your meeting with the conveyance representative, make sure you have these dates in your diary. Take note of when you:
- Are needed to exercise option
- Have to pay for your stamp duties
- Can collect your house keys
- Can get the funds
Activation Of Your CPF
Remember that the amount you pay to a conveyancing law firm is for ‘nett all in’ services. As such, make sure the amount caters for the activation of your CPF.
Common Misconceptions About Using CPF For A Housing Loan
You’ve probably heard many things about using your CPF for a housing loan.
Here are six misconceptions regarding using CPF to pay your monthly installments.
- You can only use CPF funds to pay for HDB loans
- As long as you are 55, you can no longer use your CPF funds to service your mortgage
- You must utilise all your CPF Ordinary Account savings at the time you are taking a HDB loan
- You will be required to top up the difference to your CPF account if you sell your property at a loss
- As long as you have the funds, you can always use all your CPF savings to pay for the home
- You can always use funds from your CPF account to pay for your conveyancing fees
By now, you should have a good idea about how to adjust your CPF payments for a housing loan.
In case you are stuck or need further assistance, do not hesitate to contact Credit Thirty3. We are at your service 24/7 with the aim of helping you solve your financial problems.
Talk to any of our loan advisors today. If you need financial help, apply for a loan with us now.