Wson 1st Gear December 10, 2011 Share December 10, 2011 Just curious about this CPF accrued interest thingy. Assuming man and wife bought a HDB now for $500K. They fork out $250K each from CPF account to pay off the flat in full. Every year they are accumulating accrued interest 2.5% to CPF for using that $500K CPF $. 10 years later, the accrued interest (compounded) is $140K. If they sell the flat for $640K, then every cent goes back to the CPF, no cash balance left for them to pocket. But if they sell their HDB for $500K (say due to property downturn), they will still owe $140K of accrued interest to CPF. What happens then? They need to fork out $140K in cash to put in CPF? If no cash savings how? Cannot sell? Monthly installment to pay back CPF using cash? ↡ Advertisement Link to post Share on other sites More sharing options...
Itsec 2nd Gear December 10, 2011 Share December 10, 2011 (edited) Welcome to Singapore It's a hard truth... it was because you own cpf $$ which shouldnt taken out for other uses.. hence, whatever u use, u must return including interest... but then, the interest shall be paid by CPF... not you... but now...u are paying the interest to YOURSELF, to keep the scheme going... if not, where you get the 2.5% interest... remember, there's no free lunch in this world... quote by somebody... Edited December 10, 2011 by Itsec Link to post Share on other sites More sharing options...
Hosaybo 6th Gear December 10, 2011 Share December 10, 2011 If sell at 500k, no need to top up. Applies only to your profit. Link to post Share on other sites More sharing options...
Wson 1st Gear December 10, 2011 Author Share December 10, 2011 (edited) If sell at 500k, no need to top up. Applies only to your profit. Thanks fro clarifying, then at least this scam...errr ....scheme is not so screw up. But this 140K interest, is written off? Or they will remember and claw back next time the couple make profit from other properties? Edited December 10, 2011 by Wson Link to post Share on other sites More sharing options...
Civic2000 Supercharged December 10, 2011 Share December 10, 2011 (edited) The actual amount to be refunded back to your CPF A/C depends on the date of sales of your property. For those who have attained the age of 55 and above; he is not required to refund the principal amount of CPF $ used and the accrued interest back to his CPF AC, provided he has already put aside the required amounts of saving in his/her Retirement AC and Medisave AC. However, if you are below the age of 55 and you decided to sell your property, which was purchased, using your CPF saving, then you will be required to refund back the principal amount used and also the accrued interest back to your CPF AC. The CPF Board says the Accrued interests is the interest that you would have earned had your saving remain in your CPF account. Edited December 10, 2011 by Civic2000 Link to post Share on other sites More sharing options...
Wind30 Turbocharged December 10, 2011 Share December 10, 2011 That is why recently after I sold my old place and bought a new place, I left ALL my CPF money with CPF. So the government is paying me 2.5% interest when my housing loan interest is 0.85%..... Nowdays it is really no point to use CPF to pay house... Link to post Share on other sites More sharing options...
2009k Neutral Newbie December 10, 2011 Share December 10, 2011 That is why recently after I sold my old place and bought a new place, I left ALL my CPF money with CPF. So the government is paying me 2.5% interest when my housing loan interest is 0.85%..... Nowdays it is really no point to use CPF to pay house... Mathematically and financially i do not disagree with your approach. However, i decided to take the bank loan but use my cpf to pay for the monthly mortgage. It doesn't make sense as I'm bearing the interest that cpf would have to pay me. Why i do that? Cos i dunno if I'll see my cpf money with the rising minimum sum and the likely shifting of withdrawal age etc. So instead of leaving the cpf to govt use, i use my cpf money instead. If i can make a higher return than 2.5% from the cash i have i am in no worse off position. Also, i can hold on to the property till it makes enough profit to cover the accrued interest. Lastly, the property is giving me cash rental income today that can be reinvested or spent, whereas the accrued interest is likely to be smaller in worth over time due to time value of money. Again, i stress that my method does not make mathematical or financial sense in direct comparison as there are more variables and options for me to try to beat the 2.5% interest from cpf. Cheers. Link to post Share on other sites More sharing options...
Good-Carbuyer 1st Gear December 10, 2011 Share December 10, 2011 Just curious about this CPF accrued interest thingy. Assuming man and wife bought a HDB now for $500K. They fork out $250K each from CPF account to pay off the flat in full. Every year they are accumulating accrued interest 2.5% to CPF for using that $500K CPF $. 10 years later, the accrued interest (compounded) is $140K. If they sell the flat for $640K, then every cent goes back to the CPF, no cash balance left for them to pocket. But if they sell their HDB for $500K (say due to property downturn), they will still owe $140K of accrued interest to CPF. What happens then? They need to fork out $140K in cash to put in CPF? If no cash savings how? Cannot sell? Monthly installment to pay back CPF using cash? Modern day slavery. CPF members=Confirmed Poor Fellow Members have to go to Ah Long (promote business for Ah Long?) Link to post Share on other sites More sharing options...
Good-Carbuyer 1st Gear December 10, 2011 Share December 10, 2011 That is why recently after I sold my old place and bought a new place, I left ALL my CPF money with CPF. So the government is paying me 2.5% interest when my housing loan interest is 0.85%..... Nowdays it is really no point to use CPF to pay house... I believe otherwise. Link to post Share on other sites More sharing options...
Good-Carbuyer 1st Gear December 10, 2011 Share December 10, 2011 Mathematically and financially i do not disagree with your approach. However, i decided to take the bank loan but use my cpf to pay for the monthly mortgage. It doesn't make sense as I'm bearing the interest that cpf would have to pay me. Why i do that? Cos i dunno if I'll see my cpf money with the rising minimum sum and the likely shifting of withdrawal age etc. So instead of leaving the cpf to govt use, i use my cpf money instead. If i can make a higher return than 2.5% from the cash i have i am in no worse off position. Also, i can hold on to the property till it makes enough profit to cover the accrued interest. Lastly, the property is giving me cash rental income today that can be reinvested or spent, whereas the accrued interest is likely to be smaller in worth over time due to time value of money. Again, i stress that my method does not make mathematical or financial sense in direct comparison as there are more variables and options for me to try to beat the 2.5% interest from cpf. Cheers. I like the way you put it. Definitely you are not a fool. Link to post Share on other sites More sharing options...
2009k Neutral Newbie December 10, 2011 Share December 10, 2011 (edited) I like the way you put it. Definitely you are not a fool. When you are a poor man like me, who started off with 500 bucks in my name and a hefty sum of outstanding study loan a decade ago, you would want to hold on to the cash and see what you can do more with it. My fall back position is that I'll be back to square one, a poor man. Start all over again if i fail early or it's about the end of my journey if failure comes at the end. Cheers... Edited December 10, 2011 by 2009k Link to post Share on other sites More sharing options...
Kazuo Neutral Newbie December 10, 2011 Share December 10, 2011 The interest, does it goes to CPF board, or back to my own account? If own account, does that means there's no interest at all, except that more of my money stuck inside? Link to post Share on other sites More sharing options...
2009k Neutral Newbie December 10, 2011 Share December 10, 2011 The interest, does it goes to CPF board, or back to my own account? If own account, does that means there's no interest at all, except that more of my money stuck inside? The accrued interest goes back to your account. Just that you're paying 2.5% to yourself instead of cpf cos you used the fund for property. Actually not a single cent more than leaving it in cpf. Just that you get to keep less of your profit from sale of property in cash. Link to post Share on other sites More sharing options...
Sabbie Clutched December 10, 2011 Share December 10, 2011 Simple just use back the cpf to buy another property Link to post Share on other sites More sharing options...
Sabbie Clutched December 10, 2011 Share December 10, 2011 When you are a poor man like me, who started off with 500 bucks in my name and a hefty sum of outstanding study loan a decade ago, you would want to hold on to the cash and see what you can do more with it. My fall back position is that I'll be back to square one, a poor man. Start all over again if i fail early or it's about the end of my journey if failure comes at the end. Cheers... 8 years ago, I only had 100 in my account and outstanding car loan 60k, how I envy you Link to post Share on other sites More sharing options...
Good-Carbuyer 1st Gear December 10, 2011 Share December 10, 2011 When you are a poor man like me, who started off with 500 bucks in my name and a hefty sum of outstanding study loan a decade ago, you would want to hold on to the cash and see what you can do more with it. My fall back position is that I'll be back to square one, a poor man. Start all over again if i fail early or it's about the end of my journey if failure comes at the end. Cheers... Somehow I believe that is the GRC=Go-Rob-Citizen government policy. If the time, direction, route, favourable, you may want to invest in cycling commuting to beat the traffic jams. A hybrid bicycle can bring you many places, keep you fit without going to the Gym. Save on petrol. When weather permits, I do that on weekends when there is less motorised traffic. Link to post Share on other sites More sharing options...
Wson 1st Gear December 11, 2011 Author Share December 11, 2011 Modern day slavery. CPF members=Confirmed Poor Fellow Members have to go to Ah Long (promote business for Ah Long?) Irony of this scheme is we r both the ah long and the borrower. Lend our own cpf$ to ourselves, then need to pay ourselves interest. Link to post Share on other sites More sharing options...
Good-Carbuyer 1st Gear December 11, 2011 Share December 11, 2011 Irony of this scheme is we r both the ah long and the borrower. Lend our own cpf$ to ourselves, then need to pay ourselves interest. This is what the 60%+ like about it. ↡ Advertisement Link to post Share on other sites More sharing options...
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