Martin Lee @ Sg
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Property Valuation Limit and CPF Withdrawal Limit

If you depend on financing your home property loan using your CPF OA, do you know that you might be hit with a scenario where you can’t use your OA to pay for your housing many years down the road? (This does not apply to new HDB apartments purchased using a HDB loan)

Property Valuation Limit and CPF Withdrawal LimitHere are three terms you need to be aware of:

  • CPF Withdrawal Limit
  • Valuation Limit
  • Available Housing Withdrawal Limit (AHWL)

CPF Withdrawal Limit

This is the maximum amount of CPF that you can use to pay for your housing. It varies from 150% to 120% of the loan amount depending on when you bought the property. From 1st Jan 2008 onwards, the limit is 120%. Note that if you refinance your housing loan, the prevailing CPF withdrawal limit will apply to your new loan.

Depending on the interest rate of the loan, the CPF withdrawal limit is likely to be hit towards the 2nd half or tail end of the loan.

Once this limit is hit, you can’t use any more CPF monies to pay for your housing loan.

Valuation Limit (VL)

This is the lower of:

  • Purchase price of property
  • Valuation of property at time of purchase

Once your CPF withdrawals (for paying the property) reaches the VL, you will not be able to use your CPF to pay for your housing loan unless you have the Avaliable Housing Withdrawal Limit (AHWL).

Obviously, the Valuation Limit will be hit before the CPF withdrawal limit is hit. It can also be reached in the early years of a loan if someone uses spare monies in the OA to pay down the housing loan rapidly.

Use this CPF calculator to estimate your CPF Withdrawal Limit and Valuation Limit.

Avaliable Housing Withdrawal Limit (AHWL)

For those below 55, the AHWL is the balance available after setting aside the Minimum Sum component. Savings in the OA, SA and amounts withdrawn for investment can be used to meet the prevailing Minimum Sum cash component.

CPF has a calculator that helps you estimate your AHWL.

While the terms might sound confusing, any potential property owner should definitely try to understand the implications of these limits on their housing loan repayments before they buy any new property (or refinance an existing one).

Not doing so might result in an unpleasant surprise many years down the road, especially if there is not enough free cashflow to be diverted towards the housing loan.

Leave a Comment:

Kelvin Tan Tuan Wei says 10 years ago

In economics, we have this principle known as the Tinbergen principle, basically it means you should not be using one policy tool to achieve two different policy goals.

Here, the original plan for CPF is to fufill the goal of retirement needs. Over time, CPF also took on the role of fufilling home ownership. Then it becomes the tool for healthcare, for education and so on and so forth.

As a result, the original goal of retirement became impossible to reach with CPF.

    Martin Lee says 10 years ago

    Dear Kelvin,

    I agree with you. Liberating CPF for housing has resulted in two evils : Not enough money for retirement and escalating housing prices.

Lim says 11 years ago

hi Martin,

Request No.1

You may want to include “ways or direction” in balancing between,

1. Paying the housing loan early (partial payment) AND,

2. Trap of AHWL.

it pretty shocking to realise that you need to service the home loan using cash out of the “comfort” of using CPF.

i am one if not of the earliest batch to be hit, the consolation price is that the outstanding loan are less than 10k. I need to fork out cash for a few months before the AHWL is available again.

Question 1.
Do you think it is sustainable to keep this minimum sum as retirement fund and AHWL for Hosing Loan? what happen if there is a repeat of Asia Fincial Crisis or sorts.

are the people going to be better off? looks like their hands are really tied up this time around.

Are this policy a mistake?


A Concern Resident

    Martin Lee says 11 years ago

    Hi Lim,

    Personally, I think it is not a good idea to allow CPF for housing use. It has created two problems: insufficient funds for retirement and runaway property prices.

      lim says 11 years ago

      Hi martin,

      I agree that CPF is suppose to be our retirement funds and i can see what you mean. Ya probably we are too comfort paying the housing loan without forking out cash (prior 2002) AND that has caused the runaway property price.

      OK let say half of singapore population are in this trap – cannot meet the minimum sum and still paying for housing loan at age 55.

      what is the way out here? lightly to happen based on current astronomical housing price?


      A concern resident.

        Martin Lee says 11 years ago

        Hi Lim,

        There’s no simple way out. The government will simply tell you to downgrade your flat or sell back part of your lease.

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