How To Pay Back Your CPF Housing Loan

Written by Shannon Wong on January 10, 2023

Did you know that Singaporeans and permanent residents who earn above $50 monthly are required to pay a monthly CPF contribution?

One of the best things about your CPF savings is that you can use part of it to make a downpayment for a new home or pay for your monthly home repayment.

While it’s technically your money, any amount taken out of your CPF Ordinary Account (OA) is “owed”. This means you’ll need to pay it back into your CPF account, along with the interest accrued. 

But how do you repay your CPF housing loan? Read on to find out how to pay back CPF housing loan and how to pay back CPF accrued interest. 

What Is CPF Housing Refund? 

As earlier explained, any money taken out of your CPF OA to pay for a new home is “borrowed”. 

This includes housing grants as well. You’re expected to refund the money to your CPF account, including the interest accrued.

Many people make this refund when they sell their homes. However, others don’t wait to sell their properties before refunding their CPF housing loan. This is called a voluntary refund.

If you’re younger than 55 years old, any voluntary refund you make is sent back to your CPF OA. However, a CPF housing refund after 55 is quite different. 

Any voluntary refunds you make at that age are sent to your CPF Retirement Account (RA) to cover your Full Retirement Sum (FRS). But if you already have your FRS in your RA, your voluntary refunds can go into your CPF OA. 

Unfortunately, some people don’t refund CPF housing loans because they believe the money can be better invested elsewhere. Yet there are others who aren’t able to pay back their CPF housing loans because they can’t afford to. 

But in the next section, we’ll take a look at why you should make a voluntary refund. 

Why You Should Make A Voluntary Refund

You’re allowed to wait to sell your home before making your CPF housing refund. This means you don’t have to part with a huge sum of money that can be used for more pressing needs. 

So why make a voluntary refund when you can wait? Let’s find out how making a voluntary refund can help you. 

Avoid Huge Interest Payments

The longer you wait to refund your CPF housing loan, the more interest you’ll have to pay. Also, the CPF Board’s current interest rate is 2.5%, which is much higher than what most banks charge. 

You can save yourself from being on the receiving end of huge interest by making a voluntary refund when you can. 

Selling Your Home May Not Generate Enough Money

If the possibility of avoiding a large interest payment does not convince you, how about the fact that there’s no guarantee selling your home will provide enough money to pay back your loan plus interest? 

If this happens, your home may lose its market value and you’ll be forced to sell it for a lower price. 

In the end, whatever you make from selling your home may not be enough to pay back your CPF housing loan. 

Get More Out Of Property Sales

Another reason you should make a voluntary refund is that it allows you to keep a large chunk of the money you get when you sell your home. 

Many Singaporeans who sell their homes use the money from the sale to pay for a new property or settle other needs. 

But if you’re using the sale proceeds to pay your CPF loan, there may not be enough left to do anything else. 

So if you have the money, it’s a good idea to refund CPF used for housing. 

Why Some Don’t Make Voluntary Refunds

There are three basic reasons why some Singaporeans don’t make voluntary refunds. They are:

They Don’t Have The Money

Although many Singaporeans and residents understand the benefits of making voluntary refunds, they simply can’t afford to. 

With many needs to be met, sometimes a housing loan voluntary repayment is the last thing on their minds. 

They Don’t Think It’s A Good Investment

While it’s true that you can collect interest on your CPF funds, the rates aren’t all that impressive for some ambitious young investors. 

Hence, many young Singaporeans would rather invest their money in ventures that promise higher yields rather than make voluntary refunds. 

They Are Reluctant To Have Their Money Stuck In CPF 

For some, there’s nothing quite like having cash on hand. 

While the promise of collecting interest on their CPF savings may appear attractive, they also know that making a CPF voluntary housing refund means the money gets stuck in the CPF system. 

With the money locked up in your CPF account, you cannot use it again until you need to buy another property or when you reach the age for withdrawals. 

How To Check How Much Voluntary Housing Refund To Make 

You can refund any amount. Whatever you repay is capped at the principal amount you received, plus the accrued interest (i.e. the interest you would have received had you not used the money). 

If you want to know the total amount you’re owing CPF, you should check your dashboard on the CPF website.

Here’s how to check the CPF website to see how much you need to pay back: 

  • Using your Singpass, log into the CPF website. 
  • Click on the “My Statement” icon. 
  • Check Section C of “My Statement” and select the “property” icon. 
  • Click the “My Public or Private Housing Withdrawal Details” icon to see how much you have to repay. 
  • You can now see what you’re currently owing from your CPF loan, including the interest accrued.

How To Make A Voluntary Refund 

Once you know the figure, you can refund the money to your CPF account – whether a partial or full payment. 

Here are the steps to make the refund:

  • Click on “My request” and then click on “My Property”. 
  • When you click on “My Property”, you’ll get the option to “Make a Housing Refund With Cash”. Click on that. 
  • Enter the amount you wish to pay in the box provided. 

You can complete this payment using eNets or PayNow. eNets payments can take around 24 hours to process. But if you’re using PayNow, the payment is processed instantly. 

Should You Make A Voluntary CPF Refund? 

When you weigh the pros and cons, it’s clear that making a voluntary CPF refund is a great idea. It allows you to pay off your CPF housing loan without accruing huge interest. 

It also allows you to save up more money for another property in the future. However, if other needs require your attention, you may want to hold off on making a voluntary refund. The good news, however, is that you don’t have to make the full refund all at once. Therefore, you can pay back whatever you’re able to spare now and save up to pay the rest. 

Learn How To Pay Back CPF Housing Loan Today

If you’ve decided to make a voluntary refund, head over to the CPF website to make a voluntary refund in part or in full. 

But if you’re having financial problems and need professional help, 1AP Capital has some of the best professionally trained credit consultants who can help you. 

To borrow quick cash with low interest rates, contact us now or apply for a loan today.

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