CPF Valuation Limit - How It Affects You

As mentioned in Parliament, not many home owners have hit the CPF valuation limit.  Yes, not many, but what are they NOT TELLING us?
What they didn't tell us is, once you hit 100% of the valuation limit, you cannot use CPF to pay for your loan, till you build up the "Minimum Sum". Than you can continue using it again.

Given a 30yrs loan, most likely, you will hit the valuation limit (the valuation of your property) somewhere on Year 26 (assuming, interest rate remains unrealistically at 1.5% throughout, AND not taking into consideration Accrued Interest).  If you take interest hike and accrued interest into consideration, the Valuation Limit will be reach in a far shorter years.

A few things to consider.
1. How many home loans have reach 20 years (let alone 30)? A lot of properties today, have not reach 20yrs loan yet. Increased in property transaction took place in the mid-90s onwards. Which means, most loans from the 90s (if those pple didn't change home again), will only be about 15yrs old. 

2. How many people are aware of the Maximum Withdrawal Limit, and the Minimum Sum policy? 

Way into the mid 2000s, I hear home buyers saying, I will upgrade after 5yrs. Is this practical? How many friends you know stayed in their same flat beyond 5yrs?

3. If you get married, buy a flat now, you may end up being a parent in 2-3yrs time. 20yrs down the road (You may have hit the 100% withdrawal sum), your child is ready for University education. 

You suddenly faced the stoppage in using of CPF for housing. HOW? Pay in CASH!!




So, have you been told the above?  Why are they not coming out with the real information?




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CPF valuation limit not an issue for majority of home buyers
Posted: 14 May 2012 2004 hrs

SINGAPORE: The CPF Valuation Limit is not a constraint for the vast majority of members who are servicing housing loans using their CPF savings.

Minister of State for Manpower Tan Chuan-Jin said this in response to MP for Pasir Ris-Punggol GRC Gan Thiam Poh's question on whether the CPF Board will review the CPF withdrawal limit for housing.

The valuation limit restricts the amount of CPF savings members may use or property purchases to the lower of property price or property value at the time of purchase.

This is to ensure Singaporeans' retirement needs are not compromised when CPF savings are used to finance housing needs.

Mr Tan said the number of members who can no longer use CPF savings to pay for monthly instalments after reaching the valuation limit is actually very small.

"But the small minority of members who may find it difficult to continue servicing their housing loans after they reach the valuation limit, CPF Board does assess the situation and has allowed them some flexibility on a case-by-case basis," Mr Tan said.

"For example, where giving such flexibility helps them tide over a period of temporary hardship or where the member is in the midst of right-sizing his property to avoid defaults."

"CPF Board will continue to exercise such flexibility and discretion where the case merits," Mr Tan added.

- CNA/wm
http://www.channelnewsasia.com/stories/singaporelocalnews/view/1201195/1/.html