Homeowners can retain up to $20K in CPF-OA when applying HDB loans

The latest news that homeowners can elect to retain $20k in their CPF-OA when applying for a HDB housing loan, is to me a welcomed move.

Previously, homeowners had to completely use up their OA balances, before being able to take a loan with the HDB. This meant that not only are they left with minimal buffer space in their CPF, they also miss out on the additional 1% interest from the first $20k in the CPF-OA.

Some may ask, why bother to retain the money in the OA when you can be paying down the loan and avoiding the interest? I think that an immediate advantage is to let the first 20k sit in the OA garnering an additional 1% of interest, while funneling the rest into the SA, where it earns an additional 1.5%.

The new rules are a boon for soon-to-be homeowners like myself, who see the SA as a cornerstone to their retirement plans. In fact, if you continued to funnel everything above the first $20k into the SA. I’d reckon that the FRS would not be too difficult to achieve.

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