What You Need To Know About Accrued Interest of CPF On Your House when Buying or Selling Property in Singapore

When navigating the property market in Singapore, whether you’re looking to buy a home or sell your property, understanding the nuances of CPF accrued interest is crucial. This interest pertains to the funds withdrawn from your CPF Ordinary Account (CPF OA) to finance your HDB flat or private property. It’s essential to grasp that using your CPF funds for a home loan, be it through a bank loan or a CPF housing loan, involves not just tapping into your CPF account but also committing to a pay back of the principal amount plus the interest it would have earned if it had remained in the CPF OA account. This concept is vital for homeowners planning to use their CPF to alleviate the financial burden of their housing loan, as it directly impacts the cash proceeds you’ll receive when you sell your property and the housing grants you might be eligible for. The following are answers to the most common questions my property buyers and sellers have when they engage my expertise for their next property purchase or upgrade.

A building with a green and white CPF logo on it.

1.     What is the purpose of Central Provident Funds?

CPF is a mandatory social security savings scheme funded by contributions from employers and employees. The CPF is a key pillar of Singapore’s social security system, and serves to meet the retirement, housing and healthcare needs of Singaporeans and Permanent Residents.


2.     What can CPF be used for?

Funds in Ordinary Account of CPF could be used for

  1. Housing
  2. Insurance
  3. Investment
  4. Investment
  5. Education


3.     How could CPF be used for housing?

Funds in ordinary Account could be used for

  1. Downpayment
  2. Servicing housing loan
  3. Stamp duty and legal fees
  4. Home protection scheme premium of HDB flats


4.     What is the cost of using CPF for housing?

A charge of 2.5% is created when you use your funds in Ordinary Accounts of CPF to finance the purchase of property or to service the property loan.


5.     How much CPF could you use for property?

Withdrawal is allowed if:

  • a property lease lasts up to age 95 of buyer, and
  • the CPF savings used for the property, including accrued interest, is enough to make up the Full Retirement Sum.


6.     How is the accrued interest of CPF calculated?

Accrued interest starts in the month that funds from Ordinary Account is withdrawn. Accrued interest ends when either

  1. The withdrawn amount inclusive of accrued interest is repay in full
  2. The property that the funds from Ordinary Account is sold and the sales proceeds is used to repay the withdrawn amount inclusive of accrued interest in full


7.     Can we sell the property without repaying back the withdrawn CPF?


The seller’s lawyer will distribute the sales proceeds in the following order:

  1. Repay all outstanding mortgage loan
  2. Repay withdrawn CPF and accrued interest up to the point of selling the property
  3. Distribute the net proceeds after mortgage loan and CPF to the seller


8.     What happen if the sales proceeds could not cover the withdrawn CPF and accrued interest?


  1. Top up with funds from other source, or
  2. Seek waiver from CPF Board. CPF Board reviews these appeals on a case by case basis.

9.     How does CPF grants works?

CPF grants makes the purchase of HDB flats more affordable.

When a HDB is sold, sales proceeds will need to be used to repay these grants plus accrued interest to CPF Board before net proceeds is distributed to sellers.


When buying a property in Singapore, utilizing CPF funds to finance your purchase, especially through a HDB concessionary housing loan, becomes a common strategy for many. However, it’s crucial to understand that the amount of CPF monies drawn from your CPF OA savings for this purpose, plus accrued interest, forms the total accrued interest owed that you’ll need to refund back into your CPF upon selling your current property. This ensures that your CPF OA interest earnings potential is maintained, safeguarding your future financial security. The concept of paying back your CPF, including the loan amount and the accrued interest, underscores the importance of considering the long-term implications on your CPF OA savings when making property investment decisions. Therefore, understanding the dynamics of CPF funds to finance your home, and the need to refund these amounts plus accrued interest, is essential for anyone looking to navigate the property market effectively.

Singapore couple receiving key to their new property after paying back accrued interest to cpf OA

In summary, understanding CPF accrued interest is pivotal when buying or selling property in Singapore. This interest, which your CPF OA account would have earned at the current ordinary account interest rate of 2.5% per annum, affects both the refund to your CPF account when you sell your HDB flat or private residence and the net cash proceeds you pocket. Whether you’re utilizing CPF funds to cover your housing loan or exploring housing grants, being aware of how CPF accrued interest works ensures that you can make informed decisions. So, before you dive into using your CPF to buy a home or when you’re gearing up to sell your property, take a moment to consider how CPF accrued interest will shape your financial landscape in the realm of property transactions in Singapore.

To explore your property options in Singapore with a detailed consultation or to address any concerns you may have about buying or selling, don’t hesitate to reach out to Jack Tan, a seasoned Singapore real estate agent who is renowed in District 19 & 20 for selling property in the Ang Mo Kio, Hougang, Punggol and Tampines region in relatively short amount of time. Contact Jack today and take the first step towards making informed decisions in your property journey.

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