Average Income HDB owners Buy 2 Condos WITHOUT TOUCHING THEIR SAVINGS? Part 1

Last updated on March 31st, 2018 at 11:26 pm

I chanced upon a Facebook advertisement from a property agent that really caught my attention. It read “Average income HDB owners move into a condo WITHOUT TOUCHING THEIR SAVINGS”. He sold himself to be a “wealth mentor” and I must admit that the advertisement was catchy. After all, most of us living in a HDB flat aspire to live in a condominium someday! I hastily read the webpage to find out about the method but stopped short of signing up with him. This post is to illustrate some of my conclusions of how it works…

If you bought a BTO (built to order HDB) before year 2010, chances are that your house has appreciated in value because of the strong upward trend in property prices for the last 5-10years. Assuming that the BTO was bought at $300,000 many years back, perhaps it can be sold off now at $500,000 on the open market.

So would you be able to take out $200,000 in cash after selling?

The answer is not exactly yes but you will have quite a lot of capital on hand. Attached is a short extract addressing How much do I need to refund to my CPF upon the sale of my HDB flat?” from CPF website.

UnknownFor HDB flats Bought with HDB Concessionary Loan, you will firstly need to settle

  1. Outstanding loan
  2. HDB resale levy (if any)
  3. The principal CPF amount (P) which you have withdrawn for the HDB flat
  4. The accrued interest (I) which you would have earned if the savings were not taken out from your CPF account

Any balance housing refunds will be paid to you in cash.

If you sold your HDB, the $500,000 will firstly pay off the outstanding loan. Assuming that the remaining loan is at $175,000, that will leave you with $325,000 remaining. Next, lets assume that you have used CPFOA to pay $150,000 of your loan over these years. The next step is to return that $150,000 to CPFOA plus the accrued interest (which we assume to be $25,000 in our example).

That means a total of $175,000 will be returned to your CPFOA! The remaining house proceeds will be refunded to you IN CASH. That works out to be a whopping $150,000 which is quite a nice sight to see in your bank account!


So will you be able to buy 2 condos with this money? To be continued….

  • Image from source: http://2dopeboyz.com/2015/07/29/ice-dube-dr-dre-new-album-interview and http://business.asiaone.com/news/lower-expense-ratio-caps-mooted-cpf-investment-scheme-funds

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The Astute Parent

A parent who has a sharp acumen on sieving through 'alien' financial jargon to dish out bite size financial tips from a parent's perspective.

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