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How to stop accrued interest we owe (CPF) from growing?

Thursday, September 17, 2015

Added 30 Jan 17:




    I am not selling my property. Can I make voluntary refund on the housing amount withdrawn? If yes, how do I go about doing it?



    You can refund the following amount via a cheque/cashier's order to the Board:

    a) Full principal amount

    b) Partial principal amount

    c) Full principal amount and full accrued interest

    d) Full accrued interest
    (You can only refund the accrued interest after you have refunded the full principal amount.)

    Please complete the Form HSD/VR 

    Updated Form:

    HSD/VR (2017)

    and prepare a cheque/cashier's order made payable to "CPF Board". On the reverse side of the cheque/cashier's order, please write your name, CPF Account No. and the property address. Mail both the form and the cheque/cashier's order, before 20th of the month if you wish to earn interest on the refunded amount from the following month, to:

    Central Provident Fund Board 
    Housing Schemes Department 
    238B Thomson Road
    #08-00 Tower B Novena Square
    Singapore 307685

    Alternatively, you can deposit the cheque/cashier's order and this form at any CPF service centres.

    The refund will be credited to your CPF account(s) within five working days from the receipt of your cheque/cashier's order (subject to cheque/cashier's order clearance).

    If you wish to use your CPF savings to service the outstanding housing loan after making the full cash refund, you will need to submit a fresh application, "Application to Use CPF Savings to Purchase Residential Property" to the Board through your lawyers. You will incur legal costs in the process as we need to lodge a new CPF charge on the Property to secure the refund of new CPF savings used for the Property before we allow your CPF savings to be withdrawn for the Property.

One of the things I have blogged about is how in using our CPF-OA money to purchase a property, we must be aware of the opportunity cost that comes with the decision. 

CPF money is meant to help fund our retirement. Our CPF money also enjoys relatively attractive interest rates from the government.

In the event that we use our CPF-OA money to purchase a property, we are losing out on interest payments by the government. Also, in line with the idea that our CPF money should grow for it to be a more meaningful source of retirement funding, we would have to pay ourselves interest for the CPF money we have utilised in the event that we sell the property with a capital gain.

Having understood this, a reader wrote and asked if we could voluntarily return the money we used from our CPF-OA in the purchase of our homes and here is the reply from the CPF Board:

You can refund the CPF savings that you have used for your HDB flat without selling the flat.

If you intend to make the voluntary refund, you can refund the following:

a) full principal amount withdrawn towards the property and accrued interest; or
b) full principal amount withdrawn; or
c) part of the principal amount withdrawn

With your SingPass, please check the Principal Amount used plus the Accrued Interest if you would like to proceed. The steps are as follows:

1. Logon to CPF website and click on "Login Here ---à "

2. Key your SingPass ID and password

3. You will now see your CPF statement and a column of options on the left panel of the screen

4. Click on "My Statement". Scroll down to select "Section C" - "Net Amount Used & Amount Available"

5. Click on "Property >>"

Please note that you will not be able to apply for a refund of the monies once it is credited as the voluntary refund is irrevocable. 

However, the credited monies in your Ordinary Account can be used under the various CPF Schemes.

If it is a full voluntary refund i.e. full principal amount used and the accrued interest, your monthly instalment and the Home Protection Scheme cover (if any) will be terminated and the unused premium will be refunded to your Ordinary Account.

If you would like to make the voluntary refund, please complete the Form HSD/VR and let us have your cashier’s order or cheque made payable to ‘Central Provident Fund Board’  before 20th of the month (e.g. before 20 September, before 20 October and so on). 

On the reverse side of the cashier’s order/cheque, please indicate your name, NRIC number and property address.

Please send your cashier’s order/cheque together with the HSD/VR Form to:

Central Provident Fund Board     
Public Housing Section
79 Robinson Road
CPF Building
Singapore 068897

The refund will be credited to your CPF Ordinary Account within five working days from the receipt of your cashier’s order/cheque.

I would be glad to assist if you require any clarification on the Public Housing Scheme. Alternatively, you may call us on 1800-2271188 
(Monday to Friday 8.00 am - 5.30 pm).

Coincidentally, a friend also did this recently after we had a chat on the matter. He is quite pleased that the government has once again assumed a greater responsibility for helping him grow his CPF savings.

Please note that I am not suggesting that everyone does this but I feel that for people who are in their 40s or early 50s, who might have excess cash and who are somewhat risk averse could consider doing this to build bigger retirement nest eggs. 

In fact, they could also consider doing an OA to SA transfer if they should do this in order to enjoy a higher interest rate on their CPF savings if their CPF-SA has yet to hit the Minimum Sum (now called the Full Retirement Sum).

Why did I mention people in their 40s or early 50s? Well, apart from the fact that they are more likely to have some excess cash than people in their 20s or 30s, they are also closer to the number 55. 

At age 55, that is when we are allowed to withdraw a lump sum payment from our CPF in excess of the prevailing minimum sum. So, it would be like getting a short to medium term investment grade bond with an attractive coupon for people in their 40s and early 50s. Good deal.

Related posts:
1. How AK amassed money in his OA?

2. Retirement: AK buys a 12 year bond.


Busybody said...


Below are referring to fully paid property?

"If it is a full voluntary refund i.e. full principal amount used and the accrued interest, your monthly instalment and the Home Protection Scheme cover (if any) will be terminated and the unused premium will be refunded to your Ordinary Account."

What if I just make a refund of Net Amount Used (initial 20% used with past months deduction + accrued interest) but keeping my mortgage, feasible?

AK71 said...


The message that I get is that if you do not make a full voluntary refund, then, the monthly instalment will continue.

So, if you want to keep your mortgage intact, make a partial voluntary refund instead.

However, I think you might want to write to the CPF Board and find out, to be sure. :)

AK71 said...

Hi imda,

I accidentally deleted your comment. I was going to click on "publish" but my mouse slipped and clicked on the next button instead. -.-"

Could you comment again? Thanks.

imdna said...

lol...butter fingers.

I was just saying given that the CPF board is prone to change its rules ever so often, one would have to first comfortable with that prospect and only if the amount to VC is but a fraction of one's financial resources in case you are forced to keep in your CPF longer.

And some other stuff that's just more wishful thinking like lowering the payout age to 60 and ridding CPF Life as most of us will lose a chunk of money in the end as the annuity interest goes back to the pool.

KW said...

Hi AK,

My friend (>55 years old and fully paid HDB) digest this option and will like to make a partial refund in Dec and take it out back in Jan. This way, the money will be free again but accrued interest will be lesser. LOL. You think this will work?

AK71 said...

Hi imdna,

Thanks for taking the trouble to comment again. :)

Yes, people who do VCs to their CPF must:

1. Be comfortable mentally and financially that the money is locked away for a long time.

2. Understand what is an annuity and believe that having an annuity is a good thing because CPF Life is an annuity.

AK71 said...

Hi KW,

I have advised my parents to do VCs to their CPF account because most of their VCs will go to their OAs. A small percentage will go to their SAs. They get to enjoy relatively high interest rates and they could withdraw the money whenever they need it because of their age.

Your friend's idea is interesting. I don't see why it shouldn't work but it is best to check with the CPF Board directly. :)

r said...

Dear AK,

Would like to hear your humble talk to yourself session once again.
1) My parents case is already 70+ and they are still having principal loan + accured interest currently with their home now.
- should i chip in to help them clear their principal + accured interest so that they can have some form of money in CPF.

2) I think they are still under the MS scheme and have not opted for the CPF Life (or rather, am not sure whether they are eligible for the CPF life)
- above step 1 will pour money back into their RA so that they can reach the so called FRS and then opt for CPF life?

Thanks AK!

AK71 said...

Hi r,

Once past 55, the accrued interest isn't that important anymore. If they were to sell the flat, they just need to set aside the minimum sum according to their cohort requirement in their RA and all the rest of the money, they can withdraw if they like. :)

If you would like to bolster their CPF savings, you could do a top up of their CPF-RA so that they have a more significant monthly sum to withdraw. Alternatively, you could do a voluntary contribution which would go into their OA, SA and MA. This would allow them to do a lump sum withdrawal (from their OA and SA) any time they like.

Whichever option you choose, they will enjoy higher interest rates for the time the money is in their CPF accounts. 6% for the first $30K ($60K for two parents) is nothing to scoff at. :)

Unknown said...

Hi Ak

What do you mean "Once past 55, the accrued interest isn't that important anymore"?. I thought we need to pay back the accrued interest once we sell the property? Is there any age exemption? I heard that if we do not pledge the property and only sell the property after age 65, then we do not need to pay the accrued interest, is this true?


AK71 said...

Hi JM,

At 55 or older, if you have met your FRS and if you sell your flat, you don't have to pay the accrued interest on the OA savings used to purchase the flat. No point in paying since you can withdraw all the money from your CPF in excess of the FRS by then. :)

AK71 said...

Kok Koon says...
If FRS hit, better to do VC for all 3 accts now (can squeeze abit more into SA) or pay back cpf housing grants with the same amount?

AK says...
If your mandatory contribution from employment hits the CPF annual limit, then, do voluntary refund to OA. I anyhow say de lah. ;p

AK71 said...

Reader says...
I have a hdb loan bleeding off my OA and now I want to repay myself. I am ready to pay the principle but not so sure about the accrued interest part. Do you know whether by repaying the accrued interest, would that accrued interest also start to compound? Ie it is as though I am trying to reset my OA to the situation if I didn’t use it to pay my mortgage in the first place? If so, then paying back becomes a good way to boost OA for those who have been using OA to pay the mortgage.
Thanks for talking to yourself


AK says...
Doing voluntary refund to your CPF OA is a good idea if you want the government to be the one to pay you interest instead of you paying yourself interest. ;p

It doesn't matter if you are paying down the accrued interest first or the principal as they both attract accrued interest!

But I blogged about this before. Principal first. :)

wwwMisterBooncom said...

Hi AK,

Updated Form

Cheers :)

AK71 said...

Hi Wee Boon,

Thanks for this. :)

Just Me said...

Hi AK. Just wanted to update you that a form is not needed anymore.

You can pay it through the CPF website by going to my request and then selecting Make a Housing Refund with Cash. The Payment options are PayNow or eNets.

AK71 said...

Hi Just Me,

Everything is going online at super fast speed thanks to COVID-19.

Thank you for the update. :)

W said...

At 55 or older, if you have met your FRS and if you sell your flat, you don't have to pay the accrued interest on the OA savings used to purchase the flat.

The accrued interest in automatically written off?

AK71 said...

Hi W,

I blogged about this before in reply to another reader.

Unemployed, almost 55 and worried about CPF.

Yv said...

Hi AK, I opted to do just that early this year as I have plucked all the other low-hanging fruits such as CPF top-ups/ transfers etc and was just sitting with excess cash as I am indeed quite risk averse.

My cousin, she's not a big fan of CPF, could not understand why I would want to voluntarily put money in CPF and I had a hard time explaining it to her. Glad this post has kind of "validated" my decision.

AK71 said...

Hi Yv,

Low hanging fruits are the best.

No risk of us falling from height and hurting ourselves. ;p

Unfortunately, it is very hard to convince people who do not trust the CPF that it is an important tool in retirement adequacy planning.

Gambatte! :D

1. A river called CPF and the stubborn horses.
2. Changes to CPF reasonable and necessary.

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