Matthiaspeaks

Just done our papers and collected our keys for our BTO flat this week. Here's our findings:

1. CPF will be wiped out 2 weeks later after key collection

2. Loan period starts on your key collection date

3. But your first CPF deduction will only commence 2 months later (means more interest to pay since principle amount remains undeducted for 2 months). I think CPF is trying to build create some buffer such that the CPF OA account has some money 2 months later after the wipe out.

4. If one wants to do a partial captial repayment (means to pay off some of your HDB debt in addition to your regular loan repayments to cut down on the total interest incurred), the minimum amount is $5000 and I had just learnt from the HDB website that the date will be one month later upon your application.

Hope this helps and wish all of you who are taking part in the year 2016's last launch of 10 000 BTO flats and Sales of Balance flat the best of luck!

Just as I was about to touch on this (since our BTO flat is coming to completion really soon and we are getting the HDB loan), Bank of China (BOC) had dropped a bomb as one of the best options to justify the CPF wipeout has became harder to achieve.

But before we continue, let's refresh our memory on the current CPF interest rate below. Based on the interest, one will need to decide whether if they put their CPF into better use or just use it to pay for new flat. And the easiest choice is simply to justify the wipe out is to ensure that you keep a certain amount of your savings in a place that generates more returns (or interest) than CPF.



And now let's look into BOC's Smart Saver savings account. Basically, this is one of the savings program which is gaining popularity in Singapore (which I believe that had led to the bad news which you will be reading later).

It is a good trend since savers can enjoy higher interest rate by trying to fulfil certain monthly criteria set by the bank such as crediting one's salary, spending a specific minimum amount using the bank's credit cards and paying bills. And for BOC's Smart Saver, you can actually beat CPF's interest rate if you hit their criteria.



However, from this December onward, one will not be able to hit the maximum 3.55% p.a. interest (which is more than the 3.5% p.a. interest which CPF is offering for the first $20 000 in your OA account) that easily anymore unless you are able to bank in a salary of at least $6000 cash and spent $1500 on your BOC credit card bills every month.

This is actually three times of the existing requirement below.



You may find out more about the BOCs Smart Saver revised interest rates in this link.


Since the revised BOC's Smart Saver's interest rates is no longer competitive against CPF and the flat is going to be completed soon, it seems that we will need to decide quickly on whether to use up all the CPF or to keep some in the OA to earn better interest for retirement.


As the banks are getting more and more competitive and are launching similar savings accounts, let's hope that we will be able to find one that is able to match up to CPF's interest with no lock down periods!

But for those couples that still have some time before the BTO's completion date, hope this post helps and good luck!



PS: If anyone has any alternative options to share, feel free to comment!





1st picture taken from: https://www.cpf.gov.sg/members/aboutus/about-us-info/cpf-interest-rates on the date of post

2nd & 3rd pictures taken from: http://www.bankofchina.com/sg/pbservice/pb1/201510/t20151023_5857863.html on the date of post