Assumptions for Home Purchase Planner

General

• By accessing the CPF Board website, you acknowledge the following Terms of Use, including this Disclaimer.
• This planner is intended to provide general guidance on housing affordability with results and/or estimates intended for illustrative purposes only. It should not be regarded as advice by CPF Board or used as a substitute for financial advice. Due to the assumptions and computational approach adopted, the results may not necessarily be similar to those provided by HDB/banks. These results and/or estimates are also based on the current assumptions, which are subject to change at any time without notice.

Housing projections:

For users who indicated their intention to take up a housing loan for their flat purchase:

• The purchase budget (rounded up to the nearest dollar) is derived based on the lower of the (a) purchase budget possible with the maximum housing loan and (b) purchase budget possible based on user’s existing capital. 
  • For (a), the planner first computes the estimated maximum loan possible using factors such as mortgage servicing ratio and loan interest rate. The planner then computes the purchase budget using 100/75 of the maximum loan possible, as 75% is the loan-to-value for both HDB loan and bank loan. 
  • For (b), the planner computes the purchase budget based on 4 times the amount of capital that the user and co-owner (if any) have, as the downpayment required for both HDB loan and bank loan is 25%. The amount of existing capital is based on cash savings and existing CPF Ordinary Account balances. If the user indicates the intention to sell his existing flat, any balance sales proceeds and/or any principal CPF amount withdrawn and accrued interest will also be included.
• The loan repayment period is based on the lower of (i) 25 years or (ii) the remaining number of years until the user turns 65 years old. For (ii), if user inputs a co-owner, the average age is used.
• The mortgage servicing ratio (or percentage of gross monthly income that can be afforded to be spent on housing) is 25%. For property financed with bank loan, purchase budget and monthly instalment amount are computed based on 4% interest rate. For property financed with HDB loan, purchase budget is based on 3% interest rate and the monthly instalment amount is computed based on the prevailing HDB housing loan concessionary interest rate of 2.6%.

For users who indicated their intention not to take up a housing loan for their next flat purchase:

• The purchase budget (rounded up to the nearest dollar) is derived based on the user’s and co-owner’s (if any) existing CPF Ordinary Account balances and cash savings. If the user indicates the intention to sell his existing flat,  any balance sales proceeds and/or any principal CPF amount withdrawn and accrued interest will also be included.

Balance sales proceeds

• For users under the age of 55 who indicate that they intend to sell their existing flat, the balance sales proceeds are derived using the selling price of their home less outstanding housing loan, principal CPF amount withdrawn and accrued interest (including co-owner's, if any), resale levy and other expenses.  
• For users above the age of 55 who indicate that they intend to sell their existing flat, the balance sales proceeds are derived using the selling price of their home less outstanding housing loan, the lower of the user’s (i) principal CPF amount withdrawn and accrued interest or (ii) Retirement Account shortfall to the Full Retirement Sum (if user is logged into CPF) or the user’s principal CPF amount withdrawn and accrued interest (if the user is not logged into CPF), co-owner’s principal CPF amount withdrawn and accrued interest (if any), resale levy and other expenses.

Principal CPF amount withdrawn and accrued interest:

• For users and co-owners aged under 55, the planner assumes that their principal CPF amount withdrawn and accrued interest are refunded back to their CPF Ordinary Account, which can be used for their flat.

Others:

• Buyer stamp duty is assessed at 1% of property price for first $180,000; 2% on the next $180,000; 3% on the next $640,000, 4% on the next $500,000, 5% on the next $1,500,000 and 6% thereafter. The planner assumes that CPF will be used to pay the stamp fees wherever possible.
• Legal fees are assumed to be 1.5% of property price. The planner assumes that CPF will be used to pay the legal fees wherever possible.
• CPF housing grant, agents commission, and Home Protection Scheme premium are not included in the planner.
• If user has insufficient CPF Ordinary Account savings, the planner assumes that cash is used to cover the difference.
• The housing results are based on the combined circumstances of the user and co-owner (if any).

Retirement projections

Setting Retirement Goal

• The initial retirement goal selected by you is expressed in today’s dollars.
• An annual 2% inflation rate is applied to your selected retirement goal to compute your payout goal at age 65.
• Based on the assumption that the full savings amount can be committed to CPF LIFE, your savings goal at age 65 is computed by deriving the amount of annuitised savings needed to achieve your payout goal at age 65 through the CPF LIFE Standard Plan.
• In the retirement income guide, retirement lifestyle choices provided are based on expenditure items from the Household Expenditure Survey.

Retirement Projections

• Projections are based on the details you provided under the financial information and housing situation pages. If you do not provide current and accurate information, the projections may not be suitable for your use.
• Projections will start from the current month, and end when you are projected to reach age 65.
• Ordinary Account (OA), Special Account (SA) and/or Retirement Account (RA) balances are projected.
• Initial OA balances used for projections are based on your OA balances after paying your downpayment, buyer stamp duty and legal fees. If you have indicated a co-owner, your OA balances after upfront payments will be pro-rated based on your own and your co-owner’s OA balances as well as the principal CPF amount withdrawn and accrued interest.
• SA balances are used for projections for those aged below 55 at the point of using the planner. The initial SA balances used for projections are based on your latest available SA balances. At age 55, the SA will be closed. SA savings will be transferred to the RA up to the Full Retirement Sum, with excess SA savings transferred to the OA.
• RA balances are used for projections for those aged 55 and above at the point of using the planner. The initial RA balances used are based on your latest available RA balances. If you have indicated to sell your existing property in this planner, the refunded CPF principal amount and accrued interest that is used to meet your Full Retirement Sum will also be added to your latest available RA balances.
• Projections assume that you remain employed throughout the projection period.
  • CPF contribution rates are based on those for private sector employees and government non-pensionable employees across the different age groups.
  • CPF contributions on monthly salary are capped at the prevailing salary ceiling.
  • Annual increments to salary are assumed to be constant at 3% annual growth rate over the projection period, and applied at the end of every December.
• CPF contributions from employment will be added to the projections of CPF savings. For OA contributions, any remaining OA contributions from employment after paying the monthly instalment of the recommended home purchase with HDB loan is used in the projections too. If you have indicated a co-owner, the monthly instalment payable is assumed to be equally divided between you and your co-owner.
• CPF savings are assumed to grow with CPF interest over the projection period.
  • For projection period before age 55, SA balances are assumed to earn 4% interest per annum, while OA balances are assumed to earn 2.5% interest per annum. The first $60,000 (capped at $20,000 for OA) is assumed to earn an extra 1% per annum interest, which is credited to the SA.
  • For projection period after age 55, RA balances are assumed to earn 4% interest per annum, while OA balance are assumed to earn 2.5% interest per annum. The first $30,000 (capped at $20,000 for OA) is assumed to earn an additional 1% interest per annum. These additional interests will be credited to the RA.
  • CPF interest is calculated monthly, but credited and compounded annually at the end of December.
• The projected savings are based on the sum of the OA and RA balances you are projected to have at age 65, capped at the prevailing Enhanced Retirement Sum (ERS) when you are reaching age 65. ERS is set at four times the Basic Retirement Sum, which is assumed to grow at 3.5% per annum.
• Projected payouts are based on the assumption that the projected savings (capped at the ERS) are committed to CPF LIFE, with the payout amount based on the CPF LIFE Standard Plan payout.