Property investment;

CPF accrued interest may lead to HDB negative sale?

In Singapore, many people use their CPF Ordinary Account (OA) savings to pay for their property loan instalments. Fundamentally, there is nothing wrong with this approach. I have been doing this since I bought my first property in 2010. Then again, it is important to be mindful of the amount of CPF accrued interest because it may lead to negative sale when you disposed your property.

Due to the HDB lease decay issue, the prospect of facing HDB negative sale is very real for some HDB owners in recent years. This is especially so for those who owned ageing HDB flats. What is HDB negative sale and how does CPF accrued interest play a part in it? In this article, I will explain why it is important to factor in the CPF accrued interest when you buy and sell properties.

CPF accrued interest

CPF accrued interest and its dark side

CPF’s rule is that whatever amount of CPF savings you take out for housing or education purposes, you must refund the amount with compound interest. The rationale is that our CPF savings is primarily meant to fund our retirement needs. This is akin to borrowing money from your own retirement fund and paying back yourself with interest. The accumulated interest is CPF accrued interest.

And what is exactly negative an HDB sale? It means that after you sold your HDB flat, the resale price is sufficient to pay off the outstanding HDB or bank loan but not enough to fully refund the CPF principal amount plus the CPF accrued interest. In this situation, besides having no cash proceeds from the transaction, you may even require to top up the shortfall in cash to your CPF account if your property is sold below market value.


According to CPF rule, there is also a difference for those owners who bought HDB flats with HDB loans and bank loans.

For HDB flats bought with HDB loans

The sale proceeds (including the option monies) will [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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4 thoughts on “CPF accrued interest may lead to HDB negative sale?

  • Actually the majority of Singaporeans who buy HDB never move house subsequently….

  • Hi Sinkie,

    Actually, I am not too sure what you said is true…but well, I guess its better to be aware of how the CPF accrued interest works.


  • Its true. Currently in the process of buying my first resale apartment and this concept doesn’t make complete sense to me. I am no expert, but they seem to make the assumption that property pricing will rise perpetually.

  • The HDB lease decay has definitely has come to play more commonly these days when talking about CPF accrued interest.

    People were taught to calculate their homes are appreciating asset because the government never address said so and never addressed what happens when the 99 years lease ends.

    They always think that the increase in valuation will be able to offset the accruing interest.

    The idea that Singaporeans who buy HDBs generally don’t move houses is something I’ve been thinking about often as well. But I think the idea doesn’t hold true. If you’ve looked at URA’s data, you would see a good number of Singaporeans upgrading or even downsizing.

    Gerald, great article btw. I’ve shared this to Soho and tagged the topic.

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