Election season has kicked into high gear with many “hot-potato” topics such as housing (HDB) and of course CPF taking centre stage. My stand is that I don’t blindly support any party in particular. May the best (wo)man/(wo)men win. Okay, moving on.

I thought that now would be a perfect time of sharing my experience with issues close to many people’s hearts – HDB and CPF. A personal story would perhaps resonate very strongly with you. I, for one, loves a personal story and these days, I find myself enjoying non-finance posts from bloggers more and more.

Weird huh?

In The Beginning

Upon graduation, the gift that I got was a lovely $20,000 education loan to be repaid immediately. Unlike luckier folks who borrowed against parents’ CPF account, mine was a bank loan and ridiculous interest kicked in immediately upon graduation – dammit.

For the first year or two of my working life, all my spare cash went into repaying the loan. I think I managed to repay my loan under two years – not the best but still a decent effort from me, I guess.

The obvious side-effect of total dedication to debt repayment was pretty much zero progress in every other financial aspects of my life. Next to zero savings with little insurance coverage, I was fully banking on youth to carry me through. Crap – looking back I really wished I had a budgeting software for better planning.

Thankfully, my wife and I were pretty lucky/rational folks – less than a year after graduation, my wife (then-girlfriend-status) and I applied for our HDB apartment and got it at our first try. We didn’t go for a fanciful DBSS or an expensive resale, or anything like that. No money mah.

Wait a minute – before you diss me for being a hopeless SG guy, to set the record straight I did follow up with a stunning overseas proposal that my wife will never forget.


With practically zero bucks in my bank account, what we applied for was a Standard BTO located at Punggol where my street address invokes images of a countryside cottage. *laughs*

Out of 494 all-4-room units, our assigned number was 400+ but somehow, we still managed to snag ourselves a 15-floor unit which provided plenty of natural light. Our apartment wasn’t even a premium HDB BTO project, which turned out to be a blessing in disguise since it cost us a more manageable $236,900 and we pretty much ripped apart the entire interior of the apartment.



HDB Staggered Downpayment Scheme

If you are a couple who have booked a new 2, 3, 4 or 5-room flat under construction in any of HDB’s sales exercises, you can make the down-payment for your flat purchase in two stages. To qualify for the scheme, you and your partner must be first-time applicants; and your flat application is submitted on or before you or your partner’s 30th birthday.

We passed the eligibility check and since we are taking the 2.6% HDB loan, our combined CPF was just enough to pay for the 5.0% (instead of 10.0%) down-payment of the purchase price of the flat.

Caught a lucky break there! So far so good, zero out-of-pocket expenses except the S$2,000 option fee that will be reimbursed.

Keys Collection

HDB construction back then was really fast with no hiccups I think. The project completed in about three years – too little time to amass much funds in our CPF accounts and it was wiped out during keys collection.

After wiping out our CPF ordinary accounts, the remaning HDB mortgage loan granted was for $169,200 @ 2.6%. As I have written on it before, I took the maximum loan period for reasons of my own. Back then, it was actually possible to get a 30-year loan, which works out for a monthly repayment of $680 (or $340 each) from our CPF ordinary account. A quick calculation showed that $20,000 can actually fund 5-years worth of repayment!

Our HDB apartment is thus 100% funded from our CPF ordinary account. With an incredibly low monthly repayment of $340 per pax, my CPF ordinary account now has the opportunity to grow. While doing so, it (first $20,000) is earning an interest rate of 3.5% which is higher than my HDB loan rate of 2.6%. Woohoo!

Five Years Later ..

Many people have asked me when I stretched out my HDB loan when I could have paid it off in 10 years or even less. My question is, why not? My CPF ordinary account is now back in the 5-figures range, a substantial amount that I can choose to use if the market continues heading south.

It has been 7 years since I’ve applied for my HDB apartment, and almost 5 years since I’ve collected the keys. Just a few weeks back, I got an SMS from SRX that a 2nd-floor unit sold for $400,000 – not sure how accurate it is but it is roughly inline with Punggol 4-room resale prices.

HDB Median Resale Prices 2015

Using median resale prices as a guide, it looks like my humble HDB apartment that used to be located in the middle of nowhere has appreciated by nearly $200,000 in less than 7 years. Yes, the same HDB apartment that has been funded with zero out-of-pocket cash.

With the upcoming developments in Punggol, it looks like the value of my home is going skywards. After Waterway Point Mall opens next year, it will be followed by SAFRA Punggol, Punggol Recreational Sports Centre and the latest being the new generation neighbourhood centre in Oasis Terraces (I can see the construction daily from my lift lobby) – all of which are between 5-15 minutes walk from my home.



Parting Thoughts

To be honest, I think I was really lucky that using CPF to purchase my first home worked out for me. The fact that my wife and I knew what we wanted, what we could afford and being realistic about our situation helped a lot.

At the end of the day, I am now a home owner with a decent sum in my CPF ordinary account. I’m cool with that – hands down the best investment I’ve ever made.