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You have CPF and cash.
Which one should pay for the flat?
Every dollar of CPF you put into your home comes back out of the sale price one day — with 2.5% interest attached. This works out exactly how much, what you walk away with, and whether leaving your OA alone would have left you better off.
The short answer
Does your cash earn more than 2.5% outside CPF? If yes, pay with CPF and keep the cash working. If no, pay with cash and let your OA compound. Everything else on this page is detail — and the detail that matters most is liquidity.
When you take money out of your OA for a flat, CPF keeps a running tally of the interest it would have earned. That is the accrued interest. It compounds at 2.5% for as long as you own the place.
The number gets large — $200,000 held for 25 years builds about $173,000 of it. But every cent goes back into your own CPF. Nobody takes it. You are repaying yourself.
Sale proceeds pay off the loan first. What is left goes to CPF until the refund is met, and only then does anything reach your bank account.
If the flat sold at market value and the proceeds fall short, you are not asked to top up the gap — but you walk away with no cash from the sale. Check that before you commit, not after.
Cash you sink into the flat is gone until you sell. CPF you keep is locked too, but locked while earning 2.5%.
The honest case for paying with CPF is not that it earns more — it is that it leaves cash in your hand for a job loss, a medical bill, or a parent who needs help.
From 55, a CPF refund first tops up your Retirement Account to the Full Retirement Sum before any of it reaches your OA.
Money in the RA goes to CPF LIFE and cannot be taken out as cash. If you were counting on the sale to fund the next move, put your age in before you plan around it.
What the gap looks like over time
| Years held | CPF used | Accrued interest | Refund due | Cash route ahead by |
|---|---|---|---|---|
| 5 years | $150,000 | $13,700 | $163,700 | $4,600 |
| 10 years | $240,000 | $41,300 | $281,300 | $14,100 |
| 15 years | $330,000 | $84,500 | $414,500 | $29,700 |
| 20 years | $420,000 | $145,300 | $565,300 | $52,600 |
| 25 years | $510,000 | $226,300 | $736,300 | $84,300 |
Assumes $60,000 from CPF up front plus $1,500 a month, the OA at 2.5%, and cash that would otherwise earn 1.7%. Lift the cash rate above 2.5% and the last column flips to CPF's side. Your CPF property withdrawal statement has your exact figures.
Common questions
Is it better to pay with CPF or with cash?
It depends on what your cash would earn outside CPF. The OA pays a guaranteed 2.5%. If your cash earns more, paying with CPF leaves you ahead. If it earns less, paying with cash and leaving the OA untouched leaves you ahead. The trade-off is liquidity.
Does accrued interest include the extra 1% CPF pays?
No. The extra interest on the first $60,000 of combined balances sits outside this calculation. Accrued interest is worked out at the plain OA rate.
Can I stop the accrued interest from growing?
Only by refunding the money voluntarily. You can make a cash refund to your OA at any time, which stops further accrual on the amount you return. Some owners do this in the years before a planned sale.
I used CPF for stamp duty. Does that accrue too?
Yes. Any OA money used for the property — downpayment, stamp duty, legal fees, monthly instalments — goes into the same tally.
What if I buy another flat straight after?
The refund sits in your OA and can be used again for the next property, subject to the usual limits. It is not stranded.
Is this official CPF advice?
No. This is an independent tool that applies the published rules and rates. Check your own figures against your CPF statement and cpf.gov.sg before you act on them.