"MY MOTHER AND I CO-OWN A FLAT WHICH I HAVE BEEN PAYING FOR WITH MONTHLY CPF CONTRIBUTIONS.
HOWEVER, MY FIANCE AND I INTEND TO APPLY FOR A BUILD-TO-ORDER (BTO) FLAT TOGETHER. MY MOTHER DOESN’T HAVE ENOUGH CASH, FUNDS IN HER CPF ACCOUNT, NOR A JOB TO SECURE A BANK LOAN TO BUY OVER MY SHARE.
CAN I REMOVE MY NAME FROM OUR FLAT BUT CONTINUE PAYING FOR BOTH FLATS WITH MY CPF?"
Your filial piety is admirable but, unfortunately, no. On HDB's website, it is stated that "if your child is getting married and moving out, we will determine your eligibility to retain the flat alone, based on the merits of each case". Let's assume your mum is eligible. CPF's and HDB's rules require you to be a co-owner in order to utilise your CPF funds to pay for a flat.
Low Po-Yu, a senior marketing director at ERA explains: "If you bought your flat with a parent, you must remove your name in order to buy your matrimonial home with your spouse. Technically, your mum has to sustain the loan. However, I've heard of cases where the mum is officially the owner but the financing is done by the children."
Do note that when you remove your name from the current flat and your mum buys over your share, you can't just waive off the CPF contributions that you have paid thus far. (See also: Getting your HDB flat? You don't have to use all of your CPF now)
She has to return the amount with interest, to your Ordinary Account within six months of you collecting the keys to your new BTO flat.
This often proves too heavy a financial burden on the ageing parent. One of Po's clients who was paying for the family flat she co-owned with her parents, applied for a BTO flat with her fiance. As her retired parents could not buy her out nor sustain the loan, they had no choice but to sell the family flat. The parents had to buy a much cheaper two-room BTO Flexi flat with a 30-year lease. "This is another option that those stuck in the same situation can consider," says Po.
If your mum really wants to keep the flat, an alternative is to take a personal loan from the bank or from relatives to "repay" your CPF money, though many Singaporeans will find this hard to swallow. Imagine paying interest on a personal loan, in order to put the money back into your own CPF account!
On the plus side, if you manage to raise the funds for your mum to buy you out, she can stay with you in your BTO flat, while you sublet her flat for rental income — provided your spouse is okay with the idea, of course. This helps you cut your losses, while you wait for capital appreciation.
This article was originally published on Home & Decor Singapore.