Can I afford that 4-room BTO flat?

02 Jun 2016 

Can I afford that 4room BTO flat.png

Calvin and his fiancée have a combined monthly income of $4,200. Their combined monthly Ordinary Account (OA) contributions from their employer and self is $966 (23% x $4200).


Weighing the pros and cons, they decided on a 4-room flat in a non-mature estate. As their combined monthly income is also less than $8,000, they are eligible for the Special CPF Housing Grant (SHG) and Additional CPF Housing Grant (AHG).


Based on their combined income, they will receive $10,000 under SHG and $40,000 under AHG. This will help them reduce their monthly instalments from $1,225 to $998. With the reduced monthly instalments, they will only need to fork out $32 in cash if they exhaust their monthly contribution to their OA to pay for their flat.


Food for thought

If Calvin and his fiancée decide to use only 80% of their OA contributions to pay their monthly instalments and save 20% of it (which works out to about $159 - $193/month), it would go a long way to securing their retirement as it would accumulate to more than $75,000* in their OA over 25 years!


Calvin & Fiancée's age

Monthly OA contributions

(from employer and self)

20% of OA savings/month Accumulated OA Savings Total Interest earned
35 and below


(23% x $4,200)



[$193.20/month x 10 years]

Above 35 – 45


(21% x $4,200)



[$176.40/month x 10 years]

Above 45 – 50


(19% x $4,200)



[$159.60/month x 5 years]


Total: $75,370.47


*Accumulated OA savings is based on 20% of Calvin and his fiancée's OA contributions based on the different age bands.

Total interest earned is derived based on the total accumulated OA savings + interest earned in the period prior.

Eg: Total interest earned from 35 – 45 is compounded based on accumulated OA savings before 35 + total interest earned before 35 + accumulated OA savings 35-45.

The interest earned on OA savings is 2.5% interest per annum and compounded annually.

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