RES exam question on Financing: Mr Lim, 48, sells his condominium at its market value of $1,500,000
Mr Lim, 48, sells his condominium at its market value of $1,500,000. He owes the bank $700,000, and the CPF he used with accrued interest comes to $250,000. His salesperson walks him through the completion account. (i) After the loan and the CPF refund are paid, he receives $550,000 in cash. (ii) Because he is 48, the $250,000 refund is paid into his Retirement Account. (iii) Had the price not covered the CPF refund, he need not top up that shortfall in cash, as he sold at market value. (iv) Had the price not covered the loan, the CPF Board would absorb the bank's shortfall as well. Which of the statements above is/are correct?
- A(i), (ii) and (iii) only
- B(iii) and (iv) only
- C(i) only
- D(i) and (iii) only
Show answer & explanation
Answer
D. (i) and (iii) only
Explanation
Answer: (i) and (iii) only. Proceeds clear the loan and the CPF refund, and only the CPF shortfall is waived on a market-value sale.(i) True. The loan and the CPF refund come off the price, leaving $550,000.(iii) True. A CPF refund shortfall need not be topped up in cash if the property is sold at market value.Working:1. $1,500,000 - $700,000 = $800,000.2. $800,000 - $250,000 = $550,000.Rule: Sale proceeds pay off the outstanding housing loan and refund the CPF principal and accrued interest. Below 55 the refund goes to the OA; from 55 it first tops up the Retirement Account.Source: CPF Board, CPF refund when selling or transferring property, cpf.gov.sg, read 1 Oct 2026
Why the other options are wrong
- (ii) False. Below 55 the refund goes to the Ordinary Account, so at 48 it goes to his OA.
- (iv) False. The CPF concession covers only the CPF refund; a shortfall on the bank loan remains his personal debt.
Study the concept behind this question: Property Financing in Singapore: LTV, TDSR & MSR
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