CPF Voluntary Housing Refund (VHR): How I’m Using My CPF OA as a “Time Deposit”
If you own a property in Singapore, there’s a good chance that you have used your CPF OA funds to make payments for your property downpayment and the subsequent mortgage payments. Such withdrawals from the CPF OA generates this thing called accrued interest.
As rates fall, is it time to consider doing a CPF Voluntary Housing Refund? I certainly think I’d be doing it for myself very soon, and the way I see it, I’m going to be using my CPF OA as sort of a “time deposit”.
What’s VHR?
Voluntary Housing Refund – or VHR – is the act of returning cash into your CPF OA if you have used OA funds to make payments for your property. When you sell your property, OA funds that were used for your property generate accrued interest, and the withdrawn funds plus accrued interest have to be refunded to your CPF at the point of your property sale.
VHR is essentially bringing forward such a refund.
Why do a VHR – is it because accrued interest is bad?
Accrued interest is possibly one of the most misunderstood things about CPF, and I think its name is probably the reason why. However, I find accrued interest to be a beneficial feature for reasons stated in a much older article and video here.
So the short answer is, no – I’m not considering a VHR because accrued interest is bad, but because interest rates for cash savings have fallen quite a bit, particularly in the past year or so.
Interest rates are becoming less competitive against CPF OA rates
With fuss-free accounts being significantly under 2% p.a. now and even many high-yield accounts struggling to keep above 3% p.a., CPF OA interest rates have now become more appealing.
As a reminder, CPF OA offers 2.5% p.a. interest, which is pretty good given the current interest rate climate.
Personally, I have some spare funds after maxing out a couple of high-yield accounts, so CPF VHR is something I am strongly considering (though not in early July, as we’ll discuss later).
There’s even some bonus interest
Moreover, CPF offers bonus interest for CPF members on their first S$60,000 of CPF savings, with CPF OA capped at S$20,000.
If your CPF OA is already S$20,000 or more or your total CPF savings amount to at least S$60,000, the interest rate you’ll get on your VHR funds is pretty straight forward – it’d be 2.5% p.a. because you have already maxed out your bonus interest.
If you have less than S$20,000 in your CPF OA and also less than S$60,000 in your CPF accounts, you can get bonus interest on top of the 2.5% p.a. rate. up until your CPF OA hits S$20,000, or your CPF accounts hit a total of S$60,000.
The bonus interest for CPF balances under S$60,000 is 1% p.a. for members under 55 years old:
| Age | Extra Interest |
|---|---|
| Below 55 years old | 1% per annum on the first $60,000 (capped at $20,000 for OA) |
| 55 years old and above | 2% per annum on the first $30,000 1% per annum on the next $30,000 (capped at $20,000 for OA) |
In short, the smaller your CPF balances are with CPF, the more you will benefit from a VHR. Note that bonus interest will go towards your SA/RA instead of OA.
Confused? Just use this calculator:
Loss of liquidity… until you sell your property
Of course, whenever you put funds into CPF, you can expect some loss of liquidity in exchange for its interest rates. This is also the case for VHR amounts – the funds become part of your CPF OA savings and have the same restrictions of the account.
But here’s the thing – if you were to sell your property, you would have to refund the CPF funds used to paid for your property and the accrued interest anyway. By making a VHR earlier, you reduce the amount that will need to be refunded from those sale proceeds later.
Economically, I therefore see it as something resembling a CPF “time deposit” with a tenure tied to my property sale. The VHR itself is irrevocable and remains within CPF, but assuming the sale generates sufficient proceeds after repaying the housing loan and other required refunds, the earlier VHR may mean that I receive correspondingly more of the eventual sale proceeds in cash.
And guess who wants to sell his property soon? My CPF OA would hence be a de facto “time deposit” until my apartment is sold.
Do VHR towards the end of each month
The best time to do a VHR is on the final day of each month, provided you are able to do the refund instantly. CPF states that refunds done via PayNow is processed instantly, so there shouldn’t be a problem doing this on the last day of each month.
As rule of thumb, you should always deposit funds into your CPF accounts as late as you can within the month because of how CPF accounts compute interest – whether you credit funds on the first or the last day of the month, the amount will only start earning interest on the following month.
So if you have funds you wish to put into CPF, through VHR or otherwise, try to do it as late as you can in the month so the money can earn interest somewhere else first.
Does VHR amounts get tax relief?
Amounts refunded via CPF VHR do not get tax relief.
For CPF members aged 55 and up
Things are a little bit different for those who are aged 55 and up and have not hit the Full Retirement Sum (FRS) yet. VHR will first flow to your CPF Retirement Account (RA) instead of OA until the FRS is met. Amounts that exceed your FRS will then go towards to CPF OA.
Because of this, such members can actually get more returns on a VHR since CPF RA provides a higher 4% interest rate. At the time of the property sale, the same thing happens – the refund is irrevocable and remains in CPF, but because it reduces the CPF refund required upon sale, you may receive correspondingly more of your net sale proceeds in cash (provided the sale generates sufficient proceeds after the housing loan and other required refunds).
There are a couple more parameters to think about so I will revisit this topic very soon, and hopefully can update the calculator for those who are 55 and up. Stay subscribed for updates.
Please check with CPF before doing anything
Note that this article is not financial advice nor endorsed by CPF and I am only sharing my thoughts about VHR. Since everyone has varying circumstances including property pledge and housing grants, the mechanics might not work the same for you.
Check with CPF to confirm facts before proceeding.
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With interest rates declining, those looking for a safe place to put savings can consider doing a VHR instead, especially if their property sale is on the horizon. While amounts placed in your CPF are generally reserved for the long, the fact that you are simply bringing forward your refund by doing a CPF VHR means that you are giving up liquidity for as long as you take to sell your property.
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Seth Wee was a licensed financial adviser representative from 2009 to 2025, with over 16 years of experience in Singapore’s financial advisory industry.
He started Sethisfy.com in 2019 to share practical insights on credit cards, banking products, and miles strategies, helping readers identify financial products that deliver the best value. Seth has been featured in CNA, Channel 8, Today, and a host of other publications. In 2025, he was also part of a panel at CPF’s Ready For Life festival.
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