Is the HDB Optional Component Scheme Really Worth It?

Home ownership is a goal for many Singaporeans, and the HDB Optional Component Scheme (OCS) was introduced to help buyers achieve that dream.

The OCS allows buyers to use their Central Provident Fund (CPF) savings to purchase additional components such as air-conditioners, wardrobes, and kitchen cabinets. But is the HDB OCS really worth it?

This article will evaluate the pros and cons of the OCS, and present an objective conclusion of whether the scheme is worth considering.

Weighing the advantages and disadvantages of the OCS, this article will provide readers with an informed opinion on the matter.

Advantages of the HDB OCS

The HDB OCS allows Singaporeans to use their CPF savings to purchase additional components in their new or resale HDB flat.

In other words, you do not have to pay for these items upfront.

This can help you save up to $10,000 in down payment, as well as speed up your mortgage approval by 6 months.

The OCS is a great way to increase the value of your home, as well as make it more comfortable with the additional features.

Here are some of the advantages of the HDB OCS.

Speed up your mortgage approval process

The HDB OCS allows you to use your CPF savings to purchase additional components such as wardrobes, kitchen cabinets, and air-conditioners. This can help you to speed up your mortgage approval process by up to 6 months.

Worth more when you sell your home

If you sell your home in the future, the additional components that come with the HDB OCS are likely worth more than the amount of CPF savings you put in. In other words, the HDB OCS can help you to increase the value of your home.

Disadvantages of the HDB OCS

While the HDB OCS can help you save up to $10,000 in down payment, as well as speed up your mortgage approval process by 6 months, it is important to have an objective view of the disadvantages as well.

Higher chance of defaulting on your mortgage

If you are unable to pay off your mortgage, the lender will take ownership of your home. There is a chance that your home will be repossessed due to defaulting on your mortgage. This can affect your financial standing and your future plans.

Higher chance of being sued for defamatory comments

If you are sued for defamation and are unable to pay, you could be forced to sell all your assets, including your home.

Financial considerations for the HDB OCS

The amount of savings required to purchase the additional components through the HDB OCS is dependent on the type of home you are buying.

In order to be eligible for the OCS, your gross monthly household income must be $11,000 or less.

The CPF savings required for the OCS will be deducted from your Ordinary Account, which is the main retirement account for Singaporeans. Therefore, you will have to wait until you hit the age of 65 to withdraw the savings.

Alternatives to the OCS

Although the HDB OCS is a helpful scheme for new home owners, there are other options you can consider.

Down payment assistance

This is an assistance scheme offered by the Singapore government to help Singaporeans with their down payment. You can apply for this scheme on the Singapore government website.

Personal Loan

If you can get a personal loan with a low interest rate, you can use this money for your down payment. Discover 24 hour loan in Singapore.

Seller financing

If you purchase a resale flat, you can consider asking the seller for seller financing. This is when the seller extends a loan to you and allows you to make repayments directly to them.

Conclusion – Is the OCS worth it?

The HDB OCS allows Singaporeans to use their CPF savings to purchase additional components in their new or resale HDB flat. In other words, you do not have to pay for these items upfront.

The OCS is a great way to increase the value of your home, as well as make it more comfortable with the additional features.

The HDB OCS is certainly a helpful scheme for new home owners, but it does have its downsides.

The OCS can help you save up to $10,000 in down payment, as well as speed up your mortgage approval process by 6 months.

There is a chance that the additional components that come with the OCS are worth more than the amount of CPF savings you put in. In other words, the HDB OCS can help you to increase the value of your home.