Equity Contribution for Residential Mortgage
Dear Esteemed Customer,
We are happy to bring to your attention that the National Pension Commission (PenCom) in line with section 89 (2) of the Pension Reform Act (PRA) 2014 has approved the Guidelines for access to RSA balance as equity contribution for residential mortgage.
With this approval, RSA holders who meet the minimum criteria have the opportunity to utilize a maximum of 25% of their RSA balances as equity contributions for residential mortgage. This development brings home ownership closer to RSA holders under the Contributory Pension Scheme (CPS) and Micro Pension Plan (MPP).
Authorised Limit
Irrespective of the percentage of equity contribution required by the Mortgage Lender, the maximum amount to be applied as equity contribution for residential mortgage shall be 25% of the total RSA balance as at the date of application.
Where the value of 25% of RSA balance is more than the required equity contribution, the RSA holder can only access an amount equivalent to the equity contribution required by the Mortgage Lender.
Where the value of 25% of the RSA is lower than the equity contribution required by the Mortgage Lender, the RSA holder shall deposit the difference with the Mortgage Lender before 25% of his/her RSA balance can be applied as equity contribution.
Eligibility Criteria
The RSA of the applicant shall have both employer and employee's mandatory contributions for a cumulative minimum period of 60 months prior to the application for the RSA holder to access his/her RSA balance for the purpose of equity contribution for residential mortgage.
The applicant may utilize the contingent portion of his/her Voluntary Contribution (VC) for equity contribution, in line with the Voluntary Contribution Guidelines under the CPS, after meeting above provision.
According to the Guidelines released by PenCom, RSA holders that have less than 3 years to retirement shall not be eligible to use a portion of their RSA balances as equity contribution for residential mortgage.