Property Views
Posted: Sat Aug 28, 2010 11:04 pm
I must say that for most of the people, property would likely be the biggest investment in our lifetime...I really hope that my kids will have some basic knowledge of property when they grow up...
1. Basic terms used like option fee, cooling period, exercise date, exercise fee, NS facing, etc. What is tax levy? What is additional CPF grant? HDB do conduct resale seminar to educate the public on some basic terms...
2. When to use our HLE (HDB Loan)?
We are allowed to use 2 times of HDB loan for the purchase of HDB flats, of course combined income less than 8K. In my view, most people will use their 1st HLE when they purchase their 1st HDB flat together with CPF grant. So basically left with one last time to be used. If the 2nd flat is only for short term stay (a few years), I would use bank loan. Always use the last HDB loan for the last HDB flat because chances are the repayment period is the most stretched.
3. What happen if we got retrenched?
When buying any flat, in my view, set aside at least 18 months of repayment amount, and park in any other form of investments before HDB drain out all our CPF. In case of any retrenchment to either one party, presume hubby & wife earn about the same pay, the 18 months amount can be transferred back to our OA account, can last for 36 months because the other party is still working. After 36 months, already fulfilled the Minimum Occupation Period, can sell the flat and think of other alternatives.
4. Try to pay more downpayment when purchasing a flat because chances the interest is about half of the loan amount. Thats why for the first few years, most of it will go to the interest. After paying for few years, the principal dun reduce a lot.
5. In my view, if possible, I will stay in a HDB flat as big as I can afford if I am using HDB loan as long as every month I dun need to fork out cash to service the loan. Reason is because I know I will not have a lot of CPF to withdraw at the age of 55, after setting aside the minimum sum, so how to retire? For example, If I stay in a Executive Apartment as compared to 4 room, I will sell my EA and downgrade to 3 room (fully paid), since left with two old folks (we), children married liao. The sales proceeds can be part of our retirement needs, or children education, children housing etc. Seriously our pay will never catch up with the rise in property, so the best way to hedge against inflation is property. If I stay 4 room or smaller flats, the sale proceeds may not be enough for my old age...
6. If we need to sell our flat, please take note to sell before age 55 because after 55, the sales proceeds will become part of our minimum sum. So we may have problems buying the next flat.
7. When using Bank Loan, need to take note of 2 limits, namely valuation limit & withdrawal limit. When these limits are reached, we have to use CASH to service our repayments if CPF can't set aside the minimum cash component required! Imagine have to use cash to service! How many people can tahan? Can find out more from the CPF website for greater details...HDB loan not affected hor...But of course, before both limits reached, we would have sold our flat....Generally most people dun stay in same flat for >20 years nowadays. How soon the limit will reach depends on downpayment, valuation etc.
I read in the forum regarding $1.38 EC at Yishun, my views as follow:
Is it expensive? the apartment area is 2088 sq feet, meaning that psf is around $661 psf. Is it reasonable? My view is quite reasonable! Because mass market condo is selling around $1000 psf now, so EC is around 20-30% cheaper, EC will sell around $600-$700psf now.
But is it reasonable to buy with combined income of 10K? It really dun make sense. If hubby & wife earn 5k each, take home is $8.2k. (income ceiling is 4.5k each.)
Valuation $1.38m
20% downpayment $276,000
Loan abt $1.1m
monthly loan for 30 years 4.4k (using HDB benchmark 2.6% )
bank loan is much lower now, but it's already so low, how low will it go? the next direction is UP UP UP)
nett pay 8.2k
monthly CPF OA combined only ($2070)
cash payable monthly is abt $2330
balance around 6k, must pay for
car abt $1500 (loan, petrol, parking, servicing etc)
insurance whole family $1000
maid $600
parents $500-$1000
Groceries $500
condo maintenance $300
kids enrichment (2kids) $500-$1000
Travelling ???
HP ???
Miscellanous ???
Seriously I think very very tight...
For info, there is another EC which is more expensive? Where? Bishan LOFT.
Based on caveat lodged recently, average selling price is $820 psf although highest is $892 psf. Based on area of 2088 sq feet, the price will be $1.71m for a 6 years resale EC... Imagine that! How to buy with combined income 10K!!!
All the above is only my views, different scenarios will affect differently in terms of decision made...I am not a expert in this field, just a ordinary man in the street...
Thank you for bearing with me for the past 10 mins hor, sometimes I quite lo so...Goodnite!
1. Basic terms used like option fee, cooling period, exercise date, exercise fee, NS facing, etc. What is tax levy? What is additional CPF grant? HDB do conduct resale seminar to educate the public on some basic terms...
2. When to use our HLE (HDB Loan)?
We are allowed to use 2 times of HDB loan for the purchase of HDB flats, of course combined income less than 8K. In my view, most people will use their 1st HLE when they purchase their 1st HDB flat together with CPF grant. So basically left with one last time to be used. If the 2nd flat is only for short term stay (a few years), I would use bank loan. Always use the last HDB loan for the last HDB flat because chances are the repayment period is the most stretched.
3. What happen if we got retrenched?
When buying any flat, in my view, set aside at least 18 months of repayment amount, and park in any other form of investments before HDB drain out all our CPF. In case of any retrenchment to either one party, presume hubby & wife earn about the same pay, the 18 months amount can be transferred back to our OA account, can last for 36 months because the other party is still working. After 36 months, already fulfilled the Minimum Occupation Period, can sell the flat and think of other alternatives.
4. Try to pay more downpayment when purchasing a flat because chances the interest is about half of the loan amount. Thats why for the first few years, most of it will go to the interest. After paying for few years, the principal dun reduce a lot.
5. In my view, if possible, I will stay in a HDB flat as big as I can afford if I am using HDB loan as long as every month I dun need to fork out cash to service the loan. Reason is because I know I will not have a lot of CPF to withdraw at the age of 55, after setting aside the minimum sum, so how to retire? For example, If I stay in a Executive Apartment as compared to 4 room, I will sell my EA and downgrade to 3 room (fully paid), since left with two old folks (we), children married liao. The sales proceeds can be part of our retirement needs, or children education, children housing etc. Seriously our pay will never catch up with the rise in property, so the best way to hedge against inflation is property. If I stay 4 room or smaller flats, the sale proceeds may not be enough for my old age...
6. If we need to sell our flat, please take note to sell before age 55 because after 55, the sales proceeds will become part of our minimum sum. So we may have problems buying the next flat.
7. When using Bank Loan, need to take note of 2 limits, namely valuation limit & withdrawal limit. When these limits are reached, we have to use CASH to service our repayments if CPF can't set aside the minimum cash component required! Imagine have to use cash to service! How many people can tahan? Can find out more from the CPF website for greater details...HDB loan not affected hor...But of course, before both limits reached, we would have sold our flat....Generally most people dun stay in same flat for >20 years nowadays. How soon the limit will reach depends on downpayment, valuation etc.
I read in the forum regarding $1.38 EC at Yishun, my views as follow:
Is it expensive? the apartment area is 2088 sq feet, meaning that psf is around $661 psf. Is it reasonable? My view is quite reasonable! Because mass market condo is selling around $1000 psf now, so EC is around 20-30% cheaper, EC will sell around $600-$700psf now.
But is it reasonable to buy with combined income of 10K? It really dun make sense. If hubby & wife earn 5k each, take home is $8.2k. (income ceiling is 4.5k each.)
Valuation $1.38m
20% downpayment $276,000
Loan abt $1.1m
monthly loan for 30 years 4.4k (using HDB benchmark 2.6% )
bank loan is much lower now, but it's already so low, how low will it go? the next direction is UP UP UP)
nett pay 8.2k
monthly CPF OA combined only ($2070)
cash payable monthly is abt $2330
balance around 6k, must pay for
car abt $1500 (loan, petrol, parking, servicing etc)
insurance whole family $1000
maid $600
parents $500-$1000
Groceries $500
condo maintenance $300
kids enrichment (2kids) $500-$1000
Travelling ???
HP ???
Miscellanous ???
Seriously I think very very tight...
For info, there is another EC which is more expensive? Where? Bishan LOFT.
Based on caveat lodged recently, average selling price is $820 psf although highest is $892 psf. Based on area of 2088 sq feet, the price will be $1.71m for a 6 years resale EC... Imagine that! How to buy with combined income 10K!!!
All the above is only my views, different scenarios will affect differently in terms of decision made...I am not a expert in this field, just a ordinary man in the street...
Thank you for bearing with me for the past 10 mins hor, sometimes I quite lo so...Goodnite!
