How to own a property when my household income is net $4600

[jojo]

Hi orangebelt


I had fully paid my hdb flat is it i can keep my hdb and buy a condo now? An agent said that i can keep hdb for rental n invest in a condo. Is it a good advice?

[financial_guru]

jojo:

Hi orangebelt


I had fully paid my hdb flat is it i can keep my hdb and buy a condo now? An agent said that i can keep hdb for rental n invest in a condo. Is it a good advice?

You referring to me? I'm financial guru :roll:

Can I check whether you have other assets like shares, unit trusts? Property is another asset class you can invest in, but make sure not all yr eggs are in the property basket.

[jojo]

Oop! Financial Guru, Yes, my question is meant for you. :nailbite:


How do we know when is the right time to purchase?
What are things we shld consider before committing an unit? age 43
We have viewed a condo at Pasir Ris and it value $1.04m and is facing west. mthly repayment is 3k basing on 1.02%.

both my hubby n i have shares and unit trusts.
What is the allocation you will allocate in each basket?

[financial_guru]

jojo:

Oop! Financial Guru, Yes, my question is meant for you. :nailbite:


How do we know when is the right time to purchase?
What are things we shld consider before committing an unit? age 43
We have viewed a condo at Pasir Ris and it value $1.04m and is facing west. mthly repayment is 3k basing on 1.02%.

both my hubby n i have shares and unit trusts.
What is the allocation you will allocate in each basket?

What is the term of the loan the bank is offering you? If you're 43, some banks will loan you for max 20 years, since 25 yrs will overshoot retirement age of 65.

Pls don't use 1.02% interest rate, you get these kind of rates for 1st year only. You should assume higher rate of 3% to see if you can afford to pay the loan.
Based on 800K loan, 20 yrs, 3%, yr monthly repayment is over 4k!
I don't think the rental is going to cover yr loan payments!

[dreamrat]

financial_guru, I am 31 this year. My DH is 28.

The flat was purchased on Jan 2010. So, we still have to service it till Jan 2015 before we can buy a 2nd property.

After re-calculating, if I were to re-finance the HDB loan, i.e. using cash of $125k & all the balance in CPF O.A, I would be able to clear the HDB loan by Jan 2015.

1) If it were u, would u be topping up $125k cash?

2) After I repay all the loan in HDB, how much the bank will loan me? 80%? Thanks thanks

3) Additionally, i realised that I have less cash after the cash re-payment... So, I have to start saving again...Hopefully, after another 5 years, I will have more than $100K again...

[jojo]

Hi Financial Guru,


More questions for you:)

Which is better investment if both ppty is 99 y lease? brand new or 20 y o ppty.
Friends told me brand new unit it might not the layout we see in the showflat plus we have to pay a premium price. As for old unit we can have a feel whether we are comfortable plus the facing of the unit. :xedfingers:
What is your thoughts?

[financial_guru]

dreamrat:

financial_guru, I am 31 this year. My DH is 28.

The flat was purchased on Jan 2010. So, we still have to service it till Jan 2015 before we can buy a 2nd property.

After re-calculating, if I were to re-finance the HDB loan, i.e. using cash of $125k & all the balance in CPF O.A, I would be able to clear the HDB loan by Jan 2015.

1) If it were u, would u be topping up $125k cash?

2) After I repay all the loan in HDB, how much the bank will loan me? 80%? Thanks thanks

3) Additionally, i realised that I have less cash after the cash re-payment... So, I have to start saving again...Hopefully, after another 5 years, I will have more than $100K again...

For 1), the answer is it depends. If yr cash investment is getting a higher rate of return than yr HDB loan interest rate of 2.6%, dont pay up the loan too early.

For 2) Yes. Right now its max 80%, though I expect the value could drop lower, depending how khaw boon waan will change the housing rules to further cool the housing market.

For 3) answer is in 1) above.

[financial_guru]

jojo:

Hi Financial Guru,


More questions for you:)

Which is better investment if both ppty is 99 y lease? brand new or 20 y o ppty.
Friends told me brand new unit it might not the layout we see in the showflat plus we have to pay a premium price. As for old unit we can have a feel whether we are comfortable plus the facing of the unit. :xedfingers:
What is your thoughts?

Well, firstly I wouldn't put my money in 99yr leasehold for investment, only to stay in or pass to kids. 99yr leasehold properties can be difficult to sell once the leasing duration goes below 60yrs.

I would not buy a 20yr property. That means there is less than 79 yrs left on the lease. Once the property goes below 60 yrs, the property becomes difficult to sell because of the CPF rules. If you need to sell to cash out, you'll need to find a cash-rich buyer and he will have the advantage to dictate the price you get.
There could be estate maintainance issues also unless you're speculating for en-bloc, which I advise you not to do so. Its like gambling.

[Poonie]

Hi Financial Guru

If gov’t is listening to the grouses of the public prices of brand new hdb will drop. Do you think those still holding hdb should sell at its all time high to cash out and buy a condo now before condo prices go up further. Condo prices might go up further if govt change policy and forbid PRs to buy hdbs resulting in higher demand for condos? What is your opinion on these? Not sure if my analysis is correct.

[financial_guru]

Poonie:

Hi Financial Guru

If gov't is listening to the grouses of the public prices of brand new hdb will drop. Do you think those still holding hdb should sell at its all time high to cash out and buy a condo now before condo prices go up further. Condo prices might go up further if govt change policy and forbid PRs to buy hdbs resulting in higher demand for condos? What is your opinion on these? Not sure if my analysis is correct.

The govt knows they have to engineer a soft landing in the public housing market which is too hot right now.
Personally I don't think they will take the drastic step of disallowing PRs to buy HDB. That will totally collapse the resale market!
PRs will still be allowed to buy HDB flats on resale market.
What I think will happen is:
1) They will relook at the BTO process and application for new HDB flats and increase the supply for the new flats to keep prices affordable.
2) Increase CPF housing grant for 1st time buyers, may link amt of housing grant to inflation?