Investment question

[Ahboy069]

friend has cleared his hdb loan and that house can last him till 93 years old but possible vers in 20 years time.

He has abt 850k cash in hand.
Should he get
1. 2nd property absd abt 140k and take 80% loan. This will reduce his cashing holding to abt 550k. reason to buy include his wife has small share in a private house and may not be able to get hdb again even if sers

Or just invest all his money in safe instrument like tbill, ssb, mf etc as he doesn’t want stocks.

Thanks for advice in advance

 

[sohguanh]

friend has cleared his hdb loan and that house can last him till 93 years old but possible vers in 20 years time.

He has abt 850k cash in hand.
Should he get
1. 2nd property absd abt 140k and take 80% loan. This will reduce his cashing holding to abt 550k. reason to buy include his wife has small share in a private house and may not be able to get hdb again even if sers

Or just invest all his money in safe instrument like tbill, ssb, mf etc as he doesn’t want stocks.

Thanks for advice in advance

Must share got children and elderly parents to feed both hubby and wife side? Isn't this the basics before one even consider about investing? Those big ticket items can suddenly require huge monies upfront in emergency. This issue need to factor in and liquidity is a reality e.g doctor, hospital say need X dollars how fast you can cough up cold hard cash?

Long term illness eat monies super fast if you kena only one but we know parents usually two person then include spouse is total four person. Then some ppl like children so give birth a lot just one of them kena give you headache.

Illness is just an e.g it can be other kinds of issues e.g children owe loanshark or bank monies due to his,her whatever failed ventures etc

Conclusion settle children and parents then talk about own investments. My one cent worth of opinion.

 

[Nofear40]

friend has cleared his hdb loan and that house can last him till 93 years old but possible vers in 20 years time.

He has abt 850k cash in hand.
Should he get
1. 2nd property absd abt 140k and take 80% loan. This will reduce his cashing holding to abt 550k. reason to buy include his wife has small share in a private house and may not be able to get hdb again even if sers

Or just invest all his money in safe instrument like tbill, ssb, mf etc as he doesn’t want stocks.

Thanks for advice in advance

Can get hdb under sers even if you have owned Pte before SERS announcement

 

[Ahboy069]

Can get hdb under sers even if you have owned Pte before SERS announcement

No lei was told if sers then u have private can’t get sers unless dispose private

 

[Ahboy069]

Must share got children and elderly parents to feed both hubby and wife side? Isn't this the basics before one even consider about investing? Those big ticket items can suddenly require huge monies upfront in emergency. This issue need to factor in and liquidity is a reality e.g doctor, hospital say need X dollars how fast you can cough up cold hard cash?

Long term illness eat monies super fast if you kena only one but we know parents usually two person then include spouse is total four person. Then some ppl like children so give birth a lot just one of them kena give you headache.

Illness is just an e.g it can be other kinds of issues e.g children owe loanshark or bank monies due to his,her whatever failed ventures etc

Conclusion settle children and parents then talk about own investments. My one cent worth of opinion.

No child
No car
No vice habits
Parents with fully paid hdb at 80 years old and touch wood till now no major ailments

 

[Nofear40]

No lei was told if sers then u have private can’t get sers unless dispose private

Maybe rules change
I got it

 

[sohguanh]

No child
No car
No vice habits
Parents with fully paid hdb at 80 years old and touch wood till now no major ailments

80+ years old for both sets of parents means high likelihood so must prepare for worst. Unless both parties got siblings to share if parents kena? Best case is go away peacefully fast, worst case is drag. So maximum 4 elderly all drag how much to reserve for all 4 kena around same time?

No children is 50% load off shoulders liao. My thinking is all parents so close to go the other world best to reserve maybe 25% liquid monies? The rest can be safe instrument like TBill FD etc.

Once all parents gone then can be more daring a bit put more into more risky instruments.

 

[BBCWatcher]

friend has cleared his hdb loan...

Aw, that's too bad. A 2.6% HDB loan was/is cheap money.

...and that house can last him till 93 years old but possible vers in 20 years time.
He has abt 850k cash in hand.
Should he get
1. 2nd property absd abt 140k and take 80% loan.

You meant a 75% loan, correct? That's the maximum bank mortgage available, and that's also assuming there's no cash over valuation complication. The 80% figure is for HDB loans, and I can't see how he qualifies for another HDB loan in these circumstances (second home).

If ABSD is S$140K then that implies a home purchase price of S$700K (a VERY small shoebox condo). 75% financing is $525K. Assuming he celebrates his 50th birthday tomorrow he can probably get a 15 year loan at 3.0% fixed for 3 years. (You can only get a mortgage to age 65 for a new mortgage. Upon refinancing it's usually possible to stretch that to age 70.) That would mean a monthly payment of $3,626 just for the mortgage, not including property tax, maintenance fees, income tax (if rented out), and other costs. There's a collection of risks: interest rate risks, investment risks (home prices could fall), rental rate risks, currency risks (the Singapore dollar could lose real purchasing power faster than expected), and tax/regulatory risks (the government is likely to hike real property-related taxes first and further). And the $140K in ABSD is a pure sales charge. The home has to appreciate to $840K just to break even on a nominal basis, not including transaction and other sales-related charges such as ordinary BSD. ABSD alone eats up the first 20% of price appreciation, which is a lot. That's many years of price appreciation even in an appreciating real estate market, which isn't a given.

This will reduce his cashing holding to abt 550k. reason to buy include his wife has small share in a private house and may not be able to get hdb again even if sers

As others have pointed out there's no problem with SERS if the private property(ies) was(were) acquired prior to the SERS announcement.

Or just invest all his money in safe instrument like tbill, ssb, mf etc as he doesn’t want stocks.

There's a great deal of risk in a real property purchase, especially when starting off an additional 20% in the hole (ABSD). A well diversified, low cost stock index fund isn't THAT risky. In particular, no bank is going to come after you (and your assets) if you can't pay the mortgage.

T-bills, Singapore Savings Bonds, money market funds, fixed deposits, and endowment plans are all comparatively low yielding vehicles. A low cost investment grade bond index fund is highly likely to be a bit higher yielding (over the long-term at least) but still extremely conservative. (Too conservative on its own, I'd argue.) CPF MediSave, Special, and Retirement Accounts all currently earn 4.08% interest (4.05% in 2Q2024), sometimes with tax relief when you contribute.

 

[Ahboy069]

Aw, that's too bad. A 2.6% HDB loan was/is cheap money.

You meant a 75% loan, correct? That's the maximum bank mortgage available, and that's also assuming there's no cash over valuation complication. The 80% figure is for HDB loans, and I can't see how he qualifies for another HDB loan in these circumstances (second home).

If ABSD is S$140K then that implies a home purchase price of S$700K (a VERY small shoebox condo). 75% financing is $525K. Assuming he celebrates his 50th birthday tomorrow he can probably get a 15 year loan at 3.0% fixed for 3 years. (You can only get a mortgage to age 65 for a new mortgage. Upon refinancing it's usually possible to stretch that to age 70.) That would mean a monthly payment of $3,626 just for the mortgage, not including property tax, maintenance fees, income tax (if rented out), and other costs. There's a collection of risks: interest rate risks, investment risks (home prices could fall), rental rate risks, currency risks (the Singapore dollar could lose real purchasing power faster than expected), and tax/regulatory risks (the government is likely to hike real property-related taxes first and further). And the $140K in ABSD is a pure sales charge. The home has to appreciate to $840K just to break even on a nominal basis, not including transaction and other sales-related charges such as ordinary BSD. ABSD alone eats up the first 20% of price appreciation, which is a lot. That's many years of price appreciation even in an appreciating real estate market, which isn't a given.

As others have pointed out there's no problem with SERS if the private property(ies) was(were) acquired prior to the SERS announcement.

There's a great deal of risk in a real property purchase, especially when starting off an additional 20% in the hole (ABSD). A well diversified, low cost stock index fund isn't THAT risky. In particular, no bank is going to come after you (and your assets) if you can't pay the mortgage.

T-bills, Singapore Savings Bonds, money market funds, fixed deposits, and endowment plans are all comparatively low yielding vehicles. A low cost investment grade bond index fund is highly likely to be a bit higher yielding (over the long-term at least) but still extremely conservative. (Too conservative on its own, I'd argue.) CPF MediSave, Special, and Retirement Accounts all currently earn 4.08% interest (4.05% in 2Q2024), sometimes with tax relief when you contribute.

But hdb website on sers n likely vers says

• You and the co-applicant(s) must not own or have an interest in any private property*, or have sold a private property* within 30 months before the date of applying to buy the SERS flat
• 
  https://www.hdb.gov.sg/residential/...s/buying-a-resale-flat-under-sers/eligibility

 

[BBCWatcher]

But hdb website on sers n likely vers says

• You and the co-applicant(s) must not own or have an interest in any private property*, or have sold a private property* within 30 months before the date of applying to buy the SERS flat
• 
  https://www.hdb.gov.sg/residential/...s/buying-a-resale-flat-under-sers/eligibility

Here's the first sentence on that page:

These are the eligibility conditions that you must meet before you can buy a resale flat which has been announced for the Selective En bloc Redevelopment Scheme (SERS).

The page you've linked to does not concern existing owners of HDB flats that have not been announced for SERS.

 

[Ahboy069]

Here's the first sentence on that page:

These are the eligibility conditions that you must meet before you can buy a resale flat which has been announced for the Selective En bloc Redevelopment Scheme (SERS).

The page you've linked to does not concern existing owners of HDB flats that have not been announced for SERS.

hi just to clarify, r u saying that if the owner kana sers or vers then even if one of the owner has a share in private property they still can buy the sers or vers flat replacement? Thanks

 

[BBCWatcher]

hi just to clarify, r u saying that if the owner kana sers or vers then even if one of the owner has a share in private property they still can buy the sers or vers flat replacement? Thanks

That's right. If this is the sequence:

1. Buy a new or resale HDB flat;
2. Live in the HDB flat for at least the Minimum Occupation Period;
3. Acquire an ownership interest in a private property;
4. Your HDB flat is announced for SERS;

then you can participate in the SERS exercise (can get a new 99 year HDB flat). There's currently no rule against it that I can find.

 

[Ahboy069]

That's right. If this is the sequence:

1. Buy a new or resale HDB flat;
2. Live in the HDB flat for at least the Minimum Occupation Period;
3. Acquire an ownership interest in a private property;
4. Your HDB flat is announced for SERS;

then you can participate in the SERS exercise (can get a new 99 year HDB flat). There's currently no rule against it that I can find.

Thanks much very well explained

 

[V_for_Vanilla]

friend has cleared his hdb loan and that house can last him till 93 years old but possible vers in 20 years time.

He has abt 850k cash in hand.
Should he get
1. 2nd property absd abt 140k and take 80% loan. This will reduce his cashing holding to abt 550k. reason to buy include his wife has small share in a private house and may not be able to get hdb again even if sers

Or just invest all his money in safe instrument like tbill, ssb, mf etc as he doesn’t want stocks.

Thanks for advice in advance

I personally will not want to pay $140k absd tax just to invest in property. Can consider ssb, t bills, and bonds.

 

[DevilPlate]

friend has cleared his hdb loan and that house can last him till 93 years old but possible vers in 20 years time.

He has abt 850k cash in hand.
Should he get
1. 2nd property absd abt 140k and take 80% loan. This will reduce his cashing holding to abt 550k. reason to buy include his wife has small share in a private house and may not be able to get hdb again even if sers

Or just invest all his money in safe instrument like tbill, ssb, mf etc as he doesn’t want stocks.

Thanks for advice in advance

curious to know how yr fren end up w holding 850k cash.
by pure savings?

ABSD 20% still got people considering to buy 2nd ppty sia whahaha
Might as well sell hdb and upgrade to resale condo.

 

[Ahboy069]

curious to know how yr fren end up w holding 850k cash.
by pure savings?

ABSD 20% still got people considering to buy 2nd ppty sia whahaha
Might as well sell hdb and upgrade to resale condo.

Hdb can rent at close to 10% yield … Don’t sell la

 

[DevilPlate]

Hdb can rent at close to 10% yield … Don’t sell la

Staying in it, rental yield 20% also pointless.

Btw, nett yield based on current valuation prolly 5-6% only lah.
cannot anyhow say 10% based on last time purchase price

 

[DevilPlate]

i can never fathom some people’s mindset…..
HDB really a prized trophy/asset die die must keep?

i know of 1 mid 40s couple bought a condo and paid 17% ABSD of 1.3M condo js to keep their HDB for rental…..They are very proud of it and told me don’t ever kill the golden goose.

I js keep quiet and thank them for making huge contribution to our nation building hehehe

 

[sohguanh]

i can never fathom some people’s mindset…..
HDB really a prized trophy/asset die die must keep?

i know of 1 mid 40s couple bought a condo and paid 17% ABSD of 1.3M condo js to keep their HDB for rental…..They are very proud of it and told me don’t ever kill the golden goose.

I js keep quiet and thank them for making huge contribution to our nation building hehehe

I read in other forum say you do business later failed declared bankrupt they cannot touch your HDB so at least you still got a roof over your head. HDB is special they say.

 

[ctan84]

I read in other forum say you do business later failed declared bankrupt they cannot touch your HDB so at least you still got a roof over your head. HDB is special they say.

Yes, that's the beauty of having a HDB. Its protected from debtors so that you will never be homeless.