HDB Fully paid up ?

[pcmdan]

basically the total interest for mortgage loan would be CPF interest + Bank loan interest (assuming loan from bank and service loan by CPF) 2.5% + 1.7% = 4.2%
investment can easily beat 4.2%??

Eh....I think you are not calculating correctly.

Let's say u loan $100 from CPF interest what u owe CpF is $2.5

U loan another $100 from bank. The interest is $1.7

Total interest payable is $4.2

4.2 over $200 is 4.2%?

 

[pcmdan]

on hindsight its the wrong move, but on fore sight how to tell? Would you have known in 2008 that you can use the money to invest? The whole financial world is crashing down

Ya lo totally agree with u...if I know I buy Bitcoin in 2008 lagi beta right.


Pls don't use hindsight and say if only I do this or do that..since u paid alr...just take it that at least I don't have any liability and debt free....I live without losing slp on whether the market will rebounce at night or drop till laosai

 

[LiteHouse]

some ppl prefer not to fully pay even when they have the means as they want to use the cash for investments that will give them better returns , which is more than enough to cover the cpf interest

Rich people prefer to stretch the mortgage loan as long as possible as they can buy mortgage insurance. If passed away before the loan is cleared, the insurance will settle the remaining loan FOC.

 

[limster]

Rich people prefer to stretch the mortgage loan as long as possible as they can buy mortgage insurance. If passed away before the loan is cleared, the insurance will settle the remaining loan FOC.

It depends on whether the money can be put to better use. Thats why its good to get a loan that has no lock in which allows you to partially repay the loan. When I felt stocks were too expensive, I would put money towards loan repayment instead of buying stocks.

 

[pcmdan]

Rich people prefer to stretch the mortgage loan as long as possible as they can buy mortgage insurance. If passed away before the loan is cleared, the insurance will settle the remaining loan FOC.

Wah how come I got alot of rich friends that pay their house fully...lagi best they use cash pay all..did not even take loan

 

[dork32]

basically the total interest for mortgage loan would be CPF interest + Bank loan interest (assuming loan from bank and service loan by CPF) 2.5% + 1.7% = 4.2%
investment can easily beat 4.2%??

you do not have to beat 4.2%. beat 1.7% is enuf

 

[computers70]

It depends on whether the money can be put to better use. Thats why its good to get a loan that has no lock in which allows you to partially repay the loan. When I felt stocks were too expensive, I would put money towards loan repayment instead of buying stocks.

Very true, I know of friends who just like to take secured loans from the bank with low interest and leverage upon it.

 

[henrylbh]

I offer my lender to change my loan to 'on demand' and until then, let me service interest only. Though loan is more than fully secured on the property, the bank not dare. LTV is now 40% only

 

[Mecisteus]

I offer my lender to change my loan to 'on demand' and until then, let me service interest only. Though loan is more than fully secured on the property, the bank not dare. LTV is now 40% only

No banks or anyone will dare to give you a bullet repayment scheme.

Basically you are just paying interests only and no money is going into the repayment of your principal.

If there is, then the interest rate will be super high to justify the risk. Higher rate so that lenders can hopefully recoup their capital earlier.

 

[culture_counter]

My CPF is enough to pay off the loan. But I don't mind paying loan interest as the interest I earn from CPF is more. Depending on situation, sometimes I would use cash to pay the loan instead of using CPF.

Agree on this point.

 

[kenplicity]

No banks or anyone will dare to give you a bullet repayment scheme.

Basically you are just paying interests only and no money is going into the repayment of your principal.

If there is, then the interest rate will be super high to justify the risk. Higher rate so that lenders can hopefully recoup their capital earlier.

Saw fb ads saying could leverage on fully paid hdb to get condo .
If this is the way they are doing?

 

[Mecisteus]

Saw fb ads saying could leverage on fully paid hdb to get condo .
If this is the way they are doing?

Rent out HDB
Take bigger loan to buy a condo
Use rental to service your loan

That is what the leverage is all about.

 

[SBC]

Rent out HDB
Take bigger loan to buy a condo
Use rental to service your loan

That is what the leverage is all about.

Good advice.

 

[Taloona]

Good advice.

Rental income is no guarantee unless your HDB is Pinnacle or Bishan. And don't forget, HDB whole flat rental has many restrictions. Speaking from experience.

 

[henrylbh]

Rent out HDB
Take bigger loan to buy a condo
Use rental to service your loan

That is what the leverage is all about.

There is period of vacancy from one tenant to next. Besides, there is no property tax rebate and the property rate will be increased to 10% from 4%. Sub-lessee also loses out on utility and conservancy rebates and others like GST voucher etc. On top of that sub-lessee also need to pay personal tax on rental income.

The rental for the first 3 years or so will barely cover the ABSD and in selling you will be competing with those who bought without ABSD assuming there is appreciation in price.

 

[Mecisteus]

The best time to consider a new private property is to wait for the reversal of ABSD.

By that time, property prices must be selling at some discounts.

 

[doody_]

1 condo: Sell fully paid HDB and downpay for condo. Installments pay from CPF, left over lump sum in pocket.

2 condos: Sell fully paid HDB and downpay for 2 condos. Stay in 1, rent out the other. Live the landlord dream.

 

[madtari]

Depends on how long you have been waiting... if you have been waiting since ABSD is 7%, it is now 12%... by the time it is removed or reversed, the property prices would have soared to even higher levels. Even though price may drop 20% from the peak, but it has already appreciated like 30-50% since ABSD was introduced?

The best time to consider a new private property is to wait for the reversal of ABSD.

By that time, property prices must be selling at some discounts.

 

[focus1974]

don't listen to property agents.

best if you keep your fully paid HDB ..
and then save up to buy the 2nd private property.

 

[Mecisteus]

Depends on how long you have been waiting... if you have been waiting since ABSD is 7%, it is now 12%... by the time it is removed or reversed, the property prices would have soared to even higher levels. Even though price may drop 20% from the peak, but it has already appreciated like 30-50% since ABSD was introduced?

There is a what IF there.

If you pay ABSD and if financial crisis comes, you end up paying a higher property price.

For a typical investor who has limited firepower, I think it is better to wait for a good timing.

Of course if you are buying as a residential home, then you can't possibly wait for too long.