repay or continue with hdb loan ?

[T-Mobile]

just received the consolidated loan statement for 2016 from hdb

outstanding hdb loan : $215,600

was thinking of clearing whole sum . but then if opportunity comes , i will be caught with low cash level .

but then i will have not much stress after that , but then it will make me less motivated to work harder

no need to buy HPS anymore if clear full sum , but then hps premium very cheap only haha

a little background of my financial status :
31 yrs old this year
married with 1 kid . no car . no other property .
currently liquid cash : 335k after setting aside 30k of emergency funds .
not so liquid assets ( shares , gold and silver ) : about 130k market value
cpf very little only , a few thousands

after MOP in another 2 years , most likely will try for another BTO

question, if u guys were me , would u continue to serve the remaining 26 years hdb loan or make partial payment or clear all outstanding loan amt ?

 

[DealuxTravel]

Keep your cash , because you said you wanted to sell your BTO to get new BTO in 2 years time.

1. You need pay resale levy for 2nd BTO in cash.

2. 50% of cash proceeds ( if above $25k profit ) from sale of flat,will need to go into your CPF account.

3. Save your cash for renovation / furniture for new house.

 

[BBCWatcher]

However, I'd sell the metals and put those funds in, as examples, SSBs, SRSs (something low cost), and/or CPF top ups with tax relief. If you want to wait a bit for what you think is a good gold price and/or keep one or two ounces to stare at, OK, but that's as far as I'd go.

 

[SBC]

Well done at for a 31-yo guy.

Can consider your 2nd property 2 years later when MOP is met.

 

[soneat]

just received the consolidated loan statement for 2016 from hdb

outstanding hdb loan : $215,600

was thinking of clearing whole sum . but then if opportunity comes , i will be caught with low cash level .

but then i will have not much stress after that , but then it will make me less motivated to work harder

no need to buy HPS anymore if clear full sum , but then hps premium very cheap only haha

a little background of my financial status :
31 yrs old this year
married with 1 kid . no car . no other property .
currently liquid cash : 335k after setting aside 30k of emergency funds .
not so liquid assets ( shares , gold and silver ) : about 130k market value
cpf very little only , a few thousands

after MOP in another 2 years , most likely will try for another BTO

question, if u guys were me , would u continue to serve the remaining 26 years hdb loan or make partial payment or clear all outstanding loan amt ?

Continue to serve the 26 year loan.
Time is on your side - Conserve your ammo.

 

[starfish.starfish]

Depends wat will u do with the 335k if u dun use to repay loan.

 

[T-Mobile]

Depends wat will u do with the 335k if u dun use to repay loan.

Actually those 300+ k , is my war chest . These 5 years , 'I chance for me to open it . Instead , my shares portfolio shrink ; due to privatisation , delisting and profit taking .

 

[T-Mobile]

Well done at for a 31-yo guy.

Can consider your 2nd property 2 years later when MOP is met.

I am not going for second property anytime soon , only probably in another 5-8 years . But then Property tax very high . Was thinking of alternatives

 

[T-Mobile]

Keep your cash , because you said you wanted to sell your BTO to get new BTO in 2 years time.

1. You need pay resale levy for 2nd BTO in cash.

2. 50% of cash proceeds ( if above $25k profit ) from sale of flat,will need to go into your CPF account.

3. Save your cash for renovation / furniture for new house.

Thank u for the info ;
I will try my best to move out of my existing living area . ( Super inconvenient ) And apply for another better location bto

 

[T-Mobile]

I am thinking . I am paying $400+ monthly for interest alone . If I were to clear full outstanding , consider those savings from interest , can it be considered as " investment return " . ?

 

[shareholder]

Home is non income generating, so best to clear off the debt. Only take on debts for businesses that have net positive cash flow. Focus on building a bigger war chest after clearing the debt.

 

[kzonexx]

Keep your cash , because you said you wanted to sell your BTO to get new BTO in 2 years time.

1. You need pay resale levy for 2nd BTO in cash.

2. 50% of cash proceeds ( if above $25k profit ) from sale of flat,will need to go into your CPF account.

3. Save your cash for renovation / furniture for new house.

is number 2 an old rule that is no longer valid? I tried playing around with the calculator below and I got back all cash after returning the CPF used including accrued interest.


https://services2.hdb.gov.sg/webapp/BB24SaleProceedCalculator/BB24SSaleProceedsCalc

 

[DealuxTravel]

is number 2 an old rule that is no longer valid? I tried playing around with the calculator below and I got back all cash after returning the CPF used including accrued interest.


https://services2.hdb.gov.sg/webapp/BB24SaleProceedCalculator/BB24SSaleProceedsCalc

No, rule is still valid.

The calculator is not wrong. It just shows you the amount of money you get back after you sell your flat.

But if after selling, when you buy resale or new BTO using HDB LOAN , then the rule will take effect. If you take bank loan / buy private property, rule will not apply.


http://www.hdb.gov.sg/cs/infoweb/residential/selling-a-flat/options-for-your-next-flat

Taking a second HDB loan
If you plan to apply for a second HDB concessionary rate loan, do note that the loan amount has to be reduced by using your full CPF proceeds and part of the cash proceeds from the sale of your current or immediate past HDB flat.

You may keep $25,000 or half of the cash proceeds, whichever amount is more. We will take into account the remaining part of the cash proceeds when determining the amount of the second loan to be granted to you.

The right-sizing of loan amount ensures that you do not take a larger second concessionary loan than necessary, and can help to reduce the likelihood of subsequent mortgage arrears.

 

[kzonexx]

No, rule is still valid.

The calculator is not wrong. It just shows you the amount of money you get back after you sell your flat.

But if after selling, when you buy resale or new BTO using HDB LOAN , then the rule will take effect. If you take bank loan / buy private property, rule will not apply.


http://www.hdb.gov.sg/cs/infoweb/residential/selling-a-flat/options-for-your-next-flat

Taking a second HDB loan
If you plan to apply for a second HDB concessionary rate loan, do note that the loan amount has to be reduced by using your full CPF proceeds and part of the cash proceeds from the sale of your current or immediate past HDB flat.

You may keep $25,000 or half of the cash proceeds, whichever amount is more. We will take into account the remaining part of the cash proceeds when determining the amount of the second loan to be granted to you.

The right-sizing of loan amount ensures that you do not take a larger second concessionary loan than necessary, and can help to reduce the likelihood of subsequent mortgage arrears.

ah thanks for the clarification. So it applies only if u take a 2nd HDB loan.

 

[diediex]

I am thinking . I am paying $400+ monthly for interest alone . If I were to clear full outstanding , consider those savings from interest , can it be considered as " investment return " . ?

If you can generate more than the $400+ with your 215,600 cash every month then why would you want to repay?

Meaning, if u can generate more than 2.6% return with your cash then don't repay. Else repay.

 

[henrylbh]

just received the consolidated loan statement for 2016 from hdb

outstanding hdb loan : $215,600

was thinking of clearing whole sum . but then if opportunity comes , i will be caught with low cash level .

but then i will have not much stress after that , but then it will make me less motivated to work harder

no need to buy HPS anymore if clear full sum , but then hps premium very cheap only haha

a little background of my financial status :
31 yrs old this year
married with 1 kid . no car . no other property .
currently liquid cash : 335k after setting aside 30k of emergency funds .
not so liquid assets ( shares , gold and silver ) : about 130k market value
cpf very little only , a few thousands

after MOP in another 2 years , most likely will try for another BTO

question, if u guys were me , would u continue to serve the remaining 26 years hdb loan or make partial payment or clear all outstanding loan amt ?

Hold on to your cash if you can generate at least 2.5% returns. Even if cannot, I will hold on for opportunity because it is not easy to borrow money at 2.6% without housing loan. May be can consider the savings if switch to bank loan at lower rates and if it goes above 2.6% for good, then think of settling it since you got disposal cash. But in settling early if interest rate really shoot up earlier than expected, the savings in switching may be a loss.

After MOP, no advantage in going for another new BTO because of the levy. Might as well use the levy to go for private to help pay the ABSD. The immediate rental income from completed private prop will recoup the ABSD in a shorter period with the help of savings in the levy.

 

[SBC]

Very healthy cash position for 31-yo guy. Can consider to top up parents SA if their CPF is below FRS while making provision for 2nd property.

 

[Genesisz]

I second this as well but ts should have plans to build up his financials starting from investments.

Continue to serve the 26 year loan.
Time is on your side - Conserve your ammo.

 

[SBC]

The idea of not paying for HDB levy is good. Instead, paying the ABSD for 2nd property is sound for TS, considering his total reserve of more than 430k.

This reserve will grow over the next years when he is more ready.

 

[HMAN]

With the amount of cash you have at such a young age, buy private property . The quantum gain on HDB is limited.

cash is your weapon. Making use of it. Wait for the market to crash and you go in to grab

1.Change hdb loan to Bank loan to save some interest meanwhile waiting for opportunities
2. Partial repayment of $50k , smaller loan amount gives encouragement to clear it off faster.

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