If you have read my earlier 2 pages
Titled : Should you be upgrading from hdb to Private Property & What to Look out for in a new Launch
Then , This is designed to go into deeper details , on how its actually gets done .Some are repeats, but please bear with me . Most of the time, i would be the one guiding you on this , important, life changing journey, but you are always in the drivers seat
Here are the steps in summary :
1st Step ; Asset planning
2nd Step : Approach a bank and get a IPA ( In principal approval )
3rd step : What are you buying for ? Investment or own Stay
4th step, Decide what type, new launch or resale
5th Step. Get the keys .
Those are the steps, for simplicity , they have been condensed. Below is a more detailed explanation.
The journey to private property investment for most is at first , primarily an emotional journey, where , mind set, myths, concerns must first be addressed.
Many of us have baggage from our concerned parents and peers. We see home mostly as a means of shelter and rightly are concerned over, having it taken away, due to unforeseen circumstances.
Those fears are valid and can be addressed and must be addressed.Through proper planning and analysis, we can come up with plans that can address those situations and in doing so, help our family’s children, for the long term.
Again a disclaimer, I am not into get rich quick but rather , a long term plan that address the main requirements , which is mainly for :
We first have to start off with you . We will do detailed asset planning for you. Through A proprietary software, we will do a detailed analysis and come up with a few plans for you and answer these questions :
1.Do you want to buy a Private property, ( new launch /resale )while keeping your hdb ?
Each of the above options have different financial and tax implications.Basically before, you make a life changing decison with long term implications. I want you, to take that journey yourslef, where i will walk you through your finances and come up with a plan
Many have said, they would like to keep their hdb and buy private. However, does that make sense.
Have you checked the current prices of your hdb ? Unless, you are those lucky one who bought into those super-hot areas, then it might make some sense to keep.
What does it show ? For most, The prices of the hdb could in fact be going down !. This would mean, that you are paying off your HDB loan at 2.5%, while your property is going down and you are also incurring accrued interest on the use of your cpf for your hdb loan. We would need to do a serious analysis on where the prices are heading to decide if keeping your hdb makes sense
On top of that, you would need to pay, additional buyers stamp duty (ABSD of 12 %) in addition of bsd of 4 % on purchases of $1,000,000 and above .
Lets take an example, that you bought a property of 1.3 m, while still keeping your hdb. The total taxes that you will pay will be as follows :
Buyer’s Stamp Duty 4 %
$ 36,600
Additional Buyers’ Stamp Duty 12 %
$ 156,000
Total Buyers’ Stamp Duty
$ 192,600
Total Cost of Property
$ 1,492,600
It also means you have to pay 25% of your condo cost in cash. That’s $325,000 for a $1.3 million condo!.
What about the loan that you can get ?
The maximm affordability is limited by MAS regulations on Loan-to-Value (LTV) of 45% for purchase of new property given that they are still financing their existing loan
On top of that, The amount of CPF that you can use and the maximum amount of loan that you can take will be affected .
For CPF .You need to set aside a Basic Retirement Sum (BRS) in your CPF, before being allowed to withdraw any money for the condo purchase. Its only after setting aside this amount, that the balance can be used . What that amount is depends on your age. That you can check at cpf website .
The strong point of buying a resale is ,that you can immediately move into it, lease your hdb or lease your private property .
So basically, depending on where your hdb is, it would make more sense to sell your hdb. Do bear in mind, that as prices are going down, you are also paying an interest of 2,5 % on your cpf , that you used for your housing.
Here is what you can do :
a.Log in to hdb website and check, whats your balance loan
b.Log in to cpf and check what the cpf used and accrued interest for you and your wife
c.Check, what the estimate price you can get
Whats the Result when you deduct cpf used and balance loan from your selling price ?
The result, should give you a clear answer
There is a possibility of upgrading to a private condominium without touching cash-on-hand. By using the proceeds from the sale of the hdb,( depending on sales price ) you can use those cash proceeds to purchase the private condominium.
Detailed calculation will be done to work that out
For those planning to sell HDB and upgrade to a brand new private condominium which will be ready in 2 to 3 years’ time, to avoid ABSD and secure up to 75% loan, you may have to find a temporary accommodation between the sale of your HDB and collection of the keys to your new place.
Again, by working out the numbers like:
Cost of rental for 3 years versus savings from ABSD and paying a higher down payment .
The Basic ins & Outs of Commercial Investments
For a rough guide, on what you home could be worth. Add your postal code and see, whats the probable value.
For a more detailed breakdown and analysis. I can send you a 5 page report .
Under 1 roof, get the pricing, floor plans and if you like any, book a viewing and i will arrange the show flat vist. Thats how easy, I am making it for you