Affording a private property

Hi Guys, seeking some inputs.

Currently staying in a HDB (sole owner) which I had purchased with my wife ~4+ years ago. During the past 4+ years we had seen our income risen and was considering to move to a private property after we fufill our current MOP.

A little on our financial status now,

Current debt: HDB bank loan

Combined income: 15-17k SGD/month

I am currently comfortably putting aside at least 20% of my income into savings, and saving more than 30% of my income for whatever huge expenses that could potentially come up. I am simple and don't crave for luxury items (bags, watches, etc...)

Planning to sell my current HDB and source for a 1.0-1.3M SGD private property, would you advise me against it? Thanks!

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Mei Fong

29 May 2022

Hi, looking at your income, I would strongly encourage you to do so, for a better future and retirement. I'm planning to do this when my HDB MOP. Just sharing my point of view.

Calculation:

Age: assume both of you 35 year old now

Income: $15,000 (assume both of you are fixed salaried person)

55% TDSR: $8250 less of all your current debt like car loan and etc.

(assume you dun have any debt)

30 year loan tenure, you are qualified to get up to $1.8x mil loan.

With this level of income, you have more options like:

1.) sell HDB buy two private condo under individual name

one for own stay and one for investment (collect rental income + capital appreciation)

2.) sell HDB buy one bigger size private condo (if you have big family)

if your parent move in to stay together, their current property can rent out

3.) Buy two properties for investment, move to stay with parents.

Of course, it depends on how much cash and CPF fund available after you sell your current hdb.

4.) since you are sole owner, upon MOP, your wife (non-owner, if she is working with income and enough fund) can buy a private property either for own stay or investment.

To calculate your current hdb sales proceeds,

sales proceed = estimated sale price - outstanding loan - CPF refund with accrued interest

Reason I encourage you to do upgrade:

1.) according to past transaction & data, private property has better capital appreciation than HDB

2.) after you gain from the private property, you can cash out and downgrade to HDB when you plan to retire comfortably.

3.) Better stepping stone to own a freehold landed property (if this is your ultimate goal) and live comfortably with family.

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Gaya Thiri

05 Apr 2022

If your combined income is 15k, there is so much potential and hidden gems you can tap on.

First, speak to a mortgage broker (free) to check your loan affordability. Just based on a rough calculation of 15k a month, I see that you can easily afford a private property of more than 1.7mil and I am assuming your age is 40. So you can take a 25year loan.
Then decide what is your plan- sell your condo after 3 years and repeat the cycle for capital gains? or do you want to have one for own stay and another for investment in your partner's name.
Not every new launch is profitable and at the same time, not every resale condo is unprofitable. You need to have a plan. You need to research and learn from people who have successfully done it.
of course, calculate every expense involved of owning a condo- mortgage, mcst fee, property tax, repair cost if any. Punch every number on the calculator and see if you're comfortable with it.
At the end of the day, even if you don't get a private property, atleast you know that you've considered all options before concluding.

All the best mate!

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