facebookI'm currently staying in a 4-room BTO and am thinking of upgrading to a 5-room resale due to space constraints. I've only learnt about "lease decay" recently. Do people usually "earn" when they buy a 5-room resale and sell their 4-room BTO? - Seedly

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Anonymous

22 Apr 2020

Property

I'm currently staying in a 4-room BTO and am thinking of upgrading to a 5-room resale due to space constraints. I've only learnt about "lease decay" recently. Do people usually "earn" when they buy a 5-room resale and sell their 4-room BTO?

Is it common that people shift out after the 5-year Minimum Occupancy Period is up?

The other consideration I have (if I'm not upgrading to a 5-room resale) is to pay off my HDB mortgage.

If my hubby and I have sufficient CPF OA to pay our mortgage and yet earn the higher interest, should we proceed to do so in order to save that almost 40k of interest?

Thanks in advance.

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What are your thoughts?

Cedric Jamie Soh

Cedric Jamie Soh

22 Apr 2020

Level 12·Director at Seniorcare.com.sg

Those were the good old days.

nowadays with the current hdb prices as it is, there is no more "profit" from buying a resale flat.

Your only "profits" are mostly from the grants, which can't be used anyway except back in your CPF.

Your CPF-OA is earning you 2.5% per year.

If you can refinance your hdb loan to banks, you are paying now only at 1.7% or lower.

By refinancing with bank, and leaving your CPF to earn 2.5%, you are "earning a profit of 0.8%" per year.

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From my understanding, BTO owners tend to earn a small profit due to the grants enjoyed. However, this small profit will be further depleted by a resale levy of $40,000 for 4-room flats, if you are intending to use a grant for your purchase of the 5-room resale flat.
It is also not recommended to purchase a 5-room resale just to "earn" because HDB prices are pretty much controlled by the government, because they want to keep it affordable for the majority of Singapore residents.

Hope this helps!

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