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Anonymous

03 Oct 2019

Property

What are the options for my 1st property, given my situation?

I'm 45 years old, earning around $5k with $200k in my OA.

Looking at either a resales 3 room or Private one bedroom with the aim of investment for private property?

Discussion (3)

What are your thoughts?

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As Fergus mentioned, it's unlikely that you'd be able to afford a private 1-bedder with your current income. I put your numbers into a local bank's loan calculator and it looks like your indicative loan amount is about $258k with about $1,300/mo in loan payments for a 20-year term (I didn't factor in any annual bonuses or cash savings).

Combined with your $200k CPF OA funds, that gives you $458k. Enough for a 4-room resale flat, but not enough for private property. (And that's assuming you wipe out your CPF OA, which may not be the smartest move.)

Sadly, with an income of 5k, you're also _just _over the income ceiling for the Enhanced CPF Housing Grant (capped at $4,500/mo).

That said, if you do go for a resale HDB, you can still benefit from the boost the grant is likely to provide to the resale market. More government subsidies = higher demand for resale flats = resale flat prices will likely be pushed higher in the long term.

Edit: The $4,500/mo income ceiling is just for the EHG, but you can still qualify for the Singles Grant ($25k subsidy with $7k/mo income ceiling). If you're willing to live near or with your parents, you can also get the Proximity Housing Grant for a resale flat.

Fergus Tan

29 Sep 2019

Senior Partner at Vision Advisory Management

If you are looking for the purpose of future capital appreciation, then private beats out HDB in the current market due to the government policy direction which is likely to restrain any HDB capital appreciation. If you are looking to eventually rent out your property for rental yield, then HDB will yield one of the highest yield ever.

To be honest, looking at your cash flow, it's also not likely you can afford a private 1 bedroom. https://www.propertyguru.com.sg/mortgage/afford...
Based on 20 years mortgage loan, 5k salary, and 10k annual bonus, with 200k in CPF, and $50k cash, your maximum affordability is $550k. This will result in a loan of $300k and a monthly mortgage of $1k.
A typical 1 bedroom condo might be 600-800k, to be honest. I'm not sure about your cash savings, but you would definitely need money for renovation and what not.
My suggestion is to go for a resale 4 room actually. If you are comfortable, you might actually be able to rent out for income also. This will also give you enough debt leeway if somehow you get more income and will be able to purchase a second property.
Some fruit for thought... Let's say you buy a Jumbo HDB in Yishun for example. Yishun is one of the few districts that have jumbo units which are bigger than 1300sq ft and is essentially a combination of a 3rm and a 4rm HDB. Very likely, you would be able to rent it out for more than $3k. And if you were to rent out the rooms individually, possibly more. Most private property would have a rental yield of 1.5% to 4% max. But HDB can still potentially get a rental yield of 9%.
If you still have the dream of living in a private condo, this could help pay for that rent.

Cedric Jamie Soh

29 Sep 2019

Director at Seniorcare.com.sg

I am guessing the resales 3 room refers to HDB for singles (above 35yo scheme).

The resales 3 room...

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