Buying property is a high risk investment with hidden cost
Unless you pay cash in full to buy the unit ; you are deep deep trouble if you didn’t know …
To begin with , paying all the initial fees in thousands of $$$ to book yourself a unit .
Paying the downpayment with some cash and the rest using CPF and loans .
While you are strugggling with monthly mortgage payment to banks or HDB housing loan…… ( with interest already )
What most people didn’t realize or factor in is the amount you withdrew from CPF for housing is quietly accumulating a “ACCRUED INTEREST” based on the capital amount you had used on housing .. on top of your housing loan interest . ( the money you owe CPF board )
Also monthly and yearly you have to pay extra maintenance fee and taxes just to upkeep your property …
Finally if you decided to sell away your house or unable to meet mortgage payment and if you are lucky and able to sell away at valuation or above your cost .
The banks and HDB is going to come after your outstanding bank or HDB loan from the sale proceeds (if ANY) !!!
And CPF board is coming after your accrued interest which can be quite substancial if you didn’t know .
Any shortfall you need to top up with cash !!!!!!
Buying another flat from HDB ( even if you want to downsize ) , and if you not make any money from the sale ;HDB will also slap you with another huge levy imposed for buying a 2nd property from them .
End of the day , you will be worst off then if you had not bought any property at all .
Accrued interest is the amount that members would otherwise have earned had they not withdrawn their CPF savings for their housing repayment. The interest is computed on the principal amount withdrawn for housing on a monthly basis (at the prevailing CPF Ordinary Account interest rate) and compounded yearly.
this hidden accrued interest to CPF board is compounded yearly !!!!!
The more and the longer this amount is outstanding , the more you will owe CPF .
This is on top of the mortgage interest you are paying to banks and HDB now .
Property is a double edge sword . Unless you have solid cash on hand . You may be better off renting now
A cheap typical $400K home now , a $100K used from CPF to fund the purchase . This amount for accrued interest to CPF board over 20 years , can easily balloon to about $60K interest !!!!!
You better pray hard the property you buy now you can make at least $100K net after all interest + mortgage interest deduction and fees .
Pray harder all interest rate don’t increase next year and after … that includes the HDB concessionary rate or even OA base-rate ( will hit your accrued interest even harder ) .
buy construction counters instead, these companies get paid regardless whether the developers can sell at good price or not. If developers don’t get good price, they will shelve the project. Contractors will bear the material and overhead cost…. and of course, no payment. The worst place to be is in contracting. It was only less than 10 years since the construction industry hit rock bottom and people have forgotten how bad it was. Contractors are paid second last, after banks, government, developers’ own staff. Who gets paid last? Subcontractors.
that’s where many boys and girls assume property will rise and they can profit from it in the next 5 years …
THE WORD IS “IF” PROPERTY PRICE RISE .
EVEN IF IT RISE ANOTHER 5-10% IF YOU BOUGHT RECENTLY . AND AFTER YOU SELL , YOU LIKELY NEED TO BUY ANOTHER PLACE .
Did you actually profit from it or only resulted in a net loss after all the fees and interest cost ?
The only people who had profited greatly are those who bought property 15- 20 years ago .
why are ppl assuming property will go up next 10 20 yrs ?
becos they see property price been going up the previous 20 yrs? so the next 10 to 20 yrs will also go up ?
becos they think Sg population will go 10 million?
becos they think Sg will continue to be prosperous and as a result flooded with foreigners for the next 20 yrs?
Are we sssuming Sg is still prosperous next 10 yrs while paying for the loans?
Are we assuming the next 10 20 yrs , there are as many foreigners as ever to rent our condos/houses while we paying the loan >?
This reminds me of the dot.com crash when everybody thought at that time, that tech stocks will keep going higher and higher.