PROPERTY WEALTH PLANNING
Is Holding on to your HDB a good decision?
What should you do?
Choice # 1 : Do nothing
1. CPF 2.5% per annum
The longer your CPF used in the property, the more accrued interest you have to pay back from selling the house. Compound interest effects. That means you have less cash to take back.
Do you know?
Some people cannot sell their house due to negative sale proceed.
2. Depreciation of property value
3. Inflation. Your property should be an hedge against inflation.
4. You have not put your money into good use
Many wise people already make rounds of profit in every 3-5 years. Plus, some pay the same monthly instalment and get to live in a new property.
You simply "bo chap" giving your family a better living and planning your retirement.
Choice # 2 : Keep my HDB and buy another property
1. Additional stamp duty
BSD 3% + ABSD 12% = total 15% goes to the government. How many property can make more than a profit of 15%? Is it worth it?
2. Restriction of max loan-to-value (LTV)
If you have not cleared your first loan in the first property, you can only borrow max 45% for 2nd property.
3. Restriction of CPF usage
If you use CPF for your 2nd property, you have to put aside half of the minimum retirement sum. For e.g. Turning 55 after 1 jan 2020, Retirement sum is $181k. Must put aside $90,500 !!
4. I have no above financial issue and able to buy the second property.
Congrats you are one of the few who have this type of financial power. However, you have simply ignore the fact mentioned earlier about holding on to HDB as a bad asset. Why not get a second better investment?
5. I got Sentimental value
Your sentimental value or a better future for your family and planning your retirement?
Which is more important?
Choice # 3 : Sell my HDB and buy the next better property
Resale Vs New Launch
Why buy new launch?
1. Protected Entry Point
2. Lower Breakeven Point
3. First mover advantage