My old parents buying EC

[johnski]

Hi gurus,

Currently my parents both retired are thinking of buying a small EC unit for their retirement home. They are both above 65 years old and used to own a HDB but sold it away more than 10 years ago. They are unemployed with no income. However, they do have savings for downpayment and I will be the guarantor for the loans.

My questions are

1. Are they eligible to purchase an EC? Is there a age limit to it?
2. Will the banks extend loans to them given that i will be the guarantor with stable income?
3. What other teething issues that may be of a problem?

Thanks much!

[ikan bilis]

loan tenure less than 10yrs ??.... and 40% downpayment ??... plus problems using cpf ??.. :beats-me-man:

[CondoInterested]

Not sure about EC.

But my life experience with "no income retired person" buying HDB, no bank / no HDB will lend, no CPF for payment for the "owner" if already taken out the amount beyond minimum sum. In other words pay cash for the buying a resale HDB. And only "owner" allowed to pay.

[darkseed73]

@65 why your parents want to burden themselves? Liquidity is important for that age becos there is always sudden emergency (touch wood) like healthcare etc

With the strict MOP of 5 years means from now to age 70 your parents can't have problems? Is that realistic?

[Lord Anus]

I apologise on behalf of the idiots who wrote the posts above preceding mine. When one has a question, one needs an answer. One does not need more rich-dad-poor-dad style financial advice and motherhood statements.

The problem: Of the 3 of you (parents and you), only you are eligible for a loan. This is assuming you meet the debt servicing ratio with your current income.

I assume that downpayment as well as loan repayment for the property is not an issue at this point, even in light of the new rules.

The solution: Do a tenants-in-common purchase with your parents:- 3 separate owners, each owning a percentage share of the property. For the purpose of legacy and issues arising from legacy concerns, the three of you can decide what proportion you want your shares to be in.

The above would apply to private property but I am not sure if it works for ECs as they are inherently government-subsidised residential properties with accompanying rules.

One only needs to ask the agent selling the property.

[CondoInterested]

@johnski

Is your post meant that only both your parents wanted to be owner and you as guarantor (not owner)? If interpretation is correct, please ignore people who interpreted wrongly. If my interpretation is wrong, my apology and at least I will not call people with "names".

If I am not wrong, HDB Loan can only be paid by owners (with income) CPF. For bank loan I am not sure non owner can pay the loan of HDB Flats unlike PC.

Most of the rule for HDB should apply to EC.

The best bet is you take the owner role (if you don't own a HDB or sell your HDB for EC if you own a HDB). Or call up HDB to check or check with agent.

[ichigo55]

I used to own an EC I don't rem able to get hdb loan for EC, so it has to be a bank loan.
So this may work provided you meet the MSR. You can just query HDB, the officers there would have been able to answer you.



@johnski

Is your post meant that only both your parents wanted to be owner and you as guarantor (not owner)? If interpretation is correct, please ignore people who interpreted wrongly. If my interpretation is wrong, my apology and at least I will not call people with "names".

If I am not wrong, HDB Loan can only be paid by owners (with income) CPF. For bank loan I am not sure non owner can pay the loan of HDB Flats unlike PC.

Most of the rule for HDB should apply to EC.

The best bet is you take the owner role (if you don't own a HDB or sell your HDB for EC if you own a HDB). Or call up HDB to check or check with agent.

[irisng]

If I misinterpret wrongly, pls pardon me.

It is just like parents buying for their children, now is children buying for their retired parents. Maybe you can top up their CPF, does this work?

Me too, only get from bank loan for my EC, cannot loan from HDB.

[eng81157]

Hi gurus,

Currently my parents both retired are thinking of buying a small EC unit for their retirement home. They are both above 65 years old and used to own a HDB but sold it away more than 10 years ago. They are unemployed with no income. However, they do have savings for downpayment and I will be the guarantor for the loans.

My questions are

1. Are they eligible to purchase an EC? Is there a age limit to it?
2. Will the banks extend loans to them given that i will be the guarantor with stable income?
3. What other teething issues that may be of a problem?

Thanks much!

it's a huge problem. no way they can get a loan after CM6.

[ocean68a]

regarding eligibility to buy EC, please go here:

http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyingNewFlatEC?OpenDocument

tks

[Ringo33]

there is no such thing as HDB loan for EC.

[repanse71]

Hi gurus,

Currently my parents both retired are thinking of buying a small EC unit for their retirement home. They are both above 65 years old and used to own a HDB but sold it away more than 10 years ago. They are unemployed with no income. However, they do have savings for downpayment and I will be the guarantor for the loans.

My questions are

1. Are they eligible to purchase an EC? Is there a age limit to it?
2. Will the banks extend loans to them given that i will be the guarantor with stable income?
3. What other teething issues that may be of a problem?

Thanks much!

1. For EC, only bank loan, no HDB loan, as others has pointed out.
2. For CPF, your parents cannot use due to age. To use your CPF, you need to be owner.
3. For bank, they would need you as owner, almost 99% sure. Our mortgage loan conveyancing is on "with recourse" basis i.e. if foreclose with shortfall, chasing owner is better than chasing guarantor.
4. Without income, your parents have zero "contribution" for getting the loan approved. So, you alone MUST be able to afford the loan
5. I would rather you do joint tenancy, rather the tenants in common. If you have siblings, make it known the cash $$$ your parents have helped. Since you are taking the entire credit risk, no one should share (burden) with any asset appreciation (depreciation).

Any exception?
Oh yes. Retirees has been granted housing loans by without any active income.
If LTV is 40% (X), and FD$ (or equivalent) pledged of value 20% (Y) LTV or equivalent of Z months of installment, then loan will likely approved.
With CM7, no sure if these X/Y/Z have been revised.

Good luck.
Personally, my advice is why bother?
From a bank's perspective, this is no different from you doing property investment.

Regards

[new2mondrian]

Actually I have a very similar dilemma, but slightly different circumstances.

My parents have a HDB 5 room flat (1300sqft) in Queenstown area. Above 20 floors with unblocked views. BUT it is an OLD flat that is about 35 years old.

Very conservatively, we may fetch $650k if we sell it. Since the flat is fully paid, my folks will pocket the cash. My parents are currently 65 years old. I got them a 700sqft studio at The Minton, which should TOP soon, to stay in while they rent out their 5 room flat. The monthly rental (conservatively $2300-$2500) should cover their monthly living expenses since my folks are frugal people who don't spend more than $1.2k each month.

Now we are at crossroads. With the recent change in HDB financing policy, we may have a problem selling the flat once it crosses 40 years. But if we sell it and buy a resale HDB or replacement EC, minimum occupation period applies. They cannot monetize their flat for retirement income.

What will you guys do if u were in my shoes? Tell them sell, or don't sell? And if sell, what to do with the $$$? My parents are uninsured, so whatever there's left in the flat value is in preparation for their medical expenses, should we ever come to need it.

Thanks for any inputs!

[new2mondrian]

Hi gurus,

Currently my parents both retired are thinking of buying a small EC unit for their retirement home. They are both above 65 years old and used to own a HDB but sold it away more than 10 years ago. They are unemployed with no income. However, they do have savings for downpayment and I will be the guarantor for the loans.

My questions are

1. Are they eligible to purchase an EC? Is there a age limit to it?
2. Will the banks extend loans to them given that i will be the guarantor with stable income?
3. What other teething issues that may be of a problem?

Thanks much!

Hi Johnski,

If you take up a loan on your parents' behalf, you need to be listed as an owner of the EC. With that, income and HDB purchase rules apply. Have you taken that into consideration thus far?

[ikan bilis]

Actually I have a very similar dilemma, but slightly different circumstances.

My parents have a HDB 5 room flat (1300sqft) in Queenstown area. Above 20 floors with unblocked views. BUT it is an OLD flat that is about 35 years old.

Very conservatively, we may fetch $650k if we sell it. Since the flat is fully paid, my folks will pocket the cash. My parents are currently 65 years old. I got them a 700sqft studio at The Minton, which should TOP soon, to stay in while they rent out their 5 room flat. The monthly rental (conservatively $2300-$2500) should cover their monthly living expenses since my folks are frugal people who don't spend more than $1.2k each month.

Now we are at crossroads. With the recent change in HDB financing policy, we may have a problem selling the flat once it crosses 40 years. But if we sell it and buy a resale HDB or replacement EC, minimum occupation period applies. They cannot monetize their flat for retirement income.

What will you guys do if u were in my shoes? Tell them sell, or don't sell? And if sell, what to do with the $$$? My parents are uninsured, so whatever there's left in the flat value is in preparation for their medical expenses, should we ever come to need it.

Thanks for any inputs!

ummm.... says 30K/yr rent... for next 5yrs rent collect will be 150K... will flat depreciate by 150K in 5yr time ??... when age of flat increases from 35 to 40yr old...
hmm... likely pocket S$150K rent plus some appreciation in flat price (or at worst , flat price), for next 5yrs... :beats-me-man:

[repanse71]

Hi

This is a tough one.

Since your parents are already staying in minton, the key issue is when to cash out on HDB.

You are facing 2 key risks
1. SERS en-bloc. Could your parents get/afford a replacement HDB flat? I am assuming you cannot be part of the HDB equation.
2. Unknown depreciation for HDB crossing 40 years' old.

Personally, I would stay put, if
a. current minton mortgage and monthly expenses could be covered by HDB rental.
b. parents' in relative good manageable health

Else, I would monetize.
This is just me.

Regards





Actually I have a very similar dilemma, but slightly different circumstances.

My parents have a HDB 5 room flat (1300sqft) in Queenstown area. Above 20 floors with unblocked views. BUT it is an OLD flat that is about 35 years old.

Very conservatively, we may fetch $650k if we sell it. Since the flat is fully paid, my folks will pocket the cash. My parents are currently 65 years old. I got them a 700sqft studio at The Minton, which should TOP soon, to stay in while they rent out their 5 room flat. The monthly rental (conservatively $2300-$2500) should cover their monthly living expenses since my folks are frugal people who don't spend more than $1.2k each month.

Now we are at crossroads. With the recent change in HDB financing policy, we may have a problem selling the flat once it crosses 40 years. But if we sell it and buy a resale HDB or replacement EC, minimum occupation period applies. They cannot monetize their flat for retirement income.

What will you guys do if u were in my shoes? Tell them sell, or don't sell? And if sell, what to do with the $$$? My parents are uninsured, so whatever there's left in the flat value is in preparation for their medical expenses, should we ever come to need it.

Thanks for any inputs!

[Dragonfly]

New2mondrian,
Is Minton purchased by your parents? Yes then once HDB sold, cannot buy back unless they sell away the condo.

[new2mondrian]

Thanks ikan bilis, Dragonfly and repanse71.

The Minton was jointly purchased by my husband and I, which means we are responsible for the monthly mortgage (ard $1,500 based on current interest rates). I give my folks $1,200 per month, plus pay for my dad's car runnning exps since the car was a present from me (petrol, insurance, road tax). Should they be able to rent out their HDB 5 room, the arrangement shall be I do not have to give them an allowance. They will depend on rental income for a living. I will continue to pay for the car expenses and condo maintenance fees at Minton.

In short my parents only have one property under their name, which is the HDB. They are in relative good health (keeping fingers crossed).

Yeah, I cannot be part of the HDB equation. I have been thinking through these few issues over the past couple of years.

1) the 700sqft studio at Minton may be too small for them. As they get older, I need to get them a maid. Where can the maid sleep?

2) I need to monetize the HDB should their medical expenses balloon one day. I am not sure if a 40 plus years old flat can be that readily monetizable.

With 1) and 2), the temptation of selling Minton, and getting them somewhere bigger, is always there. A two bedder would have been very ideal. But if I get them a two bedder, I can only afford an EC. But if I get an EC, I will have to sell their HDB, and rent out Minton when the EC TOPs. Rental wise, I am certainly more confident of getting tenants for a Queenstown 5 room HDB; as opposed to a 700sqft studio at Minton. :(

Choices, and more choices. I haven't been tracking EC prices. Possible to find a small EC for $650k these days?

[ikan bilis]

small 2bdr ec at ulu ulu locations (e.g. belysa, bolsom) are at <600K...
why not just keep staying at queenstown and ignore the title lease running down... until 1 day really need selling it for medical expenses... :beats-me-man:

[Sam88]

Some things u can consider

- rent out your Minton to fund your monthly allowance to your parents
- let your parents continue to stay in queens town. They ae so used to the environment.
- will they leave the hdb for you? If they do, and u foot the future medical bill. When they pass on, u still can rent out the place. Assume it has 50 yrs to go at 30k, it still has a residual value of 1.5 million. Remember, most f the time it will be SERs, especially for queens town, so minimal downside. If it gets SERs, u can sell it to someone who wants a newer flat. So I do see value in the hdb flat. 99% SERs chance.



Thanks ikan bilis, Dragonfly and repanse71.

The Minton was jointly purchased by my husband and I, which means we are responsible for the monthly mortgage (ard $1,500 based on current interest rates). I give my folks $1,200 per month, plus pay for my dad's car runnning exps since the car was a present from me (petrol, insurance, road tax). Should they be able to rent out their HDB 5 room, the arrangement shall be I do not have to give them an allowance. They will depend on rental income for a living. I will continue to pay for the car expenses and condo maintenance fees at Minton.

In short my parents only have one property under their name, which is the HDB. They are in relative good health (keeping fingers crossed).

Yeah, I cannot be part of the HDB equation. I have been thinking through these few issues over the past couple of years.

1) the 700sqft studio at Minton may be too small for them. As they get older, I need to get them a maid. Where can the maid sleep?

2) I need to monetize the HDB should their medical expenses balloon one day. I am not sure if a 40 plus years old flat can be that readily monetizable.

With 1) and 2), the temptation of selling Minton, and getting them somewhere bigger, is always there. A two bedder would have been very ideal. But if I get them a two bedder, I can only afford an EC. But if I get an EC, I will have to sell their HDB, and rent out Minton when the EC TOPs. Rental wise, I am certainly more confident of getting tenants for a Queenstown 5 room HDB; as opposed to a 700sqft studio at Minton. :(

Choices, and more choices. I haven't been tracking EC prices. Possible to find a small EC for $650k these days?

[roly8]

sorry..

why burden their selves with loan especially your parent is already at retire age?

:beats-me-man:

somemore, EC & condo have a monthly maintenance fee.
2 bedder is like $200++/mo :banghead:

[DC33_2008]

Can my parents buy BTO HDB /EC flat as they have no more properties in their name, never bought a BTO flat before and can pay cash without home loan? Will they be given a different queue given their age?

[ikan bilis]

Can my parents buy BTO HDB /EC flat as they have no more properties in their name, never bought a BTO flat before and can pay cash without home loan? Will they be given a different queue given their age?

should be no problem... but must wait for 30months after selling the very last private property... likely no grant/subsidy bcoz own private before... sorry, never heard of special seat/queue setup for elderly, pregnant, with-kids or handicap in hdb virtual queue (may be they will increase your chances? don't know...)... and, just give a call to hdb and they will answer you everything.... ;)

[DC33_2008]

Good to test the system. Why no grant? They have never own a hdb flats. Want to stay their kids as all their children are staying in PCs. :D
should be no problem... but must wait for 30months after selling the very last private property... likely no grant/subsidy bcoz own private before... sorry, never heard of special seat/queue setup for elderly, pregnant, with-kids or handicap in hdb virtual queue (may be they will increase your chances? don't know...)... and, just give a call to hdb and they will answer you everything.... ;)

[ikan bilis]

Good to test the system. Why no grant? They have never own a hdb flats. Want to stay their kids as all their children are staying in PCs. :D

ok,ok.... you win,... if hdb dare to don't give you grant hor,... then you go complain to kbw... tell him your parents buying 1.7mil ec, but got only exact 1.67mil in cash and cannot get loan... the 30K grant is needed desperately... :spliff:

[DC33_2008]

Guess this could be a loop hole in the system now. They may plug it after my enquiry. HDB flat investment is more difficult to lose money. We cannot even claim parent's relief with them staying with us. The only that we can claim is relief of maid's levy.
ok,ok.... you win,... if hdb dare to don't give you grant hor,... then you go complain to kbw... tell him your parents buying 1.7mil ec, but got only exact 1.67mil in cash and cannot get loan... the 30K grant is needed desperately... :spliff:

[x11]

Actually I have a very similar dilemma, but slightly different circumstances.

My parents have a HDB 5 room flat (1300sqft) in Queenstown area. Above 20 floors with unblocked views. BUT it is an OLD flat that is about 35 years old.

Very conservatively, we may fetch $650k if we sell it. Since the flat is fully paid, my folks will pocket the cash. My parents are currently 65 years old. I got them a 700sqft studio at The Minton, which should TOP soon, to stay in while they rent out their 5 room flat. The monthly rental (conservatively $2300-$2500) should cover their monthly living expenses since my folks are frugal people who don't spend more than $1.2k each month.

Now we are at crossroads. With the recent change in HDB financing policy, we may have a problem selling the flat once it crosses 40 years. But if we sell it and buy a resale HDB or replacement EC, minimum occupation period applies. They cannot monetize their flat for retirement income.

What will you guys do if u were in my shoes? Tell them sell, or don't sell? And if sell, what to do with the $$$? My parents are uninsured, so whatever there's left in the flat value is in preparation for their medical expenses, should we ever come to need it.

Thanks for any inputs!


If placed in the situation, I would leave the oldies where they would like to be. unless they are complaining that the place is too big to upkeep etc. I'm sure they are comfortable where they are and they are used to the environment. Oldies don't go very well with changes. I prefer to keep them happy and wouldn't mind losing some money in the meantime.

I think the key to the question is will there be a time decay on the HDB flat once it reaches/pasts the 40 year mark? Will it decay or appreciate? not sure how/why the govt is placing such a regulation in place. to cap mature estate prices?

[Shanhz]

If placed in the situation, I would leave the oldies where they would like to be. unless they are complaining that the place is too big to upkeep etc. I'm sure they are comfortable where they are and they are used to the environment. Oldies don't go very well with changes. I prefer to keep them happy and wouldn't mind losing some money in the meantime.

I think the key to the question is will there be a time decay on the HDB flat once it reaches/pasts the 40 year mark? Will it decay or appreciate? not sure how/why the govt is placing such a regulation in place. to cap mature estate prices?

agree with this. old folks energy and magnetic field will resonate better with familiarity. stay with the curr arrangement is good.

[irisng]

Guess this could be a loop hole in the system now. They may plug it after my enquiry. HDB flat investment is more difficult to lose money. We cannot even claim parent's relief with them staying with us. The only that we can claim is relief of maid's levy.

I thought we are allowed to claim $3k for parents relief, not sure whether is it $3k for each or $3k for both but 1 family 1 claim only, if your siblings are claiming, then you cannot claim.

$3k for parents relief is actually very low, I'm sure everybody gives your parents more than that yearly.

[DC33_2008]

Did you read from IRAS on the critera? Did you see the sentence in RED.

Who can claim

You may claim this relief if you supported your or your spouse's parents, grandparents and great grandparents in the previous year.

You must satisfy ALL of the following conditions:

The dependant must be living in Singapore in the previous year
The dependant lived in your household. If the dependant lived in a separate household in Singapore in the previous year, you must incur $2,000 or more in supporting him/her
The dependant is 55 years of age or above in the previous year. If not, he/she must be physically or mentally disabled
The dependant does not have income exceeding $4,000 in the previous year ($2,000 prior to YA 2010) Income includes taxable income (e.g. trade, employment and rental), tax exempt income (e.g. bank interest, dividends and pensions) and foreign-sourced income (regardless of whether it has been remitted to Singapore). The income criterion does not apply for handicapped dependants from the YA 2010.
No one else is claiming this relief or any other relief except grandparent caregiver relief on the dependant.
Only female taxpayers (subject to qualifying conditions) can claim both parent relief and grandparent caregiver relief. Where the parent is handicapped, the female taxpayer can claim the handicapped parent relief (which has a higher amount compared to parent relief) and grandparent caregiver relief on the same dependant if the handicapped dependant is able to perform some caregiving activities.



I thought we are allowed to claim $3k for parents relief, not sure whether is it $3k for each or $3k for both but 1 family 1 claim only, if your siblings are claiming, then you cannot claim.

$3k for parents relief is actually very low, I'm sure everybody gives your parents more than that yearly.

[ecimbew]

You are a good person. Bless you.
700sqft is not small for a couple. Trust me. Your parents will enjoy the facilities. Azeoprop's parents will also stay there and in the same block. Befriend him.


Thanks ikan bilis, Dragonfly and repanse71.

The Minton was jointly purchased by my husband and I, which means we are responsible for the monthly mortgage (ard $1,500 based on current interest rates). I give my folks $1,200 per month, plus pay for my dad's car runnning exps since the car was a present from me (petrol, insurance, road tax). Should they be able to rent out their HDB 5 room, the arrangement shall be I do not have to give them an allowance. They will depend on rental income for a living. I will continue to pay for the car expenses and condo maintenance fees at Minton.

In short my parents only have one property under their name, which is the HDB. They are in relative good health (keeping fingers crossed).

Yeah, I cannot be part of the HDB equation. I have been thinking through these few issues over the past couple of years.

1) the 700sqft studio at Minton may be too small for them. As they get older, I need to get them a maid. Where can the maid sleep?

2) I need to monetize the HDB should their medical expenses balloon one day. I am not sure if a 40 plus years old flat can be that readily monetizable.

With 1) and 2), the temptation of selling Minton, and getting them somewhere bigger, is always there. A two bedder would have been very ideal. But if I get them a two bedder, I can only afford an EC. But if I get an EC, I will have to sell their HDB, and rent out Minton when the EC TOPs. Rental wise, I am certainly more confident of getting tenants for a Queenstown 5 room HDB; as opposed to a 700sqft studio at Minton. :(

Choices, and more choices. I haven't been tracking EC prices. Possible to find a small EC for $650k these days?

[irisng]

Did you read from IRAS on the critera? Did you see the sentence in RED.

Who can claim

You may claim this relief if you supported your or your spouse's parents, grandparents and great grandparents in the previous year.


You must satisfy ALL of the following conditions:

The dependant must be living in Singapore in the previous year
The dependant lived in your household. If the dependant lived in a separate household in Singapore in the previous year, you must incur $2,000 or more in supporting him/her
The dependant is 55 years of age or above in the previous year. If not, he/she must be physically or mentally disabled
The dependant does not have income exceeding $4,000 in the previous year ($2,000 prior to YA 2010) Income includes taxable income (e.g. trade, employment and rental), tax exempt income (e.g. bank interest, dividends and pensions) and foreign-sourced income (regardless of whether it has been remitted to Singapore). The income criterion does not apply for handicapped dependants from the YA 2010.
No one else is claiming this relief or any other relief except grandparent caregiver relief on the dependant.
Only female taxpayers (subject to qualifying conditions) can claim both parent relief and grandparent caregiver relief. Where the parent is handicapped, the female taxpayer can claim the handicapped parent relief (which has a higher amount compared to parent relief) and grandparent caregiver relief on the same dependant if the handicapped dependant is able to perform some caregiving activities.


I don't know about your case but for my side, we meet all the criteria.:47:

[DC33_2008]

My problem is the criterion in red. My parents' income cannot be more than $4000 per year from interest from bank, etc. :( They are in private banking customers).
I don't know about your case but for my side, we meet all the criteria.:47:

[x11]

not to hijack the thread ... but would like to know how the forumers view this.

would there be a huge decay on the older hdb flats (those 40 years and older) with the new ruling?

[new2mondrian]

Thanks to all forummers who took the effort to give your inputs. Appreciate it very much.

Agree that it may be best for my folks to stay in their Queenstown flat. It is near my place, and my hubby will be much happier as the commuting time is much shorter (we need to pick up our child every evening). But since we purchased Minton, my mom and dad have been eagerly checking out the construction progress every now and then. After toiling for all their lives, and staying in an old HDB, at last they can look forward to renovating a new place and moving into a condo. In this respect, I am mindful of not bursting that bubble. If not Minton, I need to find them a replacement condo. That's why the two bedder EC idea. :)

Agree also that HDB value probably will not drop significantly over time. Since the old flat had held many priceless memories for our family, selling it can also be painful to my old folks. Taking into consideration all the views, we decided to retain the flat and rent it out. If can rent for $3K, it would certainly be great. Can live out their retirement years in relative comfort. Probably will have to spruce up the unit, maybe change the flooring, give the unit a fresh coat of paint, and install new kitchen cabinets between renting.

Thanks everyone, and have a great week ahead!

[new2mondrian]

not to hijack the thread ... but would like to know how the forumers view this.

would there be a huge decay on the older hdb flats (those 40 years and older) with the new ruling?

Hmm, I have no idea. Decay wise, probably not, since the Govt will spruce up the block and its surroundings every decade or so. But demand wise, really not sure. Depends on location I suppose. This is not tested thus far.