View Full Version : How much savings should you have after paying off downpayment then consider safe?
Let say I am buying a $600k MM unit. after paying 120k..how much should I have then consider safe and how much then consider borderline(as in interest go up then i in trouble)
thomastansb
28-01-13, 08:58
People should have another 20% of DP. To tide you over no rental or retrenchment or whatever. This is my suggestion.
Let say I am buying a $600k MM unit. after paying 120k..how much should I have then consider safe and how much then consider borderline(as in interest go up then i in trouble)
People should have another 20% of DP. To tide you over no rental or retrenchment or whatever. This is my suggestion.
another 20% of the loan amount or 20% of the property valuation? :beats-me-man:
for rental, i think 6 months rental buffer shld be safe. but also need to consider a reasonable drop in rental should mkt turn. so no rental + drop in rental, both need to consider
for income, no golden rule since only you yourself know how dispensable you are in your job or how stable it is. then you just buffer accordingly.
People should have another 20% of DP. To tide you over no rental or retrenchment or whatever. This is my suggestion.
Then if 50% down, need another 20%, total need 70% to be safe ah ?
another 20% of the loan amount or 20% of the property valuation? :beats-me-man:
your obligation is to the bank, not the market. so it shld be 20% of the original buying price. or if you taken equity loan, then 20% of the re-valued ppty price.
but it also depends on your current LTV. if at 80%, then 20% buffer is safer. but if your LTV at 30%, then you already huat leow. a much lower buffer is needed.
Then if 50% down, need another 20%, total need 70% to be safe ah ?
if 50% down, then rental will definitely (or highly likely) cover your instalment regardless of high or low rental amount. you just need to buffer for rental transition period and repairs etc. my :2cents: lah.
another 20% meaning i down 120k as downpayment..then another 120k as reserve..for own stay..quite fierce leh..like that buy mm unit need to have at least 200k then consider
I have MM too. This is what I do.
Say current MM rental fetch $2500. I will put aside: $2500 x 8= $20,000.
In case no rental income for 6 months (weak rental market). In addition, you need to pay monthly maintance fees etc.
The above does not include emergency cash fund put aside for at least 6 months.
It depends greatly on your age.
When buying your first property at age 25-30, u may only need to have 6 months of your monthly income as emergency. When u are 30-35, i would suggest 20% downpayment plus another 10%. Above 40, 40%-50% downpayment.
When u are young, u can afford to take more risk as time is on your side and it is very easy for u to find another job if you are retrenched.
darkseed73
28-01-13, 13:29
It depends greatly on your age.
When buying your first property at age 25-30, u may only need to have 6 months of your monthly income as emergency. When u are 30-35, i would suggest 20% downpayment plus another 10%. Above 40, 40%-50% downpayment.
When u are young, u can afford to take more risk as time is on your side and it is very easy for u to find another job if you are retrenched.
Agree, and upz :D
Remember to get a decreasing term mortgage insurance.
Don't think DBS is offering Decreasing terms.
I got one from them in Q4.
Remember to get a decreasing term mortgage insurance.
Don't think DBS is offering Decreasing terms.
I got one from them in Q4.
U can always get it from other insurer. Dbs one was tie up with AVIVA. Can ask GE too.
Don't think DBS is offering Decreasing terms.
I got one from them in Q4.
you dun have to get fr the same bank. most insurers offer this product. i got one from aviva, which is 2nd cheapest compared to HSBC (but hsbc had some funny T&C which i din like)
TQ, Leesg123 and Shanhz. This is the advantage of landing in a forum with many helpful forumers and sharing experiences, views, and subject matter experts.:cheers1:
TQ, Leesg123 and Shanhz. This is the advantage of landing in a forum with many helpful forumers and sharing experiences, views, and subject matter experts.:cheers1:
no worries bro... that's what forums are for.
FYI further, the cheaper ones to look at are aviva, AXA life, HSBC, NTUC and tokio marine. slightly more expensive will be GE if i rem correct. diff between is about 10-20%, not much in dollar terms really.
if you need an insurance broker to help u, you can pm me. no personal agenda, just to spread some love. :D
I am wondering, for those who purchased BUC on mortage, is there anyway to start paying the full installment amount instead of waiting till completion few years later?
Interest rate so low now but cannot capitalize on it....
I am wondering, for those who purchased BUC on mortage, is there anyway to start paying the full installment amount instead of waiting till completion few years later?
Interest rate so low now but cannot capitalize on it....
You can always 'pay yourself' the full installment first in a separate savings acct. When the full loan kicks in, empty that savings acct to make partial repayment. No lugi.
You can always 'pay yourself' the full installment first in a separate savings acct. When the full loan kicks in, empty that savings acct to make partial repayment. No lugi.
yah lor.. somemore can make some little interest on that amt. actually that's what i am doing. by the time TOP, you can easily make 5-10% payment already. plus the 10% cash buffer i already set aside.. my LTV already super low when TOP.
20% initial DP, and during the 4 yrs to TOP, set aside 15%. You will have 35% paid off by then, the 65% will be from your monthly loan servicing. LTV already reduced to about 60/40. I also set aside some funds on 10yr deals after my OTP. 6 yrs after TOP, will again have something to further reduce the loan. I have no active cash buffer, though, there are small invested accounts spread over the years where I can realise if needed.
yah lor.. somemore can make some little interest on that amt. actually that's what i am doing. by the time TOP, you can easily make 5-10% payment already. plus the 10% cash buffer i already set aside.. my LTV already super low when TOP.
20% initial DP, and during the 4 yrs to TOP, set aside 15%. You will have 35% paid off by then, the 65% will be from your monthly loan servicing. LTV already reduced to about 60/40. I also set aside some funds on 10yr deals after my OTP. 6 yrs after TOP, will again have something to further reduce the loan. I have no active cash buffer, though, there are small invested accounts spread over the years where I can realise if needed.
so which is the point you will invest in the next condo (instead of keep paying down your current loan)... under leverage also no good, assuming you can get better returns on investment
Let say I am buying a $600k MM unit. after paying 120k..how much should I have then consider safe and how much then consider borderline(as in interest go up then i in trouble)
I set aside about 15% the value of my 2nd property. This amount is not just for paying installments but also other unforeseen events in life.
As I didn't take up a huge loan, the rental for one of my properties is almost enough to cover the monthly installments for both properties.
Hope this helps.
You can always 'pay yourself' the full installment first in a separate savings acct. When the full loan kicks in, empty that savings acct to make partial repayment. No lugi.
Hmm...true also, though there is a temptation to invest those idle money....
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