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Thread: To buy EC now or save for 2nd Property

  1. #1
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    Default To buy EC now or save for 2nd Property

    Hi all Gurus here. Seeking your advice on which would be a better route to take.

    My current situation
    I currently own a 4rm HDB located at city fringe. Installments left about 98K. We bought it abt 7 yrs ago for abt 220k. Heard last unit transacted a floor above mine for $500k+
    Our combine CPF (OA) is about $80k

    Initially we were looking at getting a unit at Watercolors but din see any unit we liked.... (trying to look for a 4 bedrooms so parents can stay with us)

    So while in the process, someone suggested that I get a 2nd property for rental since the HDB is almost paid up.... took a look at nearby PC, the likes of water bank and learn that its about $880k for a 1 bedroom.

    So the question is
    Should I save like hell, meaning shift back with parents and rent out my current hdb (not sure even if I do, would I make it for the down payment)

    or

    Just go with the EC at some far away place......

    Just wanna hear the views of the gurus here......

    Thks in advance

  2. #2
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    Get EC while you still can, before they revamp the scheme. You can consider dual key units since you plan to stay with your parents.

  3. #3
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    Here is a list of all the new EC for sale and in the pipeline.

    http://www.hdb.gov.sg/fi10/fi10321p....C?OpenDocument

  4. #4
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    Quote Originally Posted by azeoprop
    Here is a list of all the new EC for sale and in the pipeline.

    http://www.hdb.gov.sg/fi10/fi10321p....C?OpenDocument
    However, do note CM7. Especially cap on MSR @ 30%

    http://www.iras.gov.sg/irasHome/page03a.aspx?id=14342



  5. #5
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    Quote Originally Posted by price
    However, do note CM7. Especially cap on MSR @ 30%

    http://www.iras.gov.sg/irasHome/page03a.aspx?id=14342


    wow VERY VERY VERY difficult to buy 2nd/3rd property
    In the final analysis.....its NOT whether you have a diploma,degree,masters OR PHD....its whether you have a HDB/PC/EC or LANDED...

  6. #6
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    if u can afford the down payment, go for the pc.

    reason:
    assume EC at northeast, 750psf
    PC at northeast, 1050psf
    3bedder (hdb 4rm) pc assuming 1000psf for easy calculation.

    you save 300k for buying a EC. but bad thing is, you need to sell your hdb.

    imagine u did not sell your hdb (and your parent hdb also go for rental) and u rent out your hdb. assuming 2.5k for each 4rm hdb rented out, in 10 yrs, you had 2.5x12x10x2=600K
    not counting the rental of your parent flat, you get 300k from renting out your hdb which already covers your saving for buy EC. and at the end, you still have your hdb...


    Quote Originally Posted by adriel
    Hi all Gurus here. Seeking your advice on which would be a better route to take.

    My current situation
    I currently own a 4rm HDB located at city fringe. Installments left about 98K. We bought it abt 7 yrs ago for abt 220k. Heard last unit transacted a floor above mine for $500k+
    Our combine CPF (OA) is about $80k

    Initially we were looking at getting a unit at Watercolors but din see any unit we liked.... (trying to look for a 4 bedrooms so parents can stay with us)

    So while in the process, someone suggested that I get a 2nd property for rental since the HDB is almost paid up.... took a look at nearby PC, the likes of water bank and learn that its about $880k for a 1 bedroom.

    So the question is
    Should I save like hell, meaning shift back with parents and rent out my current hdb (not sure even if I do, would I make it for the down payment)

    or

    Just go with the EC at some far away place......

    Just wanna hear the views of the gurus here......

    Thks in advance

  7. #7
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    Quote Originally Posted by lajia
    if u can afford the down payment, go for the pc.

    reason:
    assume EC at northeast, 750psf
    PC at northeast, 1050psf
    3bedder (hdb 4rm) pc assuming 1000psf for easy calculation.

    you save 300k for buying a EC. but bad thing is, you need to sell your hdb.

    imagine u did not sell your hdb (and your parent hdb also go for rental) and u rent out your hdb. assuming 2.5k for each 4rym hdb rented out, in 10 yrs, you had 2.5x12x10x2=600K
    not counting the rental of your parent flat, you get 300k from renting out your hdb which already covers your saving for buy EC. and at the end, you still have your hdb...
    U missed out 7% absd.

  8. #8
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    Quote Originally Posted by lajia
    if u can afford the down payment, go for the pc.

    reason:
    assume EC at northeast, 750psf
    PC at northeast, 1050psf
    3bedder (hdb 4rm) pc assuming 1000psf for easy calculation.

    you save 300k for buying a EC. but bad thing is, you need to sell your hdb.

    imagine u did not sell your hdb (and your parent hdb also go for rental) and u rent out your hdb. assuming 2.5k for each 4rm hdb rented out, in 10 yrs, you had 2.5x12x10x2=600K
    not counting the rental of your parent flat, you get 300k from renting out your hdb which already covers your saving for buy EC. and at the end, you still have your hdb...
    That is assuming they have the bullets for the downpayment plus ABSD for 2nd property! Very steep to get PC these days!!!

  9. #9
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    fully pay off and keep the HDB and buy another property.

    The way to play the property game is to have more than 1 property. One being the roof over your head and one or more investment property. It doesn't matter how high property prices go up if you have only 1 property. You can't cash out. You may continue to upgrade to bigger, more expensive properties, but it's not going to help you retire.

    You have to decide whether property is for consumption (in the case of single property, your roof) or investment (cash-flow positive properties).

    Good Luck.

  10. #10
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    exactly....bite the bullet!
    Quote Originally Posted by ysyap
    That is assuming they have the bullets for the downpayment plus ABSD for 2nd property! Very steep to get PC these days!!!

  11. #11
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    Quote Originally Posted by azeoprop
    Get EC while you still can, before they revamp the scheme. You can consider dual key units since you plan to stay with your parents.
    Agree... EC is exactly designed for people who wants a quick route to upgrade to get the same in pc needs at least $300k in cash I love this country

  12. #12
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    Ltv gonna be pretty painful. Gotta work out ur loan / salary required if u dun intend to sell your hdb for pc.

  13. #13
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    Thks all for the kind advice.... Yes stuck on eat to do cos one wrong move will affect whole life....

    Thing now is wifey not so keen to rent out place....that means it will take even longer to acquire no 2 property as passive income.....

    Doing some sums now but reckon 2nd property out Liao os by the time save snuff for no. 2 prices probably doubled....loan tenure reduced.......

    Haizzzz so close but yet so far.

    Thks all again....appreciate it

  14. #14
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    Most of the time is the wife side that has a problem. They want to stay big big house, location maybe near her parent or workplace. Men anything also can, can stay in small small place. So if single can really go ahead with it and make big money.

  15. #15
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    Quote Originally Posted by star
    Most of the time is the wife side that has a problem. They want to stay big big house, location maybe near her parent or workplace. Men anything also can, can stay in small small place. So if single can really go ahead with it and make big money.

    Hahahaha...true.....but then again also cannot blame her.... think most people would rather just live with spouse and children......

    nevermind la.....Think of other options.

  16. #16
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    Quote Originally Posted by adriel
    Hahahaha...true.....but then again also cannot blame her.... think most people would rather just live with spouse and children......

    nevermind la.....Think of other options.
    cheers bro hang around this forum u will learn a lot
    In the final analysis.....its NOT whether you have a diploma,degree,masters OR PHD....its whether you have a HDB/PC/EC or LANDED...

  17. #17
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    Quote Originally Posted by sh
    fully pay off and keep the HDB and buy another property.

    The way to play the property game is to have more than 1 property. One being the roof over your head and one or more investment property. It doesn't matter how high property prices go up if you have only 1 property. You can't cash out. You may continue to upgrade to bigger, more expensive properties, but it's not going to help you retire.

    You have to decide whether property is for consumption (in the case of single property, your roof) or investment (cash-flow positive properties).

    Good Luck.
    Very sound advice!

    However I found that a lot of people know what to do but when it comes for them to act, they procrastinate, take no action and let the opportunity slip by...

    Case study #1

    Last year, my friend had an almost paid up HDB flat (outstanding loan smaller than TS). He wanted to get a PC and rent out his HDB. So he went on to fully pay up his HDB so that he could get 80% LTV on his PC. He went on house hunting for months and finally found his ideal unit. When he was about to make an offer, he backed out hoping that the seller would lower the asking price by some 50k; but the seller simply sold his unit to the next potential buyer! Needless to say, CM7 came along and he is priced out and MTB. Till today, he is still staying in his fully paid HDB hoping that one day he could fulfill his PC and landlord dream.

    Case study #2

    Another friend of mine had a fully paid up PC. She wanted to buy another PC and has been looking around for years (yes, years) since 07. To be fair to her, each time she found something ideal, her HUSBAND will say wait for price correction or for price to crash or it is safer to keep the money in the bank. Now we are already in the next property cycle and her HUSBAND is still waiting for the "perfect timing" to come... Well, CM7 came first and they will have to pay ABSD for their 2nd property now; so what to do? WAIT further lor!!!

    These are just 2 egs, I know of many people who are still waiting...

    Well, I could only say 一种米养百种人 . Each to his own and that is why this world is imperfect and interesting.

    To TS: After reading my post, I hope you and your wife can understand what is the best decision for you to achieve passive income and move towards financial independence. GOOD LUCK!

  18. #18
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    Quote Originally Posted by earthling
    Very sound advice!

    However I found that a lot of people know what to do but when it comes for them to act, they procrastinate, take no action and let the opportunity slip by...

    Case study #1

    Last year, my friend had an almost paid up HDB flat (outstanding loan smaller than TS). He wanted to get a PC and rent out his HDB. So he went on to fully pay up his HDB so that he could get 80% LTV on his PC. He went on house hunting for months and finally found his ideal unit. When he was about to make an offer, he backed out hoping that the seller would lower the asking price by some 50k; but the seller simply sold his unit to the next potential buyer! Needless to say, CM7 came along and he is priced out and MTB. Till today, he is still staying in his fully paid HDB hoping that one day he could fulfill his PC and landlord dream.

    Case study #2

    Another friend of mine had a fully paid up PC. She wanted to buy another PC and has been looking around for years (yes, years) since 07. To be fair to her, each time she found something ideal, her HUSBAND will say wait for price correction or for price to crash or it is safer to keep the money in the bank. Now we are already in the next property cycle and her HUSBAND is still waiting for the "perfect timing" to come... Well, CM7 came first and they will have to pay ABSD for their 2nd property now; so what to do? WAIT further lor!!!

    These are just 2 egs, I know of many people who are still waiting...

    Well, I could only say 一种米养百种人 . Each to his own and that is why this world is imperfect and interesting.

    To TS: After reading my post, I hope you and your wife can understand what is the best decision for you to achieve passive income and move towards financial independence. GOOD LUCK!

    Thks for the advice........but its not my decision to make......if i can make it on my own I would...... wife also not unreasonable to wanna be contented and maintain status quo.....

    everyone say a short pray for my toto dream tonight bah.....otherwise

  19. #19
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    Hi adriel,

    Just to share with you my story as I was in your same situation 2 years ago. 2 years ago, I bit the bullet and paid off my HDB outstanding loan after I found a suitable PC in District 12. I wanted to sell off my HDB as do not have sufficient cash to pay for downpayment of PC. My parents offered to lend me some cash and advised that I should rent out my HDB.
    After much consideration, I bought the PC in May 2011 and have been staying there and rented out my HDB. Looking back, really glad to make that decision as my PC has risen 20% based on recent transaction while I collect rent from HDB. In fact, my HDB has also appreciated in the last 2 years. Just remember to declare rental income and have to pay higher property tax (10% of annual value) for the HDB. It is a small price to pay. If I can rent out HDB for about 15 years, actually equals to my buying price! Of cos that was before CM7 or CM8 came into place, else I wouldn't be able to afford 2nd property.

    Good luck!

  20. #20
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    Quote Originally Posted by bergkamp
    Hi adriel,

    Just to share with you my story as I was in your same situation 2 years ago. 2 years ago, I bit the bullet and paid off my HDB outstanding loan after I found a suitable PC in District 12. I wanted to sell off my HDB as do not have sufficient cash to pay for downpayment of PC. My parents offered to lend me some cash and advised that I should rent out my HDB.
    After much consideration, I bought the PC in May 2011 and have been staying there and rented out my HDB. Looking back, really glad to make that decision as my PC has risen 20% based on recent transaction while I collect rent from HDB. In fact, my HDB has also appreciated in the last 2 years. Just remember to declare rental income and have to pay higher property tax (10% of annual value) for the HDB. It is a small price to pay. If I can rent out HDB for about 15 years, actually equals to my buying price! Of cos that was before CM7 or CM8 came into place, else I wouldn't be able to afford 2nd property.

    Good luck!
    Ya.....i know thats the right thing to do financially...think by renting out the flat...should be able to raise down payment amount in 2-3 yrs (inclusive of CM7 etc etc) ..... then continue to rent out another 2 yrs to buffer for (in case ) lost of rental for PC...... after that the PC should finance itself liao.............so near yet so far......

    thks for sharing bro.

  21. #21
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    Quote Originally Posted by adriel
    Hi all Gurus here. Seeking your advice on which would be a better route to take.

    My current situation
    I currently own a 4rm HDB located at city fringe. Installments left about 98K. We bought it abt 7 yrs ago for abt 220k. Heard last unit transacted a floor above mine for $500k+
    Our combine CPF (OA) is about $80k

    Initially we were looking at getting a unit at Watercolors but din see any unit we liked.... (trying to look for a 4 bedrooms so parents can stay with us)

    So while in the process, someone suggested that I get a 2nd property for rental since the HDB is almost paid up.... took a look at nearby PC, the likes of water bank and learn that its about $880k for a 1 bedroom.

    So the question is
    Should I save like hell, meaning shift back with parents and rent out my current hdb (not sure even if I do, would I make it for the down payment)

    or

    Just go with the EC at some far away place......

    Just wanna hear the views of the gurus here......

    Thks in advance
    Since you still qualify for an EC, I would presume your monthly savings will not be very substantial. To pay off your $98k loan for your existing HDB, you will wipe off your CPF $80k and you need to top up $18k in cash. Only then you will be eligible for a 20% loan on your 2nd ppty and subject to 7% absd plus the usual 3% stamp duties.

    That would mean for a $1m purchase, you need to have cash total of $300k (20% downpayment + total 10% stamp duties) + $18k to pay off your HDB loan = $318k. That is a big amount.

    Frankly, imho, whoever still qualify for an EC should buy the EC unless you are cash rich and have parents support.

  22. #22
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    Quote Originally Posted by Ilikeu
    Since you still qualify for an EC, I would presume your monthly savings will not be very substantial. To pay off your $98k loan for your existing HDB, you will wipe off your CPF $80k and you need to top up $18k in cash. Only then you will be eligible for a 20% loan on your 2nd ppty and subject to 7% absd plus the usual 3% stamp duties.

    That would mean for a $1m purchase, you need to have cash total of $300k (20% downpayment + total 10% stamp duties) + $18k to pay off your HDB loan = $318k. That is a big amount.

    Frankly, imho, whoever still qualify for an EC should buy the EC unless you are cash rich and have parents support.

    You're right bro.....actually I planning for a max 800K unit which in all (if i calculated correctly) is $240K.....

    i'm ready to "Pain Pain" for the next 3-4 years...save up like crazy, move in with parents to get rental, do part time jobs etc etc.....and should be able to just hit that amount +plus savings we have ............

    Then after buy still rent out HDB for another year to buffer for "no tenancy". So all in... 5 years...... some friends say crazy.....why suffer so much???

    But how i see it is its only 5 years after that its song song to jurong...... at least old no need to burden kid.......or stress where got income .....that seemed more impt to me now.....

    But haizz.......think so much also no pt........cos I cannot do it myself.....and I can understand why.........

    Thks all.....think we'll stop here.....thks everyone for the advice....I dun want to waste u guy's time to advice when I now know that I cannot rent out my place to start the ball rolling......

  23. #23
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    Behind every successful man is a wise woman.
    The other way is also true.

    This is life, just enjoy it
    What ia a good house?
    It is a good house as long as you love it

  24. #24
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    Quote Originally Posted by lajia
    if u can afford the down payment, go for the pc.

    reason:
    assume EC at northeast, 750psf
    PC at northeast, 1050psf
    3bedder (hdb 4rm) pc assuming 1000psf for easy calculation.

    you save 300k for buying a EC. but bad thing is, you need to sell your hdb.

    imagine u did not sell your hdb (and your parent hdb also go for rental) and u rent out your hdb. assuming 2.5k for each 4rm hdb rented out, in 10 yrs, you had 2.5x12x10x2=600K
    not counting the rental of your parent flat, you get 300k from renting out your hdb which already covers your saving for buy EC. and at the end, you still have your hdb...
    Assuming 3bedder pc at 1000sqft, $1000psf, price= $1,000,000
    5% downpayment= $50,000(cash)
    Signing S&P 15%= $150,000(cash/cpf) (minimum sum $139,000 OA+SA cannot touch)
    Stamp duties 10%= $100,000 (3%+7%absd)
    At this point, it's only 20% stage.

    Total premium outlay without existing loan = $50k+$150k+$100k+$98k(to pay off existing hdb loan)= $398,000!

    With existing hdb loan, max 2nd loan cap at 50%, so another 30% is needed = $300,000(cash/cpf),so total premium outlay with existing hdb loan = $50k+$150k+$100k+$300k=$550,000!!!

    So you must have at least $398,000 on hand before you can enjoy $600,000 return 10 years later.

    That's the power of 7th cooling measure!
    Last edited by beepbeep; 04-06-13 at 10:25.

  25. #25
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    Quote Originally Posted by beepbeep
    Assuming 3bedder pc at 1000sqft, $1000psf, price= $1,000,000
    5% downpayment= $50,000(cash)
    Signing S&P 15%= $150,000(cash/cpf) (minimum sum $139,000 OA+SA cannot touch)
    Stamp duties 10%= $100,000 (3%+7%absd)
    At this point, it's only 20% stage.

    Total premium outlay without existing loan = $50k+$150k+$100k+$98k(to pay off existing hdb loan)= $398,000!

    With existing hdb loan, max 2nd loan cap at 50%, so another 30% is needed = $300,000(cash/cpf),so total premium outlay with existing hdb loan = $50k+$150k+$100k+$300k=$600,000!!!

    So you must have at least $398,000 on hand before you can enjoy $600,000 return 10 years later.

    That's the power of 7th cooling measure!
    Typo, should be $600,000 for 2nd scenario

  26. #26
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    Hi, this is an interesting thread.

    It brings out a part of what i`m thinking of, though i made the mistake by buying BTO from the start.

    On the thread starter's scenario, I`m in for paying off all and starting afresh.

    For me, my BTO cost 500k and will be ready soon.

    My wife and I managed to save up about 400K plus Cash + CPF.

    By the time the flat comes, we should be able to fully pay it.

    The option we are looking at now is to take no loan and start afresh, in hope to buy a 2nd property once MOP is over.

    Hence, I would like to seek advices on how I should plan my mortgage payments.

    Thanks in advance!

  27. #27
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    Quote Originally Posted by dodobird
    Hi, this is an interesting thread.

    It brings out a part of what i`m thinking of, though i made the mistake by buying BTO from the start.

    On the thread starter's scenario, I`m in for paying off all and starting afresh.

    For me, my BTO cost 500k and will be ready soon.

    My wife and I managed to save up about 400K plus Cash + CPF.

    By the time the flat comes, we should be able to fully pay it.

    The option we are looking at now is to take no loan and start afresh, in hope to buy a 2nd property once MOP is over.

    Hence, I would like to seek advices on how I should plan my mortgage payments.

    Thanks in advance!
    Take max loan.... Interest rate is so low....

    When your BTO finishes the MOP, then you decide to fully repay or not... Policy may change then....


  28. #28
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    Quote Originally Posted by dodobird
    Hi, this is an interesting thread.

    It brings out a part of what i`m thinking of, though i made the mistake by buying BTO from the start.

    On the thread starter's scenario, I`m in for paying off all and starting afresh.

    For me, my BTO cost 500k and will be ready soon.

    My wife and I managed to save up about 400K plus Cash + CPF.

    By the time the flat comes, we should be able to fully pay it.

    The option we are looking at now is to take no loan and start afresh, in hope to buy a 2nd property once MOP is over.

    Hence, I would like to seek advices on how I should plan my mortgage payments.

    Thanks in advance!
    Hi, did you take up bank loan or HDB loan? If you took bank loan, go for max; if HDB loan, can consider fully pay up as HDB interest rate much higher...

    Then you must also consider, if fully paid, do you still have cash for downpayment + BSD + ABSD for your 2nd property if it comes along? If don't fully pay, you can only take up max 50% loan for your 2nd property, the rest have to pay in cash.

    Btw, why do you think you've made a mistake by buying BTO from the start?

  29. #29
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    Quote Originally Posted by earthling
    Hi, did you take up bank loan or HDB loan? If you took bank loan, go for max; if HDB loan, can consider fully pay up as HDB interest rate much higher...

    Then you must also consider, if fully paid, do you still have cash for downpayment + BSD + ABSD for your 2nd property if it comes along? If don't fully pay, you can only take up max 50% loan for your 2nd property, the rest have to pay in cash.

    Btw, why do you think you've made a mistake by buying BTO from the start?
    Thanks earthling and Chestnut.

    As the project is not ready yet, I have not decided. Most likely, I will be taking bank loan.

    If i leave those cashflow sitting around, I probably do not know what to do with it.

    If i fully paid it, I will not have any liquidity. Nonetheless, after 5 years of MOP, I should be able to afford a PC downpayment.

    I made the mistake as I was attracted to some hyped BTO projects, ignoring my parents advice to go private. At that time, they had actually found a few City Fringe units which are suitable for me.

    Well well... Life goes on. Henceforth, I'm planning my next step early now.

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    Parent sometime do nag.
    But sometime good to take advice from old folks to reduce the learning curve
    What ia a good house?
    It is a good house as long as you love it

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