Why???
Let me paint a scenario for your guys...
Say a person bought an investment unit (prior to ABSD) and puts in 40% down for a 1 mil property....
Scenario 1
downpayment - 600k
loan tenure - 25 years
interest 1.2%
mortgage payment per month - $2,316
monthly rental - 3k
after 25 years, how much is the property worth????
Scenario 2
downpayment - 600k
loan tenure - 25 years
interest - 3.5%
mortgage payment per month - $3,003
monthly rental - 3k
after 25 years, how much is the property worth????
if you think there is no inflation in life??? I am surprised.... Yes, there will be inflation and deflation along the way... but over a period of 25 years, which do you think will win - inflation or deflation????
http://www.tradingeconomics.com/singapore/inflation-cpi
key in the period you want and see if inflation wins??? hahahahahaha
So in scenario 2, can a person top up a couple of hundred every month for the house???? So if hte house cannot rent out, can he lower the rent to 2.5K???? and top up the amount???? Of course if you say the husband and wife both lose their job, then I got nothing to say... what to do??? If you plan for such contingency, my suggestion is dont invest in anything lar.... hahahahaha
wishing for a major price drop and knowing under what circumstances will it trigger a major price drop are two different situations... Again, the moral of the story, what is your risk appetite and can you stomache it????
Those who took risk the last couple of years are ripping the rewards...
person rented out the unit over 3 years
Scenario 3
downpayment - 600k
loan tenure - 25 years
interest 1.2%
mortgage payment per month - $2,316
monthly rental - 3k
1 year of mortgage repayment = 2,316X12 = 27.8K
interest over 1 year = 600K x 1.2% = 7.2K
loan amount after 1 year = 580K
loan amount after 3 years = 540K
So his loan amount dropped to 540K... if he rents out for another 3 years, loan amount would drop to 480K.... Food for thought?????
I am not encouraging all of you to buy... please !!!!! The meat for property investment is over liao.... hahahahahaha
Just do simulations to see what is going to happen and you will have better sleep at nite...
Cheers