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Thread: Hold your horses, house-hunters

  1. #1
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    Default Hold your horses, house-hunters

    http://www.businesstimes.com.sg/sub/...09540,00.html?

    Published October 17, 2009

    Commentary

    Hold your horses, house-hunters

    By SIOW LI SEN
    SENIOR CORRESPONDENT


    IT seems that now one can get a home loan in 15 minutes, if you believe the latest hype from Standard Chartered Bank. Okay, so it's not really a water-tight yes from the bank but just approval in principal (AIP). But why is the bank doing it, other than to trump some rivals who can provide AIP in 60 minutes?

    Why the rush to let prospective borrowers know their credit's good for that dream home in less time than it takes to wash one's hair? A decision such as buying a house with the attendant mortgage burden of the next 20-30 years or so around one's neck should be a measured one.

    It's already strange enough that house hunters are nowadays lured to view show flats erected in posher areas, far away from the actual site, so one forgets that your dream flat is actually plonked off the Ayer Rajah Expressway. That you have to then jostle with other hopefuls to look at the model of the development can be pretty stressful, to the point of hysterics, some have said.

    Serious house buyers should do their research before venturing to showrooms. Figuring out if one could afford the purchase would be the most critical element.

    In fact knowing if one has enough money and being firm on the amount one can pay or borrow is crucial. Otherwise, it is very easy to get tempted by other add-ons along the way and end up borrowing unnecessarily.

    I remember going to a DBS branch in 1996 to ask about a home loan for an investment property. I wanted to borrow $800,000 for a $1.2 million transaction. It was suggested to me that I could take on a bigger loan since it was supported by valuation. The bank officer helpfully said all legal fees and stamp duty could also be added to the bank loan.

    In the end, I decided to borrow $830,000. When the 1997/98 Asian financial crisis hit, the value of the flat nosedived, went way below $800,000 at one point. I was dangerously heading towards negative equity.

    The rent for the flat went from a high of $6,000 a month to $3,800. I remember selling off shares so as to reduce the capital outstanding. Not that the bank asked me to, but it was unnerving to owe more that what the property was worth.

    During the decade-long financial crisis, my company made two pay cuts and there were also lower contributions to the CPF - all of which made dents towards the amount available for mortgage instalments.

    The current euphoria surrounding the property market fuelled by low interest rates can tempt people into taking on high levels of debt. It is easy now to forget that economic cycles are getting shorter and shorter.

    Interest rates when they move can be quite fast. Taking an hour or two even to reflect on a decision which could have quite severe consequences down the road on one's mental and financial health - should circumstances change - is really not very much at all.

  2. #2
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    Wa.. looks like some workers in the mass media not happy hor..

    Sumiko (the jap) complaint about pay cut on sunday times in To Buy and Hold?

    now this journalist complaint about pay cut ...

    maybe now they will start try to be more objective than being cheerleaders ..

  3. #3
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    Quote Originally Posted by mr funny
    http://www.businesstimes.com.sg/sub/...09540,00.html?

    Published October 17, 2009

    Commentary

    Hold your horses, house-hunters

    By SIOW LI SEN
    SENIOR CORRESPONDENT


    IT seems that now one can get a home loan in 15 minutes, if you believe the latest hype from Standard Chartered Bank. Okay, so it's not really a water-tight yes from the bank but just approval in principal (AIP). But why is the bank doing it, other than to trump some rivals who can provide AIP in 60 minutes?

    Why the rush to let prospective borrowers know their credit's good for that dream home in less time than it takes to wash one's hair? A decision such as buying a house with the attendant mortgage burden of the next 20-30 years or so around one's neck should be a measured one.

    It's already strange enough that house hunters are nowadays lured to view show flats erected in posher areas, far away from the actual site, so one forgets that your dream flat is actually plonked off the Ayer Rajah Expressway. That you have to then jostle with other hopefuls to look at the model of the development can be pretty stressful, to the point of hysterics, some have said.

    Serious house buyers should do their research before venturing to showrooms. Figuring out if one could afford the purchase would be the most critical element.

    In fact knowing if one has enough money and being firm on the amount one can pay or borrow is crucial. Otherwise, it is very easy to get tempted by other add-ons along the way and end up borrowing unnecessarily.

    I remember going to a DBS branch in 1996 to ask about a home loan for an investment property. I wanted to borrow $800,000 for a $1.2 million transaction. It was suggested to me that I could take on a bigger loan since it was supported by valuation. The bank officer helpfully said all legal fees and stamp duty could also be added to the bank loan.

    In the end, I decided to borrow $830,000. When the 1997/98 Asian financial crisis hit, the value of the flat nosedived, went way below $800,000 at one point. I was dangerously heading towards negative equity.

    The rent for the flat went from a high of $6,000 a month to $3,800. I remember selling off shares so as to reduce the capital outstanding. Not that the bank asked me to, but it was unnerving to owe more that what the property was worth.

    During the decade-long financial crisis, my company made two pay cuts and there were also lower contributions to the CPF - all of which made dents towards the amount available for mortgage instalments.

    The current euphoria surrounding the property market fuelled by low interest rates can tempt people into taking on high levels of debt. It is easy now to forget that economic cycles are getting shorter and shorter.

    Interest rates when they move can be quite fast. Taking an hour or two even to reflect on a decision which could have quite severe consequences down the road on one's mental and financial health - should circumstances change - is really not very much at all.
    A senior correspondent back in 1996 is paid enough to afford a $1.2million property, somemore as an investment???? These are the very same ppl tht said army boys overpaid, civil servants overpaid, ministers overpaid (this one I kinda agree haha), pilots overpaid??????

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    Quote Originally Posted by myxzyden
    A senior correspondent back in 1996 is paid enough to afford a $1.2million property, somemore as an investment???? These are the very same ppl tht said army boys overpaid, civil servants overpaid, ministers overpaid (this one I kinda agree haha), pilots overpaid??????
    Aiyah ... got shares mah .. maybe not juz SPH shares :P

    Didn't u read that part about him/her having shares but needed to liquidate? Was it mentioned tt the investment is with a partner/spouse anot huh? Quite amazing hor, got such $$ to buy as an investment ... but then again, they got pretty good bonuses ...

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    civil servants are over paid, under work. Mr Mah is a role model to them

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    most of their hdb housing policies are no brainers and any ordinary man on the street can come out with it. If you ever go down to Bukit Batok CC, you notice a big plaque stating the donations for building fund for the CC. The late Dr Ong chit Chung's name was at the top, but do you know how much he donated to the building fund of his own ward? Just a measly $5000. Even some unknown PBM and a number of unknown individuals donated in excess of $10000 and some even as much as $50000. What a shame and irony for an MP to donate peanuts to the building fund of a CC with people working there to serve him.

    Quote Originally Posted by Property_Owner
    civil servants are over paid, under work. Mr Mah is a role model to them

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    Dont worry. Election coming.

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    Election? ..haha.. how many times have i heard of people will remember.. but when goodies come.. all forget..

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    do singaporeans really care much bout election and general health of the nation or more for themselves? i never heard of overseas elections elections in western countries centered around stupid things like LUP and all those insignificant matters. Fundamental things like Rule of Law, Separation of Powers, human rights and democratic values are hardly every debated in parliament coz people at the top think they know what is best for us...

  10. #10
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    Quote Originally Posted by myxzyden
    A senior correspondent back in 1996 is paid enough to afford a $1.2million property, somemore as an investment???? These are the very same ppl tht said army boys overpaid, civil servants overpaid, ministers overpaid (this one I kinda agree haha), pilots overpaid??????
    Not everybody depends on salary to buy properties. This one born with silver spoon. Remember Lee Han Shih, ex-fearless journalist at Business Times? He belongs to the Lee family of OCBC fame. His SPH salary was pocket change to him.

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