In Singapore, property ownership is a cornerstone of many individuals' lives. With a thriving real estate market known for its stability and diverse offerings, owning a place to call home is a significant milestone for countless residents. From HDB flats to luxurious condominiums, the spectrum of property options caters to various needs and aspirations.

In the article, we'll explore the often overlooked aspect of property ownership: the cost of holding onto a property. Beyond the initial purchase price, owning a property entails various ongoing expenses that can impact your financial well-being. From mortgage payments and property taxes to maintenance fees and insurance premiums, these costs can add up significantly over time.

With a better understand on the various cost, we will be able to explore how to make better use of your hard-earned money through effective management of property holding costs in Singapore which is important as what we do affect our future retirement plans and obtaining financial freedom.

Using an example of the following scenario.

Couple bought a $500K HDB.
They took a loan from HDB for $300K and paid the Downpayment of $200K with their CPF and Grant. 

Using the same scenario as above. Let take a look at the accrued interest 

 

Here an example on how the accrued interest continue to compounded when we continue to stay and pay our loan with CPF. 

 

 

Without taking in consideration for the CPF Withdrawl limit. After 25 years of staying in the same house, the accrued interest will be  compounded to a total $334,300. 

 

 

In summary after adding all the numbers above 

- Initially downpayment $200K

- Total instalment paid $408,302

- Total Accured interest $334,300

So 25 years laters, in order to make cash from this HDB, you will need to sell at $942,602.

Scenario 1:

Let say if the HDB is 10 years old when you bought the flat. 25 years later, the HDB will be 35 years old with remaining lease of 64 years remaining. 

If a 35 years old HDB is selling around a million 25 years later, it would be scary to imagine what will be the price of the newer HDB?

 

Scenario 2:

What would happen if we are only able to sell the HDB at only $700K. This means we would have lost $242,000 ($942,602 - $700,000)  on our retirement money. This is refer to as  negative sales.

After reading the above, I trust you now have a clearer picture on the impact of mortgage interest and accrued interest on your property. It is therefore important for you to take proactive steps toward managing your property finances effectively.

 

Take the first step by reviewing your current CPF Usage by logging into your CPF account and under home ownership, have a understanding on the CPF used and current accrued interest. 

 

Here are some key ways to avoid making a negative sales or reducing high accrued interest.

1. Pay your home loan in cash. Not with your CPF

2. Choose a bank loan with a lower interest rate

3. Don't hold on to the property for too long

4. Make partial or full voluntary CPF refund

 

Last but not least, reach out to me today for a personalised consultation and let me share with you your option towards a financially secure future together.

This consultation is free! 

Hi, I'm George Tan

 

My Passion?

To turn your property dreams into an reality. I take pride in providing personalized guidance for every step on your property journey. 

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I am delighted to share that my commitment to provide exceptional service has been well acknowledge by my clients. It's immensely rewarding to see their satisfaction reflected in their recognition of the service provided.

 

This acknowledgement only fuels my delication to continuing to exceed expectations and deliver top-notch service to my clients