07 December 2012

SPRs to Buy Resale HDB in Open Market - 7 December 2012

My gf and I decided to buy a resale HDB flat in Open Market next year. As we try not to be too hurry so that we could buy a good quality flat with reasonable price. We engaged a few property agents and asked them to search the properties that suit our needs. We will be start looking for the properties soon.

We realize that there are quite a few restriction to buy HDB flat in open market. Firstly, you have to put at least 20% down payment and take up maximum 80% loan for maximum 35 years loan or until you are 65 years old. I believe it is due to the retirement age is set at 65 years old. However, as I am self employed, so I am not too sure if we can get a higher loan as well. I will check with more bankers on this. So far, DBS banker gives me about 1.2x% fix rate for first 3 years and floating rate + x% for the rest year. The locking period is 3 years for this package. I suggest you to look for more banks. Sometime, foreign banks (besides DBS / UOB / OCBC) could provide more flexible mortgage loan package to you. I also understand that some banks also do provide renovation loan for you, so that you do not be too worried about the cash flow when you need it for renovation purpose (just in case the condition of the flat is not good enough).

As both my gf and I are approaching 35 years old and to meet the Cap 30 years maximum loan rule, we got to buy a house within a year to settle this issue soon. The second issue that we are facing is that we have to dispose off the properties within 6 months after we purchase the resale HDB in Open Market. This is a very good move for Singapore government to curb the property prices to rise, or rather, to stop SPRs/Citizen to make use of the HDB flat to earn for the rental income while staying at Private Property. Anyway, I also understand that we could purchase a private property after the Minimum Occupied Period (MOP). I would check in more detail with the experts when I deal with them later. I welcome for your correction/opinion on this as well.

There are so many people or I would call "Hot Money" flow into Iskandar Malaysia, most of the foreigners / Expat love to stay at JB and let their kids to study at JB private school such as Marlborough College and they would go to Singapore to work. It takes about 1 hour to reach the CBD area from JB if you go via causeway or second link during NON PEAK hours. I believe the Singapore Property price would be stabilized soon (at least for resale HDB market).

Below is the screenshot which my gf prepare for me to calculate the loan, CPF and $ we need to buy a resale HDB. Do note that, this is only a rough figure and may not be accurate, as we still not too sure of all expenses involved in property purchase in Singapore market. Below not includes Lawyer fees & Stamp Duty Fees & others. So you may have to prepare for more cash when purchasing the property you like later.

Third concern for us to purchase HDB is that, under the revised rule, SPR flat owners will be allowed to sublet their flat after meeting the MOP, if they have not sublet the flat before. The approval will be granted for 1 year only, instead of 3 years. Upon expiry of the 1-year period, the application to extend the approval will be assessed on a case-by-case basis and approval will be granted only if there are extenuating reasons. The total period of subletting during the flat owners' entire duration of the flat ownership is capped at 5 years . you could refer here for more detailed information. Anyway, this is not the biggest concern to us as we treat it as our base in Singapore to work here, not to make money from purchasing resale HDB in Open Market. 

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