Can I Buy A Condo Even Though I Currently Have A Hdb Loan

[flameboy 0]

i have been living in a hdb all my life..and probably for the rest of my life.

currently still paying off the loan but i have met the minimum stay period.

having saved abit cash, will it be possible for me to use it for a downpayment for a small condo unit and take another private property loan?

[3dchow 0]

i have been living in a hdb all my life..and probably for the rest of my life.

currently still paying off the loan but i have met the minimum stay period.

having saved abit cash, will it be possible for me to use it for a downpayment for a small condo unit and take another private property loan?

Yes, u can but u need to check with the banks how much they can loan you as they will need to access your financial situation. Normal loan amt is lower of either 80% of purchase price or valuation price. Some banks can loan as high as 90% or as low as 70% due to current economy...all depends on each individual financial situation.

U can also use your CPF (under multiple properties) if you have enough amt in your SA & OA to meet the min sum required. The min sum will change in July - min sum is 57k or 104k depending on your age.

[ahbudden 0]

i have been living in a hdb all my life..and probably for the rest of my life.

currently still paying off the loan but i have met the minimum stay period.

having saved abit cash, will it be possible for me to use it for a downpayment for a small condo unit and take another private property loan?

Hi Flameboy,

To add on 3dchow,

you can still use your OA to make the downpayment but you need at least 5% cash, just that you can't use it to service your monthly loans

[horseman 0]

To complete the sale of the private property, the financing can be broken up into three components:

a) cash downpayment - 5%

b) loan from bank - up to 90% with higher interests rates, but generally banks grant 70 to 80% for the 2nd property

c) the balance from your CPF (from your OA in excess of the minimum sum cash component - currently $58.5k)

a) is straightforward, as long as you make sure that the cash is not financed by personal credit line or other bank borrowings

b) depends on the bank's assessment. The bank will consider your current HDB mortgage and other debts (e.g. car loan) in deciding whether to approve your private property loan. As long as your debt servicing ratio is one-third of your net income, you should be fine. Factors like age and monthly income are crucial.

c) needs a little bit of forward planning. On 1 July this year, the minimum sum cash component increased by $5.5k, from $53k to $58.5k. Assuming that you withdraw your OA to the max limit permitted in excess of the minimum sum cash component, and from now till June next year you use the monthly contributions in the OA to service the mortgage which means that your OA will not grow significantly, so when it comes to July next year, the higher limit kicks in and you won't be able to use your OA to service the monthly mortgage and you'll have to match the shortfall in cash. This can be painful. So the idea is that if you only marginally meet the minimum sum cash component, you need to set aside a greater buffer or restructure your HDB mortgage so that both mortgages can be comfortably serviced taking into consideration increases in the minimum sum cash components each July, especially if you are not planning to sell your flat.

Hope this helps.

i have been living in a hdb all my life..and probably for the rest of my life.

currently still paying off the loan but i have met the minimum stay period.

having saved abit cash, will it be possible for me to use it for a downpayment for a small condo unit and take another private property loan?

[Phantom 1]

All 1 post members? wow!

[horseman 0]

We have to start somewhere

All 1 post members? wow!

[Phantom 1]

We have to start somewhere

True enough. =)

[blackcar 0]

c) needs a little bit of forward planning. On 1 July this year, the minimum sum cash component increased by $5.5k, from $53k to $58.5k. Assuming that you withdraw your OA to the max limit permitted in excess of the minimum sum cash component, and from now till June next year you use the monthly contributions in the OA to service the mortgage which means that your OA will not grow significantly, so when it comes to July next year, the higher limit kicks in and you won't be able to use your OA to service the monthly mortgage and you'll have to match the shortfall in cash. This can be painful. So the idea is that if you only marginally meet the minimum sum cash component, you need to set aside a greater buffer or restructure your HDB mortgage so that both mortgages can be comfortably serviced taking into consideration increases in the minimum sum cash components each July, especially if you are not planning to sell your flat.

Hi only OA? I thought is combine of OA & SA minimum sum of $58.5K?

[horseman 0]

For computation of minimum sum cash component, it is OA + SA. Lump sum withdrawals and monthly mortgages from OA only.

My point is that forward planning is needed because minimum sum cash component increases each July. Meeting minimum sum this year does not mean meeting it next year, especially if OA and SA do not grow significantly.

Say assuming I meet the minimum sum this year and I have $30,000 in OA and $30,000 in SA. I withdraw $1,500 lump sum for property purchase from my OA, reducing it to $28,500. I meet $58,500 minimum sum. My monthly salary is $4,500, so every month my OA increases by $945 and SA by $270 and the rest goes to MA. In one year (incl 13mths), my OA increases by $12,285 and SA by $3,510. If I had used all my OA to pay for monthly mortgage, my OA will remain at $28,500 (no increase since every dollar of the $945 that goes into the OA each month is used to pay for mortgage) and my SA increases to $3,510+$30,000 = $33,510. I'll only have OA + SA of $62,010. If minimum sum next year is higher than $62,010, I won't be able to use my OA for the monthly mortgage until the OA increases to a level where OA + SA meets the new minimum sum. And it is entirely plausible that the new minimum sum cash component will increase to more than $62,010 next year. My sense is that it will likely be $65,000 next July.

One of my friend was caught in such a scenario this month.

Hope this is clearer.

c) needs a little bit of forward planning. On 1 July this year, the minimum sum cash component increased by $5.5k, from $53k to $58.5k. Assuming that you withdraw your OA to the max limit permitted in excess of the minimum sum cash component, and from now till June next year you use the monthly contributions in the OA to service the mortgage which means that your OA will not grow significantly, so when it comes to July next year, the higher limit kicks in and you won't be able to use your OA to service the monthly mortgage and you'll have to match the shortfall in cash. This can be painful. So the idea is that if you only marginally meet the minimum sum cash component, you need to set aside a greater buffer or restructure your HDB mortgage so that both mortgages can be comfortably serviced taking into consideration increases in the minimum sum cash components each July, especially if you are not planning to sell your flat.

Hi only OA? I thought is combine of OA & SA minimum sum of $58.5K?

[blackcar 0]

For computation of minimum sum cash component, it is OA + SA. Lump sum withdrawals and monthly mortgages from OA only.

My point is that forward planning is needed because minimum sum cash component increases each July. Meeting minimum sum this year does not mean meeting it next year, especially if OA and SA do not grow significantly.

Say assuming I meet the minimum sum this year and I have $30,000 in OA and $30,000 in SA. I withdraw $1,500 lump sum for property purchase from my OA, reducing it to $28,500. I meet $58,500 minimum sum. My monthly salary is $4,500, so every month my OA increases by $945 and SA by $270 and the rest goes to MA. In one year (incl 13mths), my OA increases by $12,285 and SA by $3,510. If I had used all my OA to pay for monthly mortgage, my OA will remain at $28,500 (no increase since every dollar of the $945 that goes into the OA each month is used to pay for mortgage) and my SA increases to $3,510+$30,000 = $33,510. I'll only have OA + SA of $62,010. If minimum sum next year is higher than $62,010, I won't be able to use my OA for the monthly mortgage until the OA increases to a level where OA + SA meets the new minimum sum. And it is entirely plausible that the new minimum sum cash component will increase to more than $62,010 next year. My sense is that it will likely be $65,000 next July.

One of my friend was caught in such a scenario this month.

Hope this is clearer.

yes, thanks for the details explanation. Unfotunately many ppl are being caught by this scenario. When i was making enquiries of my CPF after the purchase of my hse, they pointed out this changes and was told that not many ppl are aware of this CPF ruling. I guess i m quite lucky didnt fall into this situation, infact i wasnt aware of this ruling too. If not got to sell hse, car and blood to pay for the bank loan. lolz

Hope newbies buying yr dream hse got to take note of this ruling if you intend to use yr CPF for bank loan installement.

cheers

[vowsh 1]

yes, thanks for the details explanation. Unfotunately many ppl are being caught by this scenario. When i was making enquiries of my CPF after the purchase of my hse, they pointed out this changes and was told that not many ppl are aware of this CPF ruling. I guess i m quite lucky didnt fall into this situation, infact i wasnt aware of this ruling too. If not got to sell hse, car and blood to pay for the bank loan. lolz

Hope newbies buying yr dream hse got to take note of this ruling if you intend to use yr CPF for bank loan installement.

cheers

Bear in mind, CPF cannot service 2 loans. Rule of thumb, the min sum to be set aside by 2013 will be $120K. So have to put aside at least 60k ( OA+SA+CPFIS) before you can use the excess for 2nd property.

[horseman 0]

CPF can be used for the second home loan including monthly mortgage servicing, as long as minimum sum cash component is met. The withdrawal for the 2nd loan is subjected to the withdrawal limit. The minimum sum at 2013 is $120,000, but because it is in 2003 dollars and adjusted for inflation, the actual sum in 2013 is likely to be much much higher. Already this year the adjusted minimum sum is $117,000 when the stipulated sum is $104,000. In the last three years, the minimum sum increased by $5,000, $6,600 and $11,000 respectively. The increase this year caught some people by surprised, and it was largely because of high inflation last year.

Assuming low to moderate inflation for the next four years, I won't be surprised if the minimum sum in 2013 is in excess of $145,000, which means setting aside at least $72,500 to meet the minimum sum cash component to be able to continue to use the CPF for the 2nd mortgage.

Bear in mind, CPF cannot service 2 loans. Rule of thumb, the min sum to be set aside by 2013 will be $120K. So have to put aside at least 60k ( OA+SA+CPFIS) before you can use the excess for 2nd property.

Edited July 24, 2009 by horseman

[Warrior88 0]

Just to add on,

Max contributions of CPF is based on $4500 salary ceiling, employer/employee

Age (30 ~ 50) 653/900 - 14.5%/20%

Age (50 ~ 55) 473/810 - 10.5%/18%

Agr (55 ~ 60 ) 337/563 - 7.5%/12.5%

Allocation of contributions to ( OA )

Age (45 ~ 50) 55%

Age (50 ~ 55 ) 46%

So, may need to reserve some cash to cater this shortfall of OA funds

[estella83 0]

lets say if my cpf doesn't meet the minimum sum, can i used the balance in my cpf to pay for the misc charge or first downpayment? like stamp fees, legal fees etc?

[therat 18]

lets say if my cpf doesn't meet the minimum sum, can i used the balance in my cpf to pay for the misc charge or first downpayment? like stamp fees, legal fees etc?

No.

Must have the min sum component.

Any amount above that level, can be use.

Below that level, untouchable