Bridging Loan

[4d_striker 0]

instead of bridging loan (pay higher interest and most banks not keen in a standalone bridging loan), go look for a std mortgage loan with fixed interest for 1 year. i took mine with dbs, paying 1.25% interest fixed at one year and sibor on 2nd and 3rd year. i intend to redeem full loan once the fixed rate is over. meanwhile my money in cpf earns better interest at 2.6%.

[froggy 0]

so thats y the hdb officer said no cash for you. if negative sale, the proceeds that you get will have to cover until its breakeven. if there is balance cash, then they will give you.

CPF is also your hard earn cash... its just locked in a special gov a/c...

ya lor, $$ which can see but cannot touch one until xx years, then become xx+x years, further extended into xx+x+y years .... complete the pattern.

[froggy 0]

Now got a clearer picture of yr situation.

1. Just spoke to & confirmed with an agent friend : The COV to go into cpf account issue is still in a "discussion" state, expected to be in force pretty soon, likely to be after the General Election(PAP & WP candidate-would-be, just knock on my door last night & the night before), as the present's high COV issue seemed getting "out of hand". PM Lee in March, in his speech, already "hinted" not only this but may include "all profit" to go into cpf account & the minimum sum keep increasing....hor hor hor

2. If this ruling(COV issue) to be into effect, there bounce to have a "cut-off" point/date, I believed, you are safe. Seemed the "50% proceed to go into cpf if apply for 2nd hdb loan" ruling not applicable to you, cos you have effected the 2nd HDB loan before the announced date.

3. You have paid 10% to your BTO flat, and can get bank mortgage load up to 80%, and now empty money in CPF OA, yet you need the remaining 10%.... wow, really headace. Reno cost yet another burden !

4. Have to thick-skin a bit to borrow this 10% from siblings/friends already. Forget abt the bridging loan. Reno loan still can settle later.

5. Quickly get a 80% mortgage loan without lock in period + the 10% cash, then get key & apply reno loan, wait for 2nd appt, then you will be more relaxed.

6. But, remember the "3 month in advance clause" in mortgage loan. Once know the 2nd appt date, calculate the timing, quickly inform bank yr intention to do full redemption, so you can save some interest.

7. Wish you can settle mortgage loan, 10%, reno loan & move in to your BTO before 2nd appt. Only then you can shake legs.

No lah, decided not to take mortgage loan already. Take loan need to pay another 5% cash, plus all the legal fees, agent's comm etc. Already cash tight with reno and furnishng costs etc. so will just wait for completion of sale, rent a temporary place for 2 months while reno going on. Not the best option, but the best for us for now.

Thanks everyone for listening!

[froggy 0]

Froggy,

(a) Take you total amt of cpf used for current house + accrued interest = total cpf that will be returned to your cpf OA.

(b) Total cpf used for house + accrued interest + balance loan = breakeven price you need to sell at $0 loss.

So, if your valuation is more than your breakeven price, you already made a profit (excluding cov).

Eg,

Total cpf + int + bal loan = $400000

Valuation = $450000

This means you have already made +-$50000 in profit. add this to the cov you are getting, = total profit (CASH).

If (a) + whatever cpf amt u currently have is enough to cover your new house, HDB will not be touching your CASH at all.

So I guess mine is called negative sales, because sales (valuation + cov) is lower than the breakeven price. In other words, I actually lost alot in this transaction, not really in cash but in CPF lost. That is why the 2nd HDB officer said "no cash" for me because not even enough to go back to CPF!

I was even asked "lost so much why you sell?" but no choice - bought at the high time, and even though prices are better than last few years now, it is still far from the figure I paid at purchase time. Really big big lesson here.

[bepgof 20]

Hi Bepgof

We have already used 2 HDB loan, so not eligible any more. What is HLE, sorry I still very blur? Is it some kind of bank loan thing? You see, we are downgrading, and the new one is BTO which I have already been asked to collect keys. But because I have not completed sale of current flat, money not in CPF yet so I cannot collect keys (since at first I do not plan to take bank loan because the funds returned to CPF is enough to fully pay for new flat since downgrading so many rungs)

Own 2 flats, no lah. Right now, we are still owner of current flat because have not completed second appt. New BTO we had booked only paid 10% at booking time, so I dunno if they consider the second one is our flat yet? I guess not right, because if I fail to collect keys without reason, the deal will be considered lapsed and the downpayment unrefundable.

I don't understand what you mean by overlapping allowance time. As far as I know, as in my case, when the BTO is almost ready, HDB started to send "reminder" letters about its probable completion date, ie asking you to sell your existing flat. The first letter they sent was about 4 months prior to the collection date, so they expect that that is sufficient time for you to sell. As long as you can show OTP, they are ok becasue they know the appts must queue and takes time. Worst case, if you are unable to produce OTP at the time you have to collect keys, you can ask for extension, but case to case. And from what i gather from the officer, only max 1 month. I am not sure if they will actually "force" you to sell at the end of that grace period, though, or how they are going to do it!

Anyway, for most people who are either getting a HDB or bank loan, they can already collect the keys even if their current flat have not completed transaction. But for me, because no loan, got to wait for funds to be returned to CPF, ie 2nd appt.

Not sure about your 3rd point, but what I gather yesterday was - if the sum to be returned to CPF is less than the CPF monies used, then the COV component has to be returned as well. For eg,

scenario 1

flat sold at 500k (450 valuation and 50k COV)

balance mortgage loan 300k

CPF money used for flat is 400k (including all accrued interests),

first, HDB will take back 300k to clear the loan, so left 200k

since CPF funds used is 400k, CPF will take all 200k (with deficit of 200k taken as interest lost)

so no $$$ in cash

Scenario 2

flat sold at 750k (700 valuation and 50 COV)

balance loan 300k

CPF monies used 400k

return HDB 300k

return CPF 400k

still got 50k balance, so this is cash in hands

Is this correct? The previous officer (pity not black and white, and I did not take down name) I spoke with said that as long as COV = cash, regardless of how much CPF monies has been used, and now this one gave another story. Honestly I am quite **** with HDB, each staff gives a different kind of reply at different times. Very confusing and we are always at the suffering end.

Now got a clearer picture of yr situation.

1. Just spoke to & confirmed with an agent friend : The COV to go into cpf account issue is still in a "discussion" state, expected to be in force pretty soon, likely to be after the General Election(PAP & WP candidate-would-be, just knock on my door last night & the night before), as the present's high COV issue seemed getting "out of hand". PM Lee in March, in his speech, already "hinted" not only this but may include "all profit" to go into cpf account & the minimum sum keep increasing....hor hor hor

2. If this ruling(COV issue) to be into effect, there bounce to have a "cut-off" point/date, I believed, you are safe. Seemed the "50% proceed to go into cpf if apply for 2nd hdb loan" ruling not applicable to you, cos you have effected the 2nd HDB loan before the announced date.

3. You have paid 10% to your BTO flat, and can get bank mortgage load up to 80%, and now empty money in CPF OA, yet you need the remaining 10%.... wow, really headace. Reno cost yet another burden !

4. Have to thick-skin a bit to borrow this 10% from siblings/friends already. Forget abt the bridging loan. Reno loan still can settle later.

5. Quickly get a 80% mortgage loan without lock in period + the 10% cash, then get key & apply reno loan, wait for 2nd appt, then you will be more relaxed.

6. But, remember the "3 month in advance clause" in mortgage loan. Once know the 2nd appt date, calculate the timing, quickly inform bank yr intention to do full redemption, so you can save some interest.

7. Wish you can settle mortgage loan, 10%, reno loan & move in to your BTO before 2nd appt. Only then you can shake legs.

Edited May 6, 2010 by bepgof

[chronograph 0]

Bro Froggy,

Your sales is positive or negative? Meaning u make a decent profit selling or lost when selling?

[froggy 0]

Froggy, some unclear things here:

1. You're taking HDB's 2nd loan for the new house?Got apply HLE?

2. One person/couple, depending which scheme, cannot own 2 hdb units at one time, so u cannot collect keys for new house because of this policy, right ? But there is a "overlapping" allowance time, not such how long is this period. Anyone cares to enlighten?

3. Why the bank says COV goes to cpf account? Unless you are taking the 2nd HDB loan, then 50% of CASH proceeds will go to cpf account under new rule. U would still have some CASH receivable.

Hi Bepgof

We have already used 2 HDB loan, so not eligible any more. What is HLE, sorry I still very blur? Is it some kind of bank loan thing? You see, we are downgrading, and the new one is BTO which I have already been asked to collect keys. But because I have not completed sale of current flat, money not in CPF yet so I cannot collect keys (since at first I do not plan to take bank loan because the funds returned to CPF is enough to fully pay for new flat since downgrading so many rungs)

Own 2 flats, no lah. Right now, we are still owner of current flat because have not completed second appt. New BTO we had booked only paid 10% at booking time, so I dunno if they consider the second one is our flat yet? I guess not right, because if I fail to collect keys without reason, the deal will be considered lapsed and the downpayment unrefundable.

I don't understand what you mean by overlapping allowance time. As far as I know, as in my case, when the BTO is almost ready, HDB started to send "reminder" letters about its probable completion date, ie asking you to sell your existing flat. The first letter they sent was about 4 months prior to the collection date, so they expect that that is sufficient time for you to sell. As long as you can show OTP, they are ok becasue they know the appts must queue and takes time. Worst case, if you are unable to produce OTP at the time you have to collect keys, you can ask for extension, but case to case. And from what i gather from the officer, only max 1 month. I am not sure if they will actually "force" you to sell at the end of that grace period, though, or how they are going to do it!

Anyway, for most people who are either getting a HDB or bank loan, they can already collect the keys even if their current flat have not completed transaction. But for me, because no loan, got to wait for funds to be returned to CPF, ie 2nd appt.

Not sure about your 3rd point, but what I gather yesterday was - if the sum to be returned to CPF is less than the CPF monies used, then the COV component has to be returned as well. For eg,

scenario 1

flat sold at 500k (450 valuation and 50k COV)

balance mortgage loan 300k

CPF money used for flat is 400k (including all accrued interests),

first, HDB will take back 300k to clear the loan, so left 200k

since CPF funds used is 400k, CPF will take all 200k (with deficit of 200k taken as interest lost)

so no $$$ in cash

Scenario 2

flat sold at 750k (700 valuation and 50 COV)

balance loan 300k

CPF monies used 400k

return HDB 300k

return CPF 400k

still got 50k balance, so this is cash in hands

Is this correct? The previous officer (pity not black and white, and I did not take down name) I spoke with said that as long as COV = cash, regardless of how much CPF monies has been used, and now this one gave another story. Honestly I am quite **** with HDB, each staff gives a different kind of reply at different times. Very confusing and we are always at the suffering end.

[bepgof 20]

Froggy, some unclear things here:

1. You're taking HDB's 2nd loan for the new house?Got apply HLE?

2. One person/couple, depending which scheme, cannot own 2 hdb units at one time, so u cannot collect keys for new house because of this policy, right ? But there is a "overlapping" allowance time, not such how long is this period. Anyone cares to enlighten?

3. Why the bank says COV goes to cpf account? Unless you are taking the 2nd HDB loan, then 50% of CASH proceeds will go to cpf account under new rule. U would still have some CASH receivable.

Edited May 6, 2010 by bepgof

[bepgof 20]

Yup, always very scared to deal with banks, for that matter CPF, HDB, ... all these $$ places.

I guess if plan to fully redeem within short period, quite safe to go for floating rate kind, because got no penalty, also no need to pay mortgage insurance which is cash and can be quite hefty.

But if planning longer tenure, definitely safer to go for "fixed" rate. Can never anticipate if curve will go up or down lor!

Speaking of banks, now looks like we have to take reno loan. Really sickening, remember I said we were naive? When we asked HDB does COV mean cash in hands, regardless of CPF usage, they said yes. Only today at the bank did I realise that my COV has to return to CPF, so no cash, so need to get reno loan! Know anything about this? Like which bank offers the best rate etc? Sigh ... looks like I need to make another trip down to bank tomorrow

Har? COV go to cpf account? No lah, what goes back to cpf is (valuation - what you have paid by cpf over the year -accrued interest). Can use yr singpass to log on to CPF board to find out the exact amount need to return to yr account if were to sell yr property. The balance + COV are cash.

Edited May 5, 2010 by bepgof

[froggy 0]

Aiyo, don't say like that. Experience counts.., 2 experences only, so far. 1st in 2006, borrow $$369K for a condo, did partial, then full redemption, filled up forms here and there, meeting up at lawyer firms, see doc fly here & there. 2nd in 2009, $466K, doc here & there....lucky got wife keep/file all these doc orderly. Kena one time, mentally not prepared, bank revised interest rate dur to unrest in middle east, luckily it was within 6 month after 1st disbursement, I could switch to "fix" rate. After that my wife loves "fix" rate very much, no matter how I present the interest figure we could have saved, I gave in. I'll seach for the interest revised notice letter & scan and post it here, if I remembered correctly, should be about $200 increase monthly!. hope can give some awareness to someone who read.

Also ever approached banks for bridging loan, but gave up the idea cos of the interest rate.

Yup, always very scared to deal with banks, for that matter CPF, HDB, ... all these $$ places.

I guess if plan to fully redeem within short period, quite safe to go for floating rate kind, because got no penalty, also no need to pay mortgage insurance which is cash and can be quite hefty.

But if planning longer tenure, definitely safer to go for "fixed" rate. Can never anticipate if curve will go up or down lor!

Speaking of banks, now looks like we have to take reno loan. Really sickening, remember I said we were naive? When we asked HDB does COV mean cash in hands, regardless of CPF usage, they said yes. Only today at the bank did I realise that my COV has to return to CPF, so no cash, so need to get reno loan! Know anything about this? Like which bank offers the best rate etc? Sigh ... looks like I need to make another trip down to bank tomorrow

[bepgof 20]

Hi Bepgof

Yes, you are very familiar with all these!

Just went hopping round a few banks the last few days. A foreign bank proposed 85% bridging loan at 8.25%, so that's $1000+ per month. A local bank proposed a 80% mortgage loan plus 5% bridging loan, with a monthly repayment of around $850 a month. And yes, there is legal fee of $1000+, and a 3 month notification period (ie minumum 4 months "loan"). What make it worst is I need to pay another 5% cash to HDB. All these just to "buy" one month of tiime. So I guess I will have to drop that idea!

Thanks for your help!

Aiyo, don't say like that. Experience counts.., 2 experences only, so far. 1st in 2006, borrow $$369K for a condo, did partial, then full redemption, filled up forms here and there, meeting up at lawyer firms, see doc fly here & there. 2nd in 2009, $466K, doc here & there....lucky got wife keep/file all these doc orderly. Kena one time, mentally not prepared, bank revised interest rate dur to unrest in middle east, luckily it was within 6 month after 1st disbursement, I could switch to "fix" rate. After that my wife loves "fix" rate very much, no matter how I present the interest figure we could have saved, I gave in. I'll seach for the interest revised notice letter & scan and post it here, if I remembered correctly, should be about $200 increase monthly!. hope can give some awareness to someone who read.

Also ever approached banks for bridging loan, but gave up the idea cos of the interest rate.

Edited May 5, 2010 by bepgof

[froggy 0]

In yr situation, likely to do a "full redemption" right after money transfer back to yr cpf accountwithin short. Should take a mortgage loan without "lock-in" period, but read carefully, ususally must inform bank (in written or on prescribed form) 3 months before actual full redemption take place. From this forum, seem worth to take "sibor+ 0.6~0.7%" type of loan. But ask what are the the "hidden costs" like lawyer fee/admin fee/conveyance fee & many many other fees, or sometime banks lump all these up as one package & say "free" but...good luck to you!

Hi Bepgof

Yes, you are very familiar with all these!

Just went hopping round a few banks the last few days. A foreign bank proposed 85% bridging loan at 8.25%, so that's $1000+ per month. A local bank proposed a 80% mortgage loan plus 5% bridging loan, with a monthly repayment of around $850 a month. And yes, there is legal fee of $1000+, and a 3 month notification period (ie minumum 4 months "loan"). What make it worst is I need to pay another 5% cash to HDB. All these just to "buy" one month of tiime. So I guess I will have to drop that idea!

Thanks for your help!

[bepgof 20]

Thanks Bepgof

Yes, I have engaged the service of housing agent twice, once with purchase of my current house, and now with sale of the same. Both times, I got "cheated" by them over different issues. I thought I had become wiser after the first and not to fall into agent "trap" again, but alas, at that moment of decision, I still succumb ...

Anyway, thanks for your suggestions.

Was at Thomson Plaza today and walked into DBS to enquire about bridging loan. Seems that they can allow bridging loan only if I concurrently take up a housing loan from them. Although they said I can take up a no-lock in housng loan and make full repayment when my funds have been returned into my CPF, I am uncertain .. worried that the interest will be very high in the end... danger of falling into another big spending. Anyhow, waiting for their proposals ...

Thanks

In yr situation, likely to do a "full redemption" right after money transfer back to yr cpf accountwithin short. Should take a mortgage loan without "lock-in" period, but read carefully, ususally must inform bank (in written or on prescribed form) 3 months before actual full redemption take place. From this forum, seem worth to take "sibor+ 0.6~0.7%" type of loan. But ask what are the the "hidden costs" like lawyer fee/admin fee/conveyance fee & many many other fees, or sometime banks lump all these up as one package & say "free" but...good luck to you!

Edited May 4, 2010 by bepgof

[froggy 0]

Bridging loan is quite speculative in nature, high risk, low doc requirement, not all banks like to do this business, & I think MAS also not in line to encourage such. Try foreign banks, likely will get a higher loan amount.

Feel sorry in your case, learn the lesson will make you wiser.

Thanks Bepgof

Yes, I have engaged the service of housing agent twice, once with purchase of my current house, and now with sale of the same. Both times, I got "cheated" by them over different issues. I thought I had become wiser after the first and not to fall into agent "trap" again, but alas, at that moment of decision, I still succumb ...

Anyway, thanks for your suggestions.

Was at Thomson Plaza today and walked into DBS to enquire about bridging loan. Seems that they can allow bridging loan only if I concurrently take up a housing loan from them. Although they said I can take up a no-lock in housng loan and make full repayment when my funds have been returned into my CPF, I am uncertain .. worried that the interest will be very high in the end... danger of falling into another big spending. Anyhow, waiting for their proposals ...

Thanks

[bepgof 20]

Thanks Bepgof

Ha ha ... we are so blur that we agree to let buyer move in early!?!?!

So angry with our agent, she knows our situation, yet not only did not advice us to extend stay from buyer, when buyer's agent asked if buyer can move in early, she did not highlight to us. And we are nice enough (more like naive and stupid) to say, "ya, sure..." , so option 1 is not possible.

option 2 - do you mean that bridging loan can only be max 20% of valuation? Say if mine is a new flat from HDB and I have paid 10% when booking, I cannot take the balance 90% as bridging loan? If the max is 20%, I don't think this option will work for us also.

thanks

Bridging loan is quite speculative in nature, high risk, low doc requirement, not all banks like to do this business, & I think MAS also not in line to encourage such. Try foreign banks, likely will get a higher loan amount.

Feel sorry in your case, learn the lesson will make you wiser.

Edited May 3, 2010 by bepgof