Should Pay Off Mortgage Or Invest In 2Nd Property?

[calaislily 0]

Assuming you have sufficient funds in CPF and also have cash, would it be wiser to pay off the outstanding housing loan or make use of the funds to purchase a 2nd property? Toying with getting a 2nd property to live in and renting out the other one. Of course got to bear in mind the taxes on property rented out, etc.. Anyone can give some sound advice? TIA

[therat 18]

Chicken and egg issue

1. To use CPF for 2nd property , need to meet min sum component

2. If the outstanding loan has finish, you can take 80% loan for 2nd property, or else will be 60% loan.

[fahlsean 0]

Property loan is a good loan. Personal loan is a bad loan, just like car loan. Property provide rental income. It's an asset class that's held dearly by many owners and investors in today's environment. My advise is to take advantage of low interest rates within your affordable level (Govt advocate a 35% DSR). Why pay off when interest rates are low? Use the $ to invest. Pay off when interest rates are exorbitant.

Edited June 18, 2012 by fahlsean

[avidmonkey80 0]

it all depends i think.

U have to work out ur sums. Not sure what is your age though.. .

If finances are good for you, you have extra cash on hand that can be left in the bank for the miserable interest...then I would suggest buy a 2nd property to invest.

[bepgof 20]

Property loan is a good loan. Personal loan is a bad loan, just like car loan. Property provide rental income. It's an asset class that's held dearly by many owners and investors in today's environment. My advise is to take advantage of low interest rates within your affordable level (Govt advocate a 35% DSR). Why pay off when interest rates are low? Use the $ to invest. Pay off when interest rates are exorbitant.

We are all bankers - we lend our $ to gov in cpf's OA, SA, MS to earn the respective 2.5%, 4%, and 4% with strings attached. We lend our $ to banks in whatever accts. We lend our $ to public listed companies in form of stocks, etc.

We are also borrowers - in all sorts of "loans". To enjoy the "fruit" now while paying with interest.

It is a capital structure issue and identification of what depreciate/appreciate in value over time. When interest up we lend, when interest down we borrow. "Talk" very easy. Practising this principle takes time to perfect skills, involve risks. I, sincerely speaking over all these years, now very tire to monitor & control the up/down, in/out.