Hi Mr Tan,
I've been reading your blog for a few weeks now. I really appreciate that you're sharing your experience.
My father bought a 5 room flat about 10 years ago for over $500k. It is probably worth 300k+ today. He has difficulty to pay the loan. It will take another 25 years to pay off the outstanding loan.
I'm about to graduate from the university. Is there anything I can do to help the situation? We have a few tenants. I'm thinking about moving to a 3 room flat to reduce the loan quantum.
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REPLY:
If your family can afford the repayment, it is better to keep the current flat. If your loan is with HDB, your pay interest at a very low rate.
With the current boom in the property market, there is a chance that the value of the HDB flat can recover. You can sell it later, when the price has recovered.
As you are renting out some rooms, it should give you a good rental to help with the repayment.
There is no chance at all for the property to recover as your father has bought it in 1997 where all prices were at record high.
ReplyDeleteIt is wise to downgrade to reduce interest charge, lower mainteance and PUB fees. You would be surprise to know that your father is paying the interest charges for the last 10 years given that his loan is 35 years term.