I need your advice on acquiring a HDB resale flat. I am considering the following options:
1) A 5-rm HDB flat in Bishan, cosing $400k. I qualify for a HDB concessionary rate of 2.6%.
2) A 4-rm flat in Bishan, costing $300K. The catch: I need to get a bank loan with floating interest rate of 4-6%.
In your opinion, which is a better decision?
REPLY:
I hope that the following figures will be useful for you to make a decision.
Loan Repayable Interest Annual
over rate repayment
$400,000 30 years 2.6% $19,367
$300,000 30 years 4% $17,349
$300,000 30 years 5% $19,515
$300,000 30 years 6% $21,794
If you have to pay a floating interest rate at 5%, the annual repayment for a $300,000 loan is $19,515. This is almost the same as the repayment for a larger loan of $400,000 at a subsidised interest rate of 2.6%.
It may be better for you to take the 5 room flat for $400,000 at the subsidised rate. Bear in mind that the interest rate of 2.6% is subject to revision.
1 comment:
The lower interest rate seems a better deal unless you believe that the $300k property will appreciate considerably in value over a short period of time.
This way, you don't need to go through the whole 30 yrs of payment.
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