Saturday, April 23, 2011

HDB loan and Gen Y

A gen Y citizen talks about the burden of HDB loan on her parents and siblings. Click here.

1 comment:

william said...

This is why Singaporean are assets rich but cash poor!

Many people may not realise that if you take up a 30 years loan at the prevailing interest rate pegged to CPF for HDB loan (2.6%), you will be paying 51 cents towards the interest charges for every dollar you pay for your monthly instalment.

So after the 5 years MOP even if you want to sell the flat, you still owe a big junk of the loan and you still have to pay back the CPF withdrawn plus accrued interst at 2.5%. And if you hold on till the end of the entire 30 years loan, 31 cents of every dollar paid for the instalment will goes to serving the interests, and the amount to be returned to CPF is substantial with the accrued interests.

It may not be so bad if you are buying a new flat, but if you have bought a 30 years old resale flat at today's market price, by the time you have finished paying up the loan the flat only have less than 40 years lease left. At that time who will buy from you and at what price? Will the future buyer be able to get loan or use CPF to buy then? These are questions to be considered for buyers especially the Gen Y.

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