Tan Kin Lian's Blog: Downgrade to a 2 room flat

Thursday, May 26, 2011

Downgrade to a 2 room flat

Hi Mr Tan
Due to taking care of one of my family member ( stroke ), I am unable to work as full time employee. My current job is commission based. As can't afford to engage a maid to take care of my family member, I am shoulder the full responsibility.

Regard of how hard I work, I still face financial cash flow problems. The killing part now is I need to service my HDB loan , as all my CPF already dried up , every month I need to pay $1000 CASH to HDB. Now still left $110 000 plus of loan to service.

I bought this 4 rm flat at the price of around $135K in the year 1996. Now able to sell around $400 000. My next owner is my dad but not working due to very old. The other person stay with me is my mom but also not working due to old age. I am single.

Every month is a big headache to me as I need to find $1000 to pay my housing loan. Due to taking care of my family member I know that I sure can!t service my loan with my part time pay. As my saving is going to dry up in 3 months time.

My parents don't like me to rent out my flat as they don't like to stay with strangers. I am thinking of selling off my flat. I am able to profit around $150K but if I want to buy another flat, after calculation, if I am not going to take loan from HDB again, I can ONLY afford to buy a 2 room resale and it will be in places like Jurong area which is far away.

I know it is very silly to downgrade from a 4rm to 2 room flat and further away from town. But the problem is with my part time pay , I totally can't afford to service my loan. If you were in my position, would ou be making such decision like mine? Please post my views in your blog as I like to hear the views of other people as well.

Anthony

11 comments:

yujuan said...: In times of adversity, we have to adapt to circumstances.
Start with you first, so what if the two room flat you could afford is far away from town, no big deal, just
commute a longer distance.
Next, have a frank talk with your parents, and disclose your financial difficulty.
Either your family keep the present flat, and rent out 2 rooms at $500 -
$600 per room, (too bad you have to sleep in the hall as the other room would be occupied by your parents), or buy the 2 room flat away from town for more privacy.
You and your parents can't have the cake and eat it as well.
Also, you could service your present flat with the rental received. Many families in Singapore are renting out rooms for extra income, and you are no exception.; May 26, 2011 9:34 PM
Weng Mao Fa said...: Sorry, your father/mother (?) is a stroke patient. In the next appointment with the hospital/polyclinic/VWO, make a request to see a Social Worker and tell them your problem.; May 26, 2011 10:31 PM
Singapore's 5 Minute Investment Diary said...: Where are those MPs and scholars when you need them?; May 26, 2011 11:18 PM
Steven said...: You can rent out ur master bedroom for S$800-900. Then u still have 2 room. No choice. Have to sacrifice a bit of privacy.

BTW, u say u can sell ur flat for $400K and outstanding loan is $110K, then how come u only can get S$150? I think should be more than 250K.; May 27, 2011 4:57 AM
Lion said...: What look4kc stated is right. If you have brought your house in 1996 and paying $1000k every month. you would have paid 15yr x 12mth x 1000 = $180k which I believe you should more or less finish paying as your laon amount is $135K assuming no downpayment. Your information is incorrect.

However if you still own HDB $110K and do not wish to sell, I would advise you to look for HDB to extend your loan period as I find that it is quite strange that your installment would be $1000, if your loan is 30years.

I feel that it is better to keep your 4 room HDB flat rather than selling away to get a 2room. I would rent out a room from my 4 room HDB. Just imagine if you have a 2 room, you won't evr be able to rent your room to get passive income, and base on your current scenario, if you sell your 4 room, I doubt you will have a chance to afford it again.

So don't sell, rent out 1 room to solve your problem and ask HDB to extend your loan period.
Last of of all, you are young and should get a full time job and with your room rental + longer loan period which lower down your instalment+ full time job, you should be able to get a maid and pay your instalment.

Hope it helps.; May 27, 2011 10:37 AM
Recruit Ong said...: will your parents prefer to stay on in the same familiar flat but with one room rented out to a stranger, or,
tahan the hassle of selling flat eventually moving to a smaller flat and at a less familiar location? dun forget move house etc takes up time and effort too

i think the choice is clear. try to convince your parents that renting out a room to tie over costs is a better option.; May 27, 2011 3:19 PM
anthonyong2010 said...: From Anthony

Hi the reason why till now my loan still outstanding so much Is a couple of years ago due to one serious financial issue, HDB allowed me to deferred my loan for quite some time and I have extended my loan to 30 years when I started paying the loan again one year ago.

As HDB did helped me a lot, I am thinking not to approach them again and solve this issue myself. The reason why I committed to pay $1K per mth one year ago is I didn't expect I need to take care my stroke family member for so long till it took out a lot of my times.

Either I sell and downgrade to a 2rm without taking a loan again ( profit might be around $200K ). Or I rent out my rooms which my parents don't like this idea, sme to me.

I welcome comments more Mr Tan readers and Thanks in advance..Anthony; May 27, 2011 3:42 PM
silverybay said...: I would assume your $150k nett proceed after sale is cash (after factoring in payment of outstanding loan to HDB and refund of your CPF money PLUS accrued interest).

With your tight financial constraint, getting another housing loan may be a challenge. Given that both your parents are old already and you dont really need a lot of space, perhaps you can consider renting a small flat around the area you are familiar with.

With $150k in cash and careful budgetting and planning, renting may be a better option as the spare cash will allow you some breathing space to focus on getting a better paying job or buy some time to upgrade yourself for a more stable job.

This option is better than using the cash proceed to get a smaller flat and draining yourself dry with nothing in the bank to cushion you in this difficult time.

If you can persuade your parents to rent out a room or 2, that would be another solution to tied you over for now.

Hope things work out for you. Regards.; May 27, 2011 4:05 PM
ron said...: A balance can be achieved.

Moving to a new location will upset older folks, and when they get upset,
it will affect harmony at home.

Although you want to avoid asking them, it is alright to seek help from HDB again.

Offer them that you intend to let out your room and ask them to help you. Tell them the reasons why you want to do it this way.

Whatever happend has happen and history cannot be changed, look towards a brighter tommorrow, it will come as long as you believe and have faith in yourself, your parents and many people here who have offered their ideas.

Take a deep breathe and allow it to flow out. Smile, and you can see that the world will smile with you.

Your parents need you.. give them your smile, your confidence that they will remain in familiar surroundings.

Because you can.; May 27, 2011 11:10 PM
Weng Mao Fa said...: Hi Anthony, pls telephone SAGE Helpline 1800-5555555. Free of Charge.

SAGE:Singapore Action Group for Elderly; May 27, 2011 11:54 PM
DareToAct said...: Hi, I understand that once you have cash in your bank account, you will not be eligible for financial assistance until you have completely used up those cash. It is easier to get HDB to assist you in lowering your monthly mortgage payment when you have a loan with them and no cash in the bank.; May 29, 2011 1:59 PM