Sunday, October 18, 2015

The true cost of ownership

Someone said:
750k (for a 5 room BTO flat in Tiong Bahur) ÷ 99 years ÷ 12 = $ 631 per month (haven't factor in interest ). At this lease price it's cheaper than renting a flat from open market. Right? If you look at it from this perspective, it is indeed VERY affordable.

You must add in the cost of interest for 99 years. The rate over the long term is 4% p.a. The monthly repayment will be $2,600 (or 4 times the rate ignoring interest). 

Add property tax, maintenance fees, repairs and other cost of ownership, your monthly cost would be close to $3,000. Is it still affordable?

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