Let us postulate
Assuming 4-room apartment costs 280K (at valuation).
New ruling states that this year (2005) 4% cash downpayment, the rest, 6% from CPF.
4% of 280K = 11200
6% of 280K = 16800
subtotal paid up = 28000
remainder = 252000
Rest covered by HDB or Bank loan. up to 90% depending on our salaries.
Assuming Grant awarded, 40k
So, assuming loan 212K.
30 year repayment plan at an interest rate of 2.60% (HDB Concessionary rates)
Max $849 monthly instalment.
Hmmm... Interesting. :)
Else assuming grant awarded is 30k only.
Loan amount 222k.
30 year repayment will be at $889 monthly.
Note, loan repayments can be paid using monthly CPF contributions from Ordinary Account.
Now. I wonder, bank loans better or HDB loans better. May says HSBC offers very good plans; better than that of other banks. Hrm.
New ruling states that this year (2005) 4% cash downpayment, the rest, 6% from CPF.
4% of 280K = 11200
6% of 280K = 16800
subtotal paid up = 28000
remainder = 252000
Rest covered by HDB or Bank loan. up to 90% depending on our salaries.
Assuming Grant awarded, 40k
So, assuming loan 212K.
30 year repayment plan at an interest rate of 2.60% (HDB Concessionary rates)
Max $849 monthly instalment.
Hmmm... Interesting. :)
Else assuming grant awarded is 30k only.
Loan amount 222k.
30 year repayment will be at $889 monthly.
Note, loan repayments can be paid using monthly CPF contributions from Ordinary Account.
Now. I wonder, bank loans better or HDB loans better. May says HSBC offers very good plans; better than that of other banks. Hrm.
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6 Comments:
Interest rates have gone up. See page 3 of today's Straits Times. Do you think HDB will raise interest rates too?
I doubt HDB would increase interest rates. It's akin to shooting yourself in the foot and slapping your own face at the same time :D But we'll see, you never know, we're talking about the gahmen here.
Hmmm, you can ask Uncle Peter if he had any idea what was HDB's highest interest rate in it's history. Bank rates will go up if economy does well, HDB rates might also go up. I believe there's a cap by MAS.
Whatever it is, if you both can try to shorten loan period like from 30 years down to 25 years, you wouldn't need to pay off too much in interest in the long run.
Oh yah, for this matter, do as much homework as possible before deciding on which home loan to take (from HDB or Banks).
If David and I had more cash on hand the last time, I believe we would have gone for HDB loan instead of Bank Loan as banks are able to to loan you the selling price, not valuation price.
Will tell you more when we meet up.
Yeah, we'll talk more about it. We're going to meet uncle Peter for the first time in August. I'm assuming we're not going to loan the full 100% of the value of the flat. Grant counts for something right? Therefore with that in mind, it will be around 80% (after grant) or less needed to finance the whole house.
Guess what? I was chatting with my colleagues regarding the new HDB ruling and they were sharing that they found out actually for the past one year or so, they found to their horror, that nearly half of the monthly repayment to HDB actually goes to interests! For eg, they pay $800 per month combined, about $400 goes to interest,the rest goes to paying off for the actual loan amount. Scary thought isn't it? If it's possible for you and May, go for paying off as much as possible from both grant and CPFs combined and it'll reduce your loan amount definitely, not to mention interests of 2.6% (HDB rate). And see if you could go for a shorter loan term i.e. 25 years instead of the 30 years which you'll both get because of age. it'll reduce your interest significantly too.
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