Archive for November, 2009

No, you cannot take up a fresh mortgage for your paid-up HDB

Thursday, November 12th, 2009

In Summary:

“A Home to Call your Own”
– Fully paid HDB flats cannot be mortgaged for a loan
– HDB: Prevent flat owners from losing their flat in the event of a loan default
– Why the different treatment between HDB and other 99 leasehold property?
– Some HDB cost as much as private property
– People these days are more sophisticated
– Is it any different from taking a normal bank loan?
– Time to eases restrictions on flats as loan collateral and let owners decide

“Too Many Risks”
– Most HDB dwellers are low-middle income earners.
– HDB wants to ensure ownership through paid off flats.
– Not much cash equity in flats as most flats are paid with CPF
– What will people do with money unlocked from their flats?
– HDB does have other safer suggestions for flat monetization.

My Views:

I think renting out part of your flat is a much better way to ‘unlock’ your flat’s value then taking out a fresh mortgage. Somehow, “Lehman Brothers” pops to mind. There have been private home owners who have tried to make a killing in the stock market by using their homes as collateral, and end up losing their homes in the end when the market went the other direction.

The other thing that pops to mind is ‘Subprime crisis’. In the US, many home owners took opportunity of their rising home equity and taking out fresh loans based on how much their homes were worth then. Thus instead of having, say, a $200k mortgage, they now have a $250k mortgage, and $50k cash in their pockets. When the property market crashed, many home owners owed more than what their houses were worth, and that $50k cash was long gone.

Yet on the other hand, I’m also for HDB owners being allowed to make their own decisions, and to live by their decisions.

By the way, our HDB flat valuation has risen 15% since we bought it 1.5 years ago. At this rate, our flat price will double in 7 years. Now if only we could unlock that money with a fresh mortgage … $44k in our pockets …. NOT!

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SG Citizenship is worth about $7,503-$10,583 more than PRs a year

Sunday, November 1st, 2009

According to salary.sg, they calculate how much the Singapore citizenship is worth over a permanent resident. Their figure came up to an advantage of $4,511/year.

They break it down this way:

Child Birth: Baby Bonus + Ward Stay = $531/year (based on 1 kid)
Childcare Subsidy: $3600/yr
School Fees: $180/year
Housing: Insignificant
Health Subsidies: $4511/year

Salary.sg treats housing advantage as insignificant since most would turn to the resale market, like PRs. However, by not including HDB Grants and access to HDB loans, this greatly distorts the yearly figure! (more…)