Financial / Legal Matters
I would like to upgrade from my current flat to a condo. I was advised to purchase the condo first before selling off my flat to prevent the hassle of looking for a temporary lodging area. Is it risky to do so? and I have less than 100k cash would I be able to afford?
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Answered on 25 May, 2012 at 2:36PMDear Jason,
As you stated that you are currently having a HDB flat but you have less than 100k cash on hand, you may want to take note of the followings in your decision-making:
( The following points are made in the assumption that you have fulfilled the HDB MOP ( minimum occupation period ) ruling and you are eligible to sell your flat or buy a pte property. )
1) Scenario (A) --- You are still servicing the mortgage loan for your current flat:
Under the 14 Jan 2011 property cooling measures announced by MND, assuming you are a Singapore citizen ( otherwise if you are a PR, the latest ABSD ruling also applies for purchase of 2nd property ), the LTV for your 2nd property is 60% ( of the purchase price or valuation whichever is lower ) with at least 10% cash and balance 30% CPF.
Assuming the condo is S$1mil, your cash on hand will not be sufficient for the cash component of the downpayment assuming you have at least S$300,000 ( usable ) in your CPF ordinary account for the balance cpf component of the downpayment.
You also have to set aside for the legal fees and stamp duty ( about 3% ).
2) Scenario (B) --- You have fully paid off your HDB flat:
Under the 14 Jan 2011 ruling, the LTV is 80% comprising at least 5% cash and balance 15% CPF.
3) Basically, selling your flat first will qualify you under scenario (b) situation in terms of the financing for the condo purchase.
Nonetheless, besides the above-mentioned, there are quite a number of other important factors that you may like to consider before making your purchase as for most people, buying a condo is a big ticket item and you would want to get things right in a few critical areas before you take the plunge.
I have written and posted a number of relevant articles in these areas in my blog and you may want to read more on them @ investmentpassivesutra.blogspot.com
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Answered on 25 May, 2012 at 1:26PMHi Jason,
If you are able to afford the down payment for the condo. yes you don't need a temporary lodging. There's many other factors which you need to take note also.
Please drop me a call & we can further discuss regards to your question.
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