FOOLISH HOME BUYERS OVERSTRETCHING THEMSELVES?💥 Explaining CPF Rules For Mortgage And HDB Upgrading

[@MrNamesNoMore]

I'm truly dissapointed by our local newspaper, publizing these kind of poor financial choices for the average Singaporean. No wonder our local news struggle to maintain young readership.

[@joshconsultancy]

Yup i was shocked too

[@nucleusagp6974]

Josh should contact the reporter who come out this article, pls post video for the outcome

[@chinchowpowpook]

Newspaper editor main job is attract viewership..so negative news always sell better than positive..yes , very biased..no matter how they write to tell 90%hdb dwellers to be prudent in saving and don’t invest in properties..it just show 90% are poorer and 10% wealthy gone to new level do wealth.. mind u the top earners in Singapore press holding none stay in hdb..

[@123samanthastar]

I think a lot of ppl are getting misled by property agents to upgrade

[@firefly4326]

Newspaper isnt wrong to report a fact that a hdb flat has been sold for 1m. You should be dissapointed with foolish people not newspaper. The problem is how many sold 1m hdb flat? If there is such volume, hdb price will be soaring like commodities. Reality is hdb is not a supposed to function like a trading asset. Why would somebody in the right mind cripple their entire cpf or savings just to buy an asset that is not liquidable and with a term of expiry that affects the value? Gov has already announced the remaining lease will affect the price of the property but people choose to buy, and when there is crazy demand, there comes the price.

[@AaronLin88588488]

The problem is not whether upgrading is good or bad. Is the article example that is wrong. Not all property decision are like this. Of course there are people that make wrong decision. But there also people that make the right decision and benefit from it. Its the example in the article that is wrong. Not the concept of upgrading to condo.

[@joshconsultancy]

Agree. Its these 2 examples. Based on your experience on first case, are my guesses that family members are stacked in probable?

[@kaiseng8394]

Thanks Josh for the candid talk. Really appreciate it. It looks like financial literacy is something that is really lacking for the mentioned people from the article. If people blindly follow the trend of property investment, considering a roof as investment, they will be in trouble at their old age. I really pity these people who over leverage. I guess people need to understand the concept of liability free, then works towards financial freedom. One step at a time.

[@joshconsultancy]

Thank you for the high praise Kai Seng. Indeed, concept of liability free!

[@superjames3556]

It is pitched by property agents. They sell the idea that condo price increases 80% for past 10 to 20yrs vs 20% increase of HDB. u buy a condo now (say 1.3-1.5m) and if the value increases to a certain value say 2m (they claim it as force savings), u can downgrade to a flat and get a resale HDB/BTO. They just sell u all the nice numbers. 2m minus 1.3-15m means profit of 0.5m-0.7m. I have done my sums before and it is pretty BS. They did not consider all the transactions costs, interest expense on loan, renovation costs , the loss interest income from your CPF OA account and most importantly the cost of buying a similar size home when u decide to downgrade. If i sell my 4rm HDB at 520k now and upgrade to a 1.3m 3br condo. i will be 300-400k worst off in cash for next 25 years. In future, when i sell the condo and downgrade to a similar size HDB, i will have to sell a 1.3m condo at 2.5m in 25yrs time just to even breakeven (comparing to me staying status quo and earn interest on CPF) and buyback a HDB at 620k from open market as i still need a home to stay when i sell the condo. That is just ridiculous they don't factor in the costs of buying a new property to stay. I just tell the property agent i am better off staying in HDB and let the CPF earn interest without the pressures of cashflow and affecting quality of life now with 300 to 400k cash less now.

[@joshconsultancy]

Wow this could be a topic to expand. Good sharing James. Anyone else with experience to chime in?

[@fool1124]

700k for the risk involved is not a very good return. Just put 1000per month in a s&p index fund with 10% return you would have over a million dollars after 20 years.

[@fool1124]

Dollar cost averaging for spy qqq or bitcoin and call it a day.

[@nesadcruz7840]

@@joshconsultancy I started investing in 2006. It is not 25 years yet but some projects have gone up more than 3 x since then. So a 1.3M unit today is unlikely to go at only 2.5M 25 years from now. On the other hand HDB resale has not gone up as much % wise. However one must look at risk appetite, not everyone has holding power. Also timing is everything. Those who buy when prices are low like in 2008, will make the most. A unit I bought during subprime has gone up 3 X, I sold it this year.

[@joshconsultancy]

HDB resale if bought in 2006 would have been up substantially. The Pinnacle is launched around that period

[@liangjerry]

What you can afford vs what you can buy is a HUGE difference. The winner is NOT the owner/s, the the strings of businesses + people that makes from what you paid to commitments with liabilities.

[@joshconsultancy]

AGREE!

[@coffeemeblack]

Our schools should introduced financial 101 (or, Financial prudent) in upper Secondary or even lower Secondary. Example, What is compound interests, CPF accounts and CPFLIFE which are very close to us, Rule 72 and so on ... Some of the Maths that we have learnt are not applicable when we come out to work. Not everyone graduated as an Engineers or Technicians. Just my opinion.

[@joshconsultancy]

Agree. What we can do is to spread the message of prudence. Upgrade the HDB to a new one for case study 1? Sure, loan should be easy and manageable

[@frjuy]

actually, we learnt about simple interest, compound interest, installment, etc in primary school, around p5 or p6. it was from here that i realised installment payment very bo hua (not worth it)

[@coffeemeblack]

@@frjuy I see. Different era. My P6 was 1970. LOL

[@frjuy]

@@coffeemeblack waaa, i think you are my father's age LOL!! my p5 p6 was the early 2000s 😆

[@fool1124]

actually its not about financial knowledge, its about greed. people bought into these get rich scheme.

[@whackino]

Josh kudos to u for being socially responsible by telling the truth , this video should reach more people who are crazily and frantically buying at astronomical prices ..

[@joshconsultancy]

Thank you for the high praise. Now with interest rates at 4%+... BIG PROBLEM

[@adrianoh6485]

I like your frankness which I enjoy in your videos. These articles were written without much substantive backups n nos. and in my opinion irresponsible. Tks for bringing up such acts to light.

[@kangjingtan7312]

Great video on prudence. Based on the limited info provided, it definitely seem that the first lady overstretched herself based on her pay. However, I think the 2nd example of school teacher purchasing a 1b unit at Treasures at Tampines is sufficiently prudent given that she’s single & has no dependents & earns a decent wage. The running cost of owning a mega development like Treasures is low due to the massive number of units (more than 2000). Maintenance fee can be below $200 in the long term. HDB town council fees + season parking + gym membership cost may well be higher than Treasures monthly maintenance fees. My personal opinion is that many Singaporeans in 20s & 30s are not stretching themselves hard enough. But many in late 40s & 50s are over stretching. Risk appetite should be calibrated according to age.

[@joshconsultancy]

Stretching for a home (if we define as a liability) is prob not wise. Stretching for investments ya go ahead. Its very personal and prob not dependent on age. Cya around

[@nesadcruz7840]

Not just Age but income and family situation too

[@nesadcruz7840]

@@joshconsultancy Property unlike cars arent liabilities. Even a home can be encashed, you can downgrade if you need to. Many older couples sell their condo or landed , downgrade to a smaller unit or even hdb after the waiting period. This gives them a good amount of cash .

[@Dantheman8222]

"People who advocate simplicity have money in the bank; the money came first, not the simplicity"

[@joshconsultancy]

That's deep!

[@KrishnanV9]

Wow!! Nicely put.

[@chinchowpowpook]

Money in the bank feed bankers ,,while yourself save to eat less..till death

[@jessgan2055]

Won't money in bank lose its purchasing power?

[@aikpengng7690]

The other day when I read this article, I was also surprise of the reason for upgrade. On of that, also wondering how do they service their new loan specifically for the 1st case mentioned. Thanks for sharing this.

[@joshconsultancy]

Yes thats why my guess is the equation has more people involved

[@nesadcruz7840]

@@joshconsultancy If there is a second borrower who is significantly younger like a child who is 30, the a Tenor goes up a lot as the bank will average it.

[@jeremysng4214]

Yes i generally agree. Condo PSF has climbed at an astonishing rates and pple are afraid that they may be priced out of the mkt in future. Hence the buying spree. The affordability issue coupled with shorter loan tenure and employability as we age will see many in troubles especially when interest rates start to creep up.

[@joshconsultancy]

"Condo PSF has climbed at an astonishing rates and pple are afraid that they may be priced out of the mkt in future. " - very well said

[@nigel155]

Thanks Josh for such a sincere sharing and education

[@teo-dividends4life101]

Another great video Josh! Interest rates are creeping up, extremely important to calculate our loan burdens.

[@joshconsultancy]

Thanks for the high praise. Hopefully the sharing has helped prevent some families from overstretching to mortgage

[@whis5448]

Reminds me of an example where many years ago in the place I've worked there were one driver who got his pension and he immediately go and buy a Lexus and parked beside the boss's toyota. He also bought a new house and was super happy about his life. Later heard from some colleague that this worker had gotten heart attack as he was too excited about his pension and ways to spent it. I feel that most people had no financial literacy and thus the Govt do away with lump sum payment for CPF (also doing away with pension) and focus on giving out monthly payments to last the whole lifetime of the person. Any person who squander away his retirement money is a burden to the govt.

[@ryojinkiiro940]

My old neighbor told me he received a lump sum of over $200k and went broke just after 2 years. On hindsight, he mentioned how he'd hope that the govt had implemented the CPF minimum sum earlier but I doubt he would support that policy back then.

[@nanayue5388]

Sometimes i wonder why Singaporean auntie and uncle still working in their old age bcos they squandered all their $ after age 55 when cpf monies can b withdraw...🤔

[@zulmarquez8496]

Scary how some property agents encourage hdb sellers to upgrade to a condo just because sellers can "afford" based on their calculations.

[@joshconsultancy]

Think about it.... if comfortably can afford then need to calculate hard?

[@123samanthastar]

I like how someone finally points out the foolishness of upgrading !

[@stormysky5177]

look at all the property ads in YT and u know why. Today the quality of property marketing and pitching by the agents and property firms in all this ads are highly persuasive and very well presented. I mean this is a good thing as it raises the quality and standard of prop marketing. But it also 'brainwashed' many buyers, sellers and upgraders of property.

[@yewkaisiang7213]

Some people just do not understand the difference between "What one wants?" and "What one can afford?" I may want a lot but can I afford? Do I really need it? Thanks Josh, good video!

[@joshconsultancy]

Share with someone this message. Very troubling. And its on a newspaper some more which can make more FOMO wrongly

[@stanley2997]

i dont think the story is complete..a lot of loopholes

[@cheekhiangtan893]

A very good video. Thanks Josh for the insightful views. Many are stretching themselves too thin with a large loan with the hope of high capital appreciation for condos. It might pay off or it might not.

[@joshconsultancy]

Ya, I was concerned hence I did this sharing

[@JS-ev4xc]

As long as it is only 99yrs lease, private condo does not make sense as a gd investment I think, as there is no holding value long term. HDB though is 99yrs but at a gd price level, and stands a better chance as govt policies will somehow assist those that may face problems when lease is ending.

[@joshconsultancy]

I hope so but its our speculation

[@nesadcruz7840]

There is enbloc from pte properties. A good possibility.

[@ackc1204]

True, many are buying like they are printing money. Just look at cars alone will know. I am not scare of this FOMO (Fear of Missing out). I am more worry of the other FOMO ( Fear of Money Out). 😁😁

[@renatang7275]

Thank u Josh Tan. So much to learn from u. Your good video will guide us to buy right .

[@Jason-pp9go]

Is normal everyday can see foolish people everywhere 😢 they throw food rubbish outside their empty bin in order to attract pest beside their home smoke beside their children and babies while walking together.

[@lidna82]

The ST articles can be very misleading so thank you for your video. Beyond the contents found in the articles, the buyers may well afford the upgrade due to their spouses or other incomes etc. Or they simply find greater value in buying a new home than paying for a Reno, even the sums are miles apart. Our national paper can definitely do better.

[@cheongkentang8370]

I find it to be true, news now a day are tricky by their word play. Have to read very carefully and think what is it all about.

[@nesadcruz7840]

Those interviewed may not disclose everything for privacy reasons.

[@icemanso]

Totally agree with being financially prudent. Regardless of age, everyone should calculate the numbers before committing to a big ticket item like property.

[@chinchowpowpook]

Yes ,,prudent..but means work till death..chicken n egg

[@teoweeli]

same for many Singaporeans when our median household income is 4k. Even for those buying EC with household income of 12-14K?

[@joshconsultancy]

Median per adult income $4k+. Thats x2 of Not median household income?

[@teoweeli]

@@joshconsultancy 8k x 12 x10 isn’t even 1 million. Plus interest for a “normal” 1.5 mil condo it will take almost 20 years to pay off. Plus both have to be gainfully employed with same salary or more over 30 years. There is no cushion at all, not to mention conservancy and sinking funds fees. We are really slapping ourselves just because we feel our govt is “withholding” our CPF and is trying to take out as much as we can for housing.

[@hgft274]

Fast forward to today's high interest environment, this is ageing well !!! :)

[@joshconsultancy]

Yup.. ouch. Marginal home buyers who are on floating rates will likely be financially stressed out

[@menghui1242]

is there a possibility that developers influence st reports? it is not in reporters rule that they analyse data b4 writing an article

[@joshconsultancy]

Maybe… most important are the learning points discussed on prudence and how loans and cpf work

[@ketan5747]

Josh, u r prefectly right on your worries. Looking at this type of plannning, is really stressful gg forward. At age 54yr, it really make no sense to buy a 1.5mil condo just for the sack of doing that, n ended up taking a huge loan of over 1mil.. Aiyo~ i m worried too...

[@joshconsultancy]

Ya, especially at older age, get ready to be able to pay off home loans

[@pyt6631]

Hmmm it isn't upgrading if the financial burden also upgrades along

[@seogeneration]

I agree with what you said. For example, we r a couple with combined earning of ard 11k and cpf of 300k. Peers kept encouraging us to buy EC. For a 1.2m unit, yes the 25% downpayment is no issue to us as we have quite some cpf. But the monthly repayment + maintenance can be a bit stretched as we both have elderly parents to support, and what if we have young kids in the future? Plus if we use cpf to pay for the bank loan, the interest is quite high. It really depends on what you want. We prefer to have more cash on hand to live life.

[@joshconsultancy]

Thank you for the personal sharing. Now you've the cash to potentially retire earlier. And no financial stress if work is not smooth

[@theflyingbanker225]

I am by nature very prudent. But i have changed my mindset slightly in recent years. 1) Singapore main source of wealth is tied to Real Estate, hence i think over the next decade and beyond, valuation will keep rising albeit at a slower rate. Also, there will always be influx of wealth from the HNW from Asian countries due to our stability in govt and currency. The money has to go somewhere and traditionally Real estate is the preferred choice. Its an incredibly well supported industry in a land limited country. Demand vs Supply. 2) Look at the CPI or inflation related statistics. Are our wages keeping pace with prices of consumer goods, education, utilities or properties? As much as we exercise prudence, we also want to strike a balance between retirement & enjoying the present. With kids n the occasional holidays, expecting to build a retirement nest with cash savings is impossible. I rather deploy into stocks, bonds, etf for cash, while my accomodatiom appreciates significantly with leveraging, ie mortgage. If your HDB is almost fully paid or managable, upgrade and at most consider carefully the LTV. I think for young working adults, 60%~ is reasonable if you have sufficient buffer for >1yr mortgage payments. My biggest mistake was not taking enough risks in life. Always seeking to be debt free and i'm only early 40s. Despite the non existence of Iron Ricebowls jobs, if you have a long working tenor ahead, have faith in your ability to progress and take reasonable and calculated risk in building a diversified wealth portfolio in both traditional and non traditional asset classes. I quote Mark Zuckerberg "The biggest risk is not taking any risk... In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks."

[@nucleusagp6974]

@@theflyingbanker225 what your advise buying which type of stocks and etf? Using how much to buy and frequency rate of buying ? Under which platform to buy also? What yr strategy of buying stocks when price drop 10%,20%,30% to 70%?

[@theflyingbanker225]

@@nucleusagp6974 Depending on your risk appetite, i think for a balanced risk profile, 1) Buy the STI ETF (ES3) for minimal capital gains and dividends. This should be done on a regular basis (DCA), and whenever opportunties arises from a major selloff, buy on dips. Its not only to lower your average buy price, but also make sense to buy stuff on a discount. I think this is rather safe so can form the core portfolio. 2) If you are looking towards 20% to 30% gains in the next 3 to 5 years, i like that chinese stocks (H shares) are at attractive current valuations. Again it comes with more volatility. But hey, high risk, high reward. The 3 tech giants, 700, 9988,.9618 in order of preferences. Otherwise, the SGX listed ETF, Lion-Ocbc Securities HS Tech is fine. For dividend plays, the insurance companies like 2318, 2628, and reluctantly. a couple of banks 1398, 3968. 3) If you want exposure to US markets, the typical FAANGs can't go wrong but the current pricing scares me. Maybe strike a balanced between growth & value stocks. Best still, DLC into ETF like SPY or VOO. Lastly if i may: 1) Diversify 2) Construct your portfolio based on your risk profile, not what others say 3) Its not the timing of the market, but time in the market ie long time horizon 4) When shit hits the fan and everyone is panic striken, gather your cash and do some shopping, ie Be Brave when the rest are fearful.

[@nesadcruz7840]

Depends on what you want like you said. But for those who want the condo lifestyle, better to make sacrifices early and go for it when young as you have more time to pay down. Also 10 years from now you wont be seeing today’s prices. Lock in the price early. It is also easier to make sacrifices earlier in life.

[@vincentlim1160]

Indeed worrying with many agents out there trying to provide ‘another perspective’, especially when the internet rate rises. It’s definitely beautiful to upgrade, without being over-stretched. But somehow the numbers are manipulated to paint the easy profit if we buy them RIGHT NOW! 🤯

[@joshconsultancy]

Easy profit perception is indeed dangerous. Agree.

[@vincentlim1160]

@@joshconsultancy But that’s what the agents keep telling us, or what they are trained to tell us (so they make a living/great bucks 😆) Ultimately, market need more people like u to crunch the numbers to make things logic/fair/smart Appreciate the videos in guiding the community 🤓

[@andrea9797mdd]

Really astute, as usual! Thank you!

[@joshconsultancy]

Share the message. Very worrying especially if theres a loss of job or if interest rates start climbing

[@potion4765]

A lot of ppl wants to ‘upgrade’ regardless of financial capabilities

[@vivianviv7955]

I recently sold my hdb to buy a private condo. I calculated my financial before committing this big ticket item. Initially I wanted to loan little from the bank but banker told me that I should get more loan for such low interest and park my cpf money for higher interest. Monthly loan maybe higher but then the interest gain over 2 years was pretty attractive at around $4k-$5k. Not sure if I made the right choice but I think I still can do partial repayment after serving the 2 years lockin. Thanks for sharing your thoughts.

[@joshconsultancy]

Hi Vivian, factually OA rates are above bank rates right now and for the foreseeable year ahead. Hence it can be seen as good debt. I work on a fee based to look at it in totally and there will be an unbiased financial planning process. To engage for advice look for links www.theastuteparent.com/josh-tan/

[@chinchowpowpook]

With low interest u take more loan..as the capital appreciation of Pty will surpassed this..the wealthy people all do this..that’s what bank are for..

[@vivianviv7955]

@@chinchowpowpook wise words 😊

[@DerrickTay88]

It was probably a right choice back then if u manage to lock them for 3 years. Its been 1 year since u got the loan, if your loan is only for 1 year fixed and is still that high with the current SORA rate.. Then... Hmm....

[@hhspore]

The straits times always report news that are skewed and sometimes I wonder if they are in "cohorts" with the developers (think advertisement $$$$$) by reporting hyped up news on condo sales.

[@joshconsultancy]

Dangerous to accuse without evidence. What we can do is to share some sensibility to more people

[@gparamaeswary7276]

They are , l am sure......agents.

[@jackyjacky4220]

For case 1, the income source is not giving a full picture in the newspaper article.

[@hbu8012]

Quite sad that most Singaporean only consider 2.5% reported as the annualised inflation rate. The 7% GST is also a type of induced artificial inflation. So our spending is actually inflated by 7% + 2.5% = 9.5% ..... After factoring in GST at 7% as a part of inflation it sudden make sense we need to work till 70. GST is tax by definition but its effect is inflationary.

[@joshconsultancy]

GST is a tax yes and it impacts ur total bill as a fixed amount more. But it doesnt increase every year, which is what inflation is....

[@littledrummerboy9080]

A 43 year old HDB still have 56 years left. 56 years remaining leasehold should be enough for a 40 year old, let alone a 54 year old.

[@joshconsultancy]

Think for legacy she is thinking of giving it to child with substantial lease left

[@ocswoodlands]

selling away an old HDB is wise. But buying a condo beyond one's means is foolish.

[@nesadcruz7840]

HDB will en bloc it long before zero year. At that time If the valuation is low, you will have to top up the difference for Replacement flat. My friend had to step in with her CPF as her elderly parents didnt have enough cash or CPF to pay for it. Fortunately at 30 and single she had not bought anything yet. Her other siblings were all married and older. Holding on to an old flat isnt wise as unlike pte you have no say when it enblocs and hdb will Value it. You have to be able to top up for a Replacement or sell it back to them at valuation and make other arrangements. The less the remaining years on the lease the less you will get back.

[@thegreenbaby9365]

@0.41 Wonder if among those HDB upgraders, a small handful could be snapping up pricier properties after some windfall 😅😛

[@joshconsultancy]

Depends on situation. Problem is the windfall gain is back into the market. Its like in stocks you make gains and you plough it back into the next stock correct? What if property doesnt appreciate for the next 5years? WHat is interest rates stay reasonably high for the next 5years?

[@samlai3362]

The problem starts from Singapore economy primarily depends on real estate which benefited the banks and government collecting GST plus maybe ABSD, so state control media glorify public housing dwellers upgrading to private property, HNWI purchasing GCB during the pandemic, KZbinrs claiming sell 1 HDB and buy 2 private properties, there are agents claiming that PSF will raise to 2000+ psf in the coming years, etc. A lot of local residents FOMO will buy into these kind of news, thus making an impulsive purchase. In the next few years, likely to have an increase in bank sales when interest rate raises.

[@joshconsultancy]

FOMO buy usually doesnt end well. Carefully planned 5y upgrade plan and raising income to meet it is the prudent way

[@silentbliss7666]

Foolish or not, who are we to judge?

[@Zenus21]

Status Status Status. . . . Twin View also will get into decaying lease too isn't it? Or Stagnation of Resale Price

[@joshconsultancy]

Status cannot help retirement haiz

[@Zenus21]

@@joshconsultancy Agree but can satisfy Ego Lolx. For legacy retention, better to consider FH Pty. However 2 person to sacrifice their lifestyle to upkeep the 99 year pty is really boo boo.

[@chewkenneth]

Great insight Josh and thanks for sharing!

[@joshconsultancy]

No probs, share with someone who should hear

[@gparamaeswary7276]

Anyway what is Straits Times(SPH) into now. Property.....

[@goondu86]

Singapore Property Holdings 🤔

[@neishchan109]

As you said this is not a complete story based on what's reported on the article, I guess we shouldn't call them a foolish buyer based on the limited facts. In the first case, she might not have necessarily taken up a 75% loan. The sale proceeds of her existing house and personal savings could make up her down payment, which help to reduce the loan amount required. Suppose she is taking only 55% loan ($825k), she is allowed to stretch the loan tenure until 75yo. With that, her monthly instalment is about $3631 (assuming 1% interest rate). The existing TDSR framework helps to ensure borrowers are not over-leveraged. The fact that she could get her loan approved by the bank means that she passed the stress test and has the financial means to service the loan. Well, I do agree that she needs to look into her retirement years. But she could sell the property for capital appreciation and downgrade to a smaller unit in the future if there's a need to. Moreover, she could also choose to pass down the asset to the children who don't mind owning a private property and continue with the loan repayments. When the children inherit the property, they could refinance the loan and potentially get a fresh 30 years loan tenure because of their younger age. And that further reduces the future monthly instalments.

[@joshconsultancy]

"Suppose she is taking only 55% loan ($825k), she is allowed to stretch the loan tenure until 75yo. With that, her monthly instalment is about $3631 (assuming 1% interest rate)." - this is valid. "The existing TDSR framework helps to ensure borrowers are not over-leveraged. " - not necessarily. 60% total debt (then) of monthly income if you think of it is ill advised for most common households. Ive advocated at least 20% net savings rate to work towards financial independence. Consider property 3-3-5 formula, it is a much more prudent approach. "But she could sell the property for capital appreciation and downgrade to a smaller unit in the future if there's a need to." - stay tuned. Will address this in a followup video. I hear the view point and it defers as I advocate financial independence which is the polar opposite of family paying off debt together which is what we both guess. But still good to see alternative points and your inputs are appreciated =)

[@showerchan6149]

fast forward 1 year later I view your video. The Interest rate is so high right now she probably have to pay additional $1000 for the additional interest hike

[@joshconsultancy]

very likely... big problem

[@lohdanwee474]

Why are there so much worry that HDB will eventually has zero value ? Do people know that HDB offers best rental retuen compared to private property. If a HDb has 55 years lease left, the HDB can rentb$2k/month, why bother selling at 500k? Would it not be better that the unit be rented out for 55 years and net 1.32 million a lot better ?

[@joshconsultancy]

Agree. Guess the marketing pitch is usually directly towards new launch capital appreciation

[@kenneth3132]

Just to be devil's advocate and provide another pov , for Case 1, the person could have a huge amt in CPF (eg 500k in OA) and wanted to use it all for the house, selling her hdb for 430k she just needs a loan of 600k remaining for the condo? If she waits til she crosses 55, she will then lose the FRS or BRS or whatever( deducted from the 500k) and she will end up having to take a bigger quantum? If she had such amounts in OA then it also might mean her SA has some substantial amt and might be enough to at least be decent for retirement since that cannot be touched for housing payments. Please correct me if Im wrong. considering everything I also feel there are missing information like maybe her kids buying w her, hence she is unable to get a hdb (if her kids already own a hdb as well) after selling and can only get a condo instead?

[@joshconsultancy]

The scenario above is very unlikely. As remote as her having a lottery windfall w big cash on hand. I could be wrong, just my guess from the details from the case provided. If kids own HDB and buy this with her, it will be joint name and ABSD will apply

[@paulyin8934]

The real reason Face Value

[@kenneth3132]

@@joshconsultancy yes I guess ABSD applies but some people dont bother about ABSD as long as they can cross the line with their current cash/cpf and salary to get the house, in this case yes it might still be very imprudent but to them the only concern is being able to get the house now, instead of being unable to later on when more money is locked up. I am curious why you would wonder it is not likely for her as her sale of HVD is 430k, assuming that is nett, she gets 430k and if she used up most of her cpf early on for the house, maybe 200-300k will be returned to her CPF. so her CPF has a high chance of being quite huge due to the proceeds as well as her cumulation. Not to forget most of cash proceed will go back to CPF if she initially used CPF only to pay for her house as accrued interests go back to CPF. then probably the remaining portion will be shouldered by someone else she is buying with.

[@Nothingmore1313]

Owning a private condo may not be a wise idea unless u r buying a landed plus a deep pocket.

[@joshconsultancy]

Why not wise? I was concerned about affordability of the two case studies but if can afford by all means

[@coljuay]

Agree with most of your videos. However, not this one. The case studies on newspaper is definitely showing only limited details, can't possibly expect a news article to include one entire page of financial details right? Devil lies in the details

[@dovetofree]

I agreed. For the 1st case, the Indian lady should hv bought the house many years ago at a very low price, thus preserving most of her cpf to pump into this new property. She may also have pumped in the 400 over k from the sales of the hdb into this property which will reduce her mortgage loan obligation. The situation may not be as bad if my guess is right. The social media should paint a fuller pic of her case so as not to mislead the masses thinking they can do the same

[@joshconsultancy]

@coleman, yup hopefully ive reverse engineered some details out. @pauline, assuming the deposit is $375k, and if with stamp duties, that will require the $410k already

[@82kimura]

Slightly unfair sharing for the 54 year old lady. She probably have sufficient savings via insurance investment to fund for her retirement and probably do not rely on CPF for retirement. Legacy planning using her cpf and savings/invesment for retirement. Sounds rather legit as well 😊.

[@Maricruzious]

May be her old houses already paid off, so with the HDB sold money fully in the condo plus the CPF and some saving which result in sufficient $$ to own condo and with 300k for loan? I mean that just assumption.

[@joshconsultancy]

Old house is likely fully paid. Surplus OA of $700k in the scenario above is probably less likely than having both spouse &/or child name within. Food for thought

[@sookw1071]

Hey you are good. This should be a wake up call to all ignorant people abt the cpf and owning a property

[@nesadcruz7840]

We dont know people’s circumstances. The info isnt complete so you are making too many assumptions. For those who can afford ( taking into account risk potential too ) it is better to invest sooner rather than later. I remember 15 years ago when I was investing people also said it is too expensive, then subprime came and yes those who over stretched did lose money. But those of us who could hold had no problems and have done well. Prices have soared since then. At the end of the day property is the best investment in Singapore. But it is prudent to not over stretch, must always have some cash on stand by, emergency funds. Renting isnt good as you are just helping someone else pay down their unit. Rental can go up too and you will end up priced out of the mkt.

[@joshconsultancy]

There is logic to some of the guesses. Such as "want to have access to CPF" which implied lack of cash funds &/or CPF not at FRS. Age which impacts loan... among many others explained in video

[@nesadcruz7840]

@@joshconsultancy Those of us who have a lot of cash often choose to access CPF because we choose to stay liquid, keep cash for other investments. My preference is always to use CPF first.I dont need my CPF for retirement as i have passive income from rental of several units.

[@lucern543]

15years ago, i laughed at those ppl who leverage to buy 3-4 properties. Back to current, i'm still working hard with my small hdb while they sold off 1 of their muti property and rented out the remaining, chose to stop working to travel the world. I wonder who is the foolish one now... Anyway, it is all down to your luck, risk appetite and karma.

[@nesadcruz7840]

@@lucern543 15 years ago it was easy. No absd , no tdsr, easy to get Financing and yields covered rent. During subprime especially there were plenty of opportunities.

[@pilipaladadadazheng7064]

thanks for sharing, nice video 👍 just would like to know what’s your view on dbss? is it worth to purchase a newly mop dbss now looking at the increasing prices?

[@joshconsultancy]

I dont have a particular view. Home is very personal. As long as loan is comfortable go for it =)

[@NinJa-qr1sp]

This irrational behavior can be attributed to the govt's continuous skirting of the HDB lease issue and their pathetic attempt to not address the value depreciation. After Singaporeans slaved away for decades paying off their flats, a snap of the finger and all the value disappear, giving the govt a bullet to say the flat is worthless now. Very low move by the ruling party.

[@joshconsultancy]

chill chill, there could be constrains or consequences as laymen we all do not see yet

[@Novic09]

My retirement plan. Own one HDB. When my kid is working, rent whole unit out. Rent a condo in J.B. Stretch every dollar. Work security at any condo in Woodlands.😎

[@joshconsultancy]

After going in for a holiday and seeing the state of things, I dun know about living in JB man... I trust living in singapore more =)

[@Novic09]

@@joshconsultancy Each his own😁👌

[@maxlim3673]

They are being sold to the concept that property price in sg will always go up as the demand for it is strong due to land scarcity and in flux of rich individual. Looking at the past data on average the prices of sg property r still in the upward trend.

[@joshconsultancy]

Property prices are definitely on the uptrend now. But home is home. Its a liability that cannot be cashed out in 1y even (without SSD). When buying a home looking easily 10y or 30y affordability

[@maxlim3673]

@@joshconsultancy well if the person buying for a home then your point will be valid but if that person is buying as an investment product with the hope of cashing it out later with a handsome profit then it would be a different story. Some of the possibles scenarios which i roughly can think of after 10 years buying the private property 1) the property under both husband n wife after cash out the private property stay with their kids. 2) under husband and wife name after cash out moved to Malaysia for retirement. The above just are some of my guesses. The fundamental is that singaporean no longer think a property is a home but rather an investment. Thats the scariest part of the whole situation now in sg. 😊

[@jalanjalan7099]

Hi Josh, how about a 38 year old couple upgrading to a 1.4 million condo? Maybe I can sell off the condo and downgrade to a HDB when I am older and my children are all married? Just to add a couple with loan of 1 million. Not super stretched with our salary

[@joshconsultancy]

"sell off the condo and downgrade to a HDB" this part i think its dangerous if its a 5y horizon. Perhaps prudence means looking at it from a 10-20y timeframe for house. Loan must be backed with income for that period. Then property ups and downs are easy to ride

[@nesadcruz7840]

@@joshconsultancy at 38 I doubt they will be retiring and downgrading in 5 years. My advice is go for it If you have sufficient Emergency funds for a year to pay all bills in case of Crisis like job loss or medical Emergency that can happen at any age.

[@kokonaGao]

The housing agent earn big big. Got commission from developer and also referral rewards from the banks for introducing bank loans.

[@superconnie5003]

Maintenance at Twin View is $400/mth?

[@joshconsultancy]

IDK. And depends on size

[@VzuallStudio]

Any advice for singles on how to plan for retirement or upgrade base on 2 room flexi after 5 years?

[@joshconsultancy]

I actually dont like 2rm flexi. But my view. Coz other units in 2room are rental units and size too small for families to buy

[@paulyin8934]

I like your prudent advise. But sadly if you give $1Mil to 3 different person equally and tell them to see you after 10 years what they have achieve. All will return back differently.

[@joshconsultancy]

Well said!

[@damyeuful]

The other worry is that the bank was so willing to provide the loan. Maybe a lot of cash on hand

[@joshconsultancy]

Equation may be 2 or more people in loan

[@nesadcruz7840]

Banks are prudent, they dont simply lend out. If she qualifies then she and joint buyer obviously are stable enough.

[@DonYang73]

Good luck Mdm Nabisah! 😀

[@benboy4126]

Good video and message. One question - have you consider in 10, 20 years they could sell their condo at a higher price and downgrade back to HDB and use the proceeds as their retirement?

[@joshconsultancy]

That depends on the growth rate projected within this concept. First hurdle is the CPFOA 2.5%pa

[@fool1124]

consider a 99 year lease condo plus 30 month wait to purchase a HDB

[@paintingpainters]

But the condo is for LeGaCy purposes

[@sahfahrisupar]

Mind sharing the article? Great video btw. Still yet to retrieve my keys to my new bto but financial prudence is sth my wife and I care about for our next step as well. Lifestyle inflation can easily creep in if we are not open and honest with our needs and wants.

[@donldnify]

Good video Josh - this could be just the tip of the iceberg. Assuming now is the peak and when market/valuations comes down, will they be expected to pay more? Also, interest rates have bottomed and expected rise from 2023. Both these factors will hit those who are over leverage. And why do you think Govt has not implemented cooling measures?

[@joshconsultancy]

Why Govt has not implemented cooling measures could be due to HDB BTO construction crisis. That seems to be resolving

[@chinsienliew556]

Great Video! thanks for sharing :D

[@joshconsultancy]

No probs. Interest rates have risen massive since then. Share this message on prudence to anyone who should hear too 👌🏻

[@valmont6088]

I like frank opinions , good job Josh!

[@jimseah8974]

if u din buy stocks u miss out; know of many toilet cleaners and security guard who bought dogecoin and became millionaires, near my house a cleaner ask her son buy tsla and SHIBA for her, last week she told people she has bought a semi-d and is considering buying a private jet.

[@animals101ify]

Looking forwad for your next video! Just what i need !

[@joshconsultancy]

Targeting Friday. Smash the subs and stay tuned

[@andrewsim5725]

Thanks Josh. This is a great video. I am also wondering ……..

[@ryanwoody77]

Sir, in this era do u think it is better to be cash rich?I do not concur. I do agree tat u need sme buffer for emergency.

[@joshconsultancy]

The “asset heavy” maybe should be defined as home property heavy. That is worrying coz home is liability, agree? Cya around ryan

[@potion4765]

A property is a liability if u have to lower your well being in order to finance a loan

[@williamwong5627]

Who knows? Maybe she strike MOREMORE and easily afford the condo.

[@joshconsultancy]

Then there wouldn’t be to utilize the cpf portion

[@orynfam7940]

Very often its property agents telling them nice fairy tales. Than the agents earn commissions.

[@DonYang73]

Yes, its ALWAYS the property agents. When you screw up, it doesnt impact them.

[@mikeang80]

Just buy within your means. Most news articles just never revealed the truth or perhaps half truth. Who's knows maybe it a sponsored ads by the developers or property marketing agencies.

[@Alice-hh5kd]

Thank you for sharing.

[@limrosemary8536]

very kind of u to advise seniors who hope for a Golden Age of sorts .., A limited edition HDB EA or EM after HIP does not drop in value esp post pandemic WFH & HBL is bevoming de riguer ..,the pic on your 🎥 says ‘伤脑经啊״

[@joshconsultancy]

More like 无药可救 haha

[@zedloh5633]

What do you think about the upcoming PLH BTO?

[@joshconsultancy]

I think if you get it, its going to be great. For the rules part, I've this sharing on THE JOSH TAN SHOW channel WHY I THINK THE NEW 10Y MOP RULE FOR PRIME AREA HDB DOESN"T WORK! 😱 kzbin.info/www/bejne/bKbVi6ukr9-igMU

[@bsoon2001]

people buying condo,either too much money or show off!

[@syntecsea]

Omg...even i 2mil cash i dun even think of buy condo but bto for 5 rm yishun..n retire comfort..best..i only 45 n debt free no child...oh plz...dun let e desirez over u! Wat if she sick n i wonder how to payoff!

[@joshconsultancy]

Ya illness is a situation when income gets impacted and mortgage cost really strains a family

[@catherinelim1543]

Thank you. V clear.

[@kongkong9337]

With $1.5M, you can rent for 2 lifetimes.

[@nesadcruz7840]

You cant take a loan to rent and at the end you will have nothing to pass down to kids or to sell and unlock cash. Moreover Rents keep going up.

[@chitchat3838]

This is a poor people mindset syndrome. The desire to prove that they're not poor (or the need to show off), surpass all reasoning. That is the same mindset why a clerical work person buy LV handbags. Deep down, the pain of being inferior to others is insurmountable.

[@joshconsultancy]

Harsh but has some truth

[@damyeuful]

I think when you go to the show flats, the buzz there and hard sell by agents, makes you make foolish choices

[@joshconsultancy]

I think you're right. Its like an auction, you need to be prepared very well. If you go in blur, you will make rash choices

[@damyeuful]

Being financially prudent is not as sexy as saying I own a $1.5 million property :))

[@damyeuful]

@@joshconsultancy Always consider buying a property when the masses have left. Do your homework around the prices around the area and take your time. Don't be rushed into making a decision. Prices may drop for leftover units. Happened to a friend of mine $2400 vs $2250/psf when he went after the condo launched maybe a year later

[@gparamaeswary7276]

Agents just want their commission. They get higher commission for launches. Beware

[@viclee9565]

Prices for new launch going up because singaporean dont invest anywhere else, burn finger in other areas so stick to propaty. Nowaday got many salary class family income easy 20k. Last 2 year covid reduce their expense very much, still got glc/banking job they scratch. These ppl dont know what to do with money in covid time. They dont care 2k psf. Many people see them and want to follow and over leverage. Lets see how long this propaty sun shines. Just like china, propaty is the only investment some ppl know. Garment also know, anytime can open foreiner tap again, to shoot up economy again after covid. All this moneykey see moneykey do.

[@123samanthastar]

In Singapore hdb are really better

[@nesadcruz7840]

Private goes up a lot more

[@Keiky192]

Why hold on to cash when governments round the world are printing money like there is no tomorrow? . $1m in cash and $1m in property, guess which will better retain its purchasing power in 10 years.

[@joshconsultancy]

Didnt say hold onto cash. Funds from the case wwere also from CPF which has 2.5%

[@fightingspirit6520]

FOMO: After seeing their ex-neighbours dumber than them leveraged to flip properties and made $200k… Kena pitched is true

[@umeshutan6959]

Servicing a 1million loan needs lots of stamina to get lots of cold hard cash every month!!!

[@joshconsultancy]

Yes and interest rates may stay high for awhile

[@miklee4834]

The moral of the story is you are better born rich. Sadly I'm not.

[@joshconsultancy]

Not really... Its more of we make the best decisions with what we have?

[@miklee4834]

@@joshconsultancy yes😆😆

[@Brightyization]

Great video.

[@andygoh252]

Money is created out of thin air , Pro

[@frjuy]

so for the 2nd case, she rather pay almost 10x the money to upgrade than just paying 20k for renovation(which she finds expensive)? plus no more free money from gov which gov gives every now and then for the 1st case, guys, maybe she struck lottery, so no worries for her ya? haha

[@joshconsultancy]

Hmm ya for first case, if she really struck lottery then yes, id agree to lock it into property then. Rather than squandering it....

[@pongpong5108]

Ever heard someone mentioned losn tenure can be up to 75yrs old. Is it true.?

[@joshconsultancy]

Only if Refi. New cannot. MAS guideline

[@Xamael666]

Really appreciate Josh for calling this out, as a responsible financial KZbinr 👏...Pity all these upper middle-aged to elderly folks having to struggle with insane mortgage thanks to some "Huat-kueh" gurus haiz

[@joshconsultancy]

Thank you for high praise. Sharp mortgage cost which could be at least $1,000/m more is really going to bite marginal buyers

[@mariantia926]

With projection of cost rising due to this pandemic in all consumers aspects and recovery is still a long way to go and real figures growth is still not there yet, owning condominium especially now is not value investing compared to hdb growth performance and landed property. The price of condominium is overpriced and the potential of good profit margins is low even sell. Very heavy burden in maintenance. Too much of condominium nowadays is eating up the profit margin of selling.. 好看不好吃。。😂😂。Look good outside, underlying no value. Our press wording is always misleading, beautiful to read the reporting but viewer or reader must know deciphering the underlying stories. Warren buffer say price is what you pay, value is what you get...As individual, we must have wisdom to difference price and value?? 🤔 🤔 What value is our press want to deliver to the reader?? 😂 😂

[@joshconsultancy]

Well said!

[@limrosemary8536]

till Eternity most wont .., value vs price .. Many think high price means gd .,