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Hi AK
I have been reading your blog for a couple of years. Very inspiring. Thank you very much for talking to yourself.
I have been talking to myself a lot lately but I couldn’t get to anywhere. Not sure how should i proceed, appreciate you could talk to yourself if you were in my shoes.
I am a 32 yr old Singapore PR - currently stationed overseas but will be going back to Singapore for good soon.
Savings of around S$150k, investment of around 150k (which gives me around 10k in dividends per year), CPF OA of around 80k. I will be earning around 8k-9k per month when i return.
All these while, I have been savings up - with the idea of buying a home in Singapore. Unfortunately, I could only buy a private property.
My parents have been encouraging me to buy a property in Singapore (as my sister who is 10 years younger will be graduating next year and she could live with me; my parents could also stay with us whenever they visit).
I used to rent a room in a HDB flat, should I do the same when i return to Singapore? I have been waiting for the prices to drop but it is still not dropping significantly.
What would you do if you were in my shoes? How to balance between comfort and being prudent? How to talk myself out that I need to own a roof over my head?
I hope God AK could enlighten me.
Thanks! YR.
Hi YR,
I would ask readers who are thinking of a bigger home to read this blog post:
http://singaporeanstocksinvestor.blogspot.sg/2015/07/do-i-need-bigger-home-and-what-to-do-if.html
Ask the 3 questions I shared in the blog post.
In your situation, you can only buy a private property since single PRs are not allowed to buy resale HDB flats and you need one by next year when your sister graduates.
If you are thinking of leaving your home as a legacy, then, you might want to get a freehold or a 999 years leasehold condo instead of a 99 years leasehold condo.
To be prudent and not to stretch finances too much, get a property that is priced $1 million or lower.
This is going to be a consumption item. A (30 year) loan of $700,000 to $800,000 will keep monthly mortgage repayments at around $3,000 a month or lesser. This repayment amount will rise when interest rates rise in future but it should remain manageable for you, everything else being equal.
With a $1 million budget, a 2 bedroom or even 3 bedroom condo in OCR Singapore are within reach.
Best wishes,
AK
Sometimes, we might have to do what is less financially prudent because of more onerous obligations in life.
So, although it might make sense sometimes to rent a home rather than buy one, we just have to make the best of a financially less prudent decision.
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Interesting trivia:
Julian Cheung Chi-lam and Anita Yuen Wing-yi decided years ago never to buy property in Hong Kong. The reason was simple. Prices were outrageously high... Cheung once reportedly remarked: “With the amount I need to pay for a house [in Hong Kong], I can rent till I’m over 130 years old.”
Source:http://www.scmp.com/comment/insight-opinion/article/2020388/when-even-hong-kongs-super-wealthy-opt-rent-something-not
Related posts:
1. Affordability and value for money.
2. Wife wants to sell flat and buy condo.
3. Rule of 15: Buy or rent?
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