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Forum Property To upgrade or remain

Forum Property To upgrade or remain

Forum Property To upgrade or remain

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  • #1305
  • #1388
    MS
    MoneySmart Singapore
    Participant

    Posts: 31

    Joined: Jun 27, 2014

    Expert

    On a prudent approach, our advise would be to hold on to the 4rm HDB and pay off the loan immediately. After paying your loan from your CPF, we suppose you would not have much balance left at this point but there are 2 advantages of this:

    1. You would have paid lesser interest for your loan.
    2. You would have more time saving up for your retirement (building up your CPF funds and bank savings account again)

    if you were to “upgrade” now, it would means you will be incurring a larger loan unless you are going to use all the sales proceeds + your current CPF-OA funds to pay for the new HDB and take a small loan. This would means you would have lesser time to save up for retirement.

    We would not think of the 2nd timer chance as a “wasted” chance. Instead you should focus on concerns such as,

    1. is there a real need to get a bigger unit for more space?
    2. does your current finances allows it?
    3. an additional fund of at least 10k-20k for the renovation etc. (would the money currently be put to better use such as children education etc)

    For everyone, there is an “economic lifespan” where one could earn a good income. This “economic lifespan” is different for everyone.

    If you project that you are only able to pay off the new house at age 55 or so, this means you only have about 10 years to build your retirement funds.

    if you were to hold on to your current unit now, in the future

    1. your priorities or needs by then could have changed as well.
    2. the choice of “right-sizing” to a studio or a 3rm HDB is still open. (it need not be a new HDB, could be from resale market)

    Keeping the difference from “right-sizing” would add to your retirement funding and you would have a more eventful retirement.

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