4 Answers

Hi Mdm. Tan,

I am not sure what he meant exactly, but the higher the bank loan definitely means a higher monthly mortgage which you have to service, and higher interest repayments. How is that going to generate higher cash profits when you sell it off as you will have more expenses pertaining to the property..?

Unless one can generate more returns with the cash, instead of using it to pay for the property, then it makes sense to take a higher loan. For example your 100k cash gets 3% yield, but the 100k loan is only 1.5% interest pa, then its worthwhile to take up the loan since you can earn the difference. Of course this is a simplified example, each case is unique so its still advisable to do your own due diligence.

May I have more info and requirements about your plans so to make better recommendations? Thanks and look forward to value-add to your housing plans.

Warm Regards,
Ivan Ng ERA ASAP
(ASk Anything Property)
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SMU BBM (Finance), Magna Cum Laude

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YT Tan (陈永达)
Good evening Sally,

Care to share more about your statement so I will be in a better position to advise you further?

Hear from you soon!

"Your Freehold Ally, Leasehold Tactician"

YT TAN 陈永达 | ACCA Graduate, RES
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R043025D
Propnex Realty Pte Ltd
Blk 480 Lorong 6 Toa Payoh, #11-95 HDB Hub East Wing, Singapore 310480

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Hi Sally,

I think you may have misinterpret what the agent is referring to. He or she may be encouraging you to take a higher loan so that you capital outlay is lower and therefore your Return on Investment (ROI) is higher as a result of leveraging.

However, leveraging is a double edge sword if you were to over leverage especially in the current market conditions when interest rates are climbing steadily.

You may want to leverage comfortably to achieve the most ideal outcome. Please feel free to contact me so that I can explain to you further in details!

Regards,
Nick Tan
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B.Eng(Chemical)(Hons)(NUS)
Cert-in-REA
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Mr & Mrs Tan (Seller of Inter-Terrace House) Read More
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Good afternoon,

I'm not sure about the context of the conversation. But it is definite that with high mortgage, your capital outlay is lower. Properties that have good resale value will benefit over the long run as ROI is calculated based on your return against capital outlay. However, in the event that things does not turn out well with limited holding power, you might lose out.

FYI
Mike Lim
 96929209 
m52i@yahoo.com
ERA Read More
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