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Hi,

Are you looking to purchase a 2nd property, and planning to use the rental income from the 1st property to service the 2nd property mortgage? If so, its looks feasible but we also have to have more detail about the numbers and your objective to arrive at better recommendations.

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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Good morning Sir/ Mdm,

Are you thinking of holding on to your HDB for rental and purchase private for own stay?

Do take note of all these first before we proceed further:

1) you can only loan up to max 50% if you still have an outstanding loan. If not you can loan up to 80%.

2) subject to ABSD of 7% as a Singaporean

3) If have used CPF OA funds on existing HDB, you will have to set aside basic retirement sum of $85.5k in your CPF OA + SA before you can use the
excess OA funds to finance the second property

4) need to fulfill 5 years MOP before you are eligible to rent/ sell the whole unit

5) your household must have at least 1 Singaporean in order to hold on to HDB and purchase a private

I will strongly advise to do up a financial plan to see which is more viable.

If fully pay up for existing HDB, you will be able to loan up to max 80% loan so there will be a 30% loan difference (vs 50%). I am not sure whether do you have enough funds for private purchase if fully pay or never.

Usually I will advise my client to use CPF OA funds to pay the bare minimum of downpayment/ stamp duty and dont reduce the loan amount so they will always have in mind that if they dont have any income for a period, they can still finance the mortgage with the CPF OA funds in mind (reserve funds for emergency).

And for usage of CPF OA funds, if you never use it CPF board provides you 2.5% interest. If you use it, you need to pay yourself own interest thus opportunity cost is 5% so minimise usage of CPF OA funds at the shortest time will be advisable.

Shall we explore other option that both of you still can own two properties and still able to enjoy tax savings and restrictions from cooling measures?

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Hi,

(1) You are not allowed to rent out the whole flat before fulfilled MOP.

(2) If you are at your 30+, you should be using more cash to reduce your mortgage instead of using CPF.
Your cash in bank does not generate 2.5% interest annually, which your CPF is gaining that annually.

Hope the above answer to your main concerns, but if there are more queries, please feel free to contact me at 90110636  , or email: ling.ck7@gmail.com if more information is needed.
I'll be glad to assist.

Best regards
Ling CK
 90110636 
ling.ck7@gmail.com

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Dear sir,

If you realise, your question is relatively generic for any of us to give you a solid proposal as we need to obtain more facts in your current situation in order to share more accurately what could be a better option for you.

In general, CPF interest rates is higher than the loan interest rates at this moment and foreseeable short term, therefore if there is no plans in investing further with existing cash should you opt to utilise CPF funds for the home now, it is definitely a better option to use cash for funding the home instead.

At the end of the day, the utilisation of CPF funds for home purchase allows the home purchaser an option to manage their cash flow, therefore if you foresee that you will need to set aside some significant amount of cash aside for rainy days, be it having old folks at home for medical or young children at home for their extra-curriculum activities, you can even work around setting the amount of CPF funds to be utilised on a monthly basis while remaining can be paid off using cash, according to your household needs.

I hope the above helps in answering your questions and if you do need further discussion, please get in touch with us in private as we are not alerted to any responses posted on this platform.

Thank you and have a pleasant week ahead!

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