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Thread: Biggest loan you make in yuor life before?

  1. #121
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    Quote Originally Posted by radha08
    Agree. There are certainly downside risks such as

    1. Lack of tenants
    2. Drop in valuation
    3. Interest rate hike
    4. Lose of job

    Selling one property during good times to reduce total loan quantum is a possibility. (Sure and stable, but not making use of leveraging)

    Continue to hold all properties, using rental income to reduce loan quantum and save up for new investments and make use of leveraging. (Risky but greater rewards)

    Sigh... decisions decisions!
    but just to add unfortunately biggest threat to property investors in singapore is our good govt...they are the ones pulling the strings....who knows what they may or may not do next ur guess as good as mine...[/QUOTE]

    You are so right. When everything is 20% downpayment, things were easier to predict and more flexible. Now with 40% down, it either mean "game over" or "game paused".

  2. #122
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    IMHO

    You are in a good position

    With $7k rental, your total income is $20k. At $6k debt serving, your debt to income ratio is 30%. Should be comfortable, but this is just for the properties alone you may have more recurring debt in other areas which want to take into consideration.

    Cheers!


    Quote Originally Posted by edwinleeap
    Do you guys think I am financially overstretched?

    Existing loan : 2 mil
    Estimated properties' value : 3.6 mil
    Combined gross income : 13k monthly
    Rental income : 7 k monthly
    Monthly instalment est : 6 k monthly
    Cpf used to service instalment : 2 k
    Cash used to service instalment : 4 k

    Any friendly advice on whether I can hold for the long term? Many thanks first!

  3. #123
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    On one hand, garment is trying to protect and on the other hand, it restricts investment opportunity. But it is better to have some measures to prevent overheating of the market when the big brothers are having problem. Otherwise, lots of people here will go down with it.
    Quote Originally Posted by edwinleeap
    but just to add unfortunately biggest threat to property investors in singapore is our good govt...they are the ones pulling the strings....who knows what they may or may not do next ur guess as good as mine...
    You are so right. When everything is 20% downpayment, things were easier to predict and more flexible. Now with 40% down, it either mean "game over" or "game paused".[/QUOTE]

  4. #124
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    Quote Originally Posted by howgozit
    IMHO

    You are in a good position

    With $7k rental, your total income is $20k. At $6k debt serving, your debt to income ratio is 30%. Should be comfortable, but this is just for the properties alone you may have more recurring debt in other areas which want to take into consideration.

    Cheers!
    Here is the 'bad' case scenario for discussion:
    Property price drop 20%
    Problem finding tenant (rental income drops 20-30% Rent at discount)
    Spouse stops working
    Interest rates rises

    Existing loan : 2 mil
    Estimated properties' value : 2.9 mil
    Combined gross income : 7 k monthly
    Rental income : 5 k monthly
    Monthly instalment est : 9 k monthly
    Cpf used to service instalment : 1 k (spouse stops work)
    Cash used to service instalment : 8 k

    Shortfall for at least the period without some tenants: 3 k

    So things can still turn nasty.

  5. #125
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    Don't seem to add up... I am missing something here...


    Quote Originally Posted by Arcachon
    1988 Loan $ 83,000 for 4 room HDB (Kim Keat Ave) First cherry.
    1995 sell $285,000 profit $180,000.
    1996 move into 5 room HDB loan $200,000. (Balam Road) Second Cherry.
    2006 loan $428,000 for 2 Bedroom @ SouthBank.($535,000)
    2011 loan $660,000 from SouthBank.(Cash out)
    2011 loan $750,000 for 3 Bedroom PH @ Terrasse.($1,305,800)

    Total loan about $1,800,000.

    Monthly income $2,400. Rental income $2,400+$4,100=$6,500.

    Mortgage = $2,329.14(660,000)+$1,475.76(428,000)=$3,804.9 cash.

    Buy Low Sell High.

  6. #126
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    Quote Originally Posted by edwinleeap
    Here is the 'bad' case scenario for discussion:
    Property price drop 20%
    Problem finding tenant (rental income drops 20-30% Rent at discount)
    Spouse stops working
    Interest rates rises

    Existing loan : 2 mil
    Estimated properties' value : 2.9 mil
    Combined gross income : 7 k monthly
    Rental income : 5 k monthly
    Monthly instalment est : 9 k monthly
    Cpf used to service instalment : 1 k (spouse stops work)
    Cash used to service instalment : 8 k

    Shortfall for at least the period without some tenants: 3 k

    So things can still turn nasty.
    You haven't factored in property tax, maintenance fees as a recurring expense. Also if you have a car, your car loan may add another 1K monthly. If you have maids + kids, another 1K. Your cash flow will be tight on one income. Do not underestimate the little things that add up eg groceries, electricity, car petrol, meals outside (even fast food is not cheap these days).

    If loan interest takes a hike it will be even worse.

    If you can hold out for the term of the loan, 7K rental income on top of your own income(s) of 13K is very good. But you re in for the long haul (30 years). Anything can happen. You will also be shocked that even young-ish people are getting gravely ill these days (cancer, heart disease, etc - choi choi choi but it does happen so take care of your health and dont' focus so much on your careers and making money that you neglect your health - it's one thing that money cannot buy back once you've lost it). Ahem and that brings me to another expense - insurance (sorry am not an agent but I thought I should remind you that you need to fork out some money for insurance too).

  7. #127
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    Do you have mortgage insurance if you holding on for long term? This is additional expense. People ignore this as it can become a liability to the family.
    Quote Originally Posted by chiaberry
    You haven't factored in property tax, maintenance fees as a recurring expense. Also if you have a car, your car loan may add another 1K monthly. If you have maids + kids, another 1K. Your cash flow will be tight on one income. Do not underestimate the little things that add up eg groceries, electricity, car petrol, meals outside (even fast food is not cheap these days).

    If loan interest takes a hike it will be even worse.

    If you can hold out for the term of the loan, 7K rental income on top of your own income(s) of 13K is very good. But you re in for the long haul (30 years). Anything can happen. You will also be shocked that even young-ish people are getting gravely ill these days (cancer, heart disease, etc - choi choi choi but it does happen so take care of your health and dont' focus so much on your careers and making money that you neglect your health - it's one thing that money cannot buy back once you've lost it). Ahem and that brings me to another expense - insurance (sorry am not an agent but I thought I should remind you that you need to fork out some money for insurance too).

  8. #128
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    IMHO,

    Too many ifs and buts. As you are now, you are good.

    Pre-Lehman Brother, people were working on about 0.4 debt to income ratio. Based on your debt of $6k, you will need $15k income to hit 0.4. If you and your wife maintain your $13k income, your rental can drop drastically to $2k and still maintain the 0.4 DTI ratio. What ever it is, in your positon there is room to manoeuvre.

    Of course 0.4 is not ideal but as of now you are at 0.3, quite a way to go to 0.4. So I still that maintain that you are alright.



    Quote Originally Posted by edwinleeap
    Here is the 'bad' case scenario for discussion:
    Property price drop 20%
    Problem finding tenant (rental income drops 20-30% Rent at discount)
    Spouse stops working
    Interest rates rises

    Existing loan : 2 mil
    Estimated properties' value : 2.9 mil
    Combined gross income : 7 k monthly
    Rental income : 5 k monthly
    Monthly instalment est : 9 k monthly
    Cpf used to service instalment : 1 k (spouse stops work)
    Cash used to service instalment : 8 k

    Shortfall for at least the period without some tenants: 3 k

    So things can still turn nasty.

  9. #129
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    Thanks for all your advice. I am still quite new in property Investment and value allyour inputs. Am striving to make things less risky and more stable. Many thanks

  10. #130
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    Quote Originally Posted by edwinleeap
    Do you guys think I am financially overstretched?

    Existing loan : 2 mil
    Estimated properties' value : 3.6 mil
    Combined gross income : 13k monthly
    Rental income : 7 k monthly
    Monthly instalment est : 6 k monthly
    Cpf used to service instalment : 2 k
    Cash used to service instalment : 4 k

    Any friendly advice on whether I can hold for the long term? Many thanks first!
    7k to feed the interest ($6k)

    and you still got $13k income ... quite safe ,right??

  11. #131
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    Quote Originally Posted by edwinleeap
    Thanks for all your advice. I am still quite new in property Investment and value allyour inputs. Am striving to make things less risky and more stable. Many thanks
    As a newbie you are doing very well (pat on the back). Just be sure you have things covered eg mortgage insurance, medical insurance and do the sums on your other expenditures (eg property tax, maintenance fees, maid salary and levy, kid's expenses - childcare, tuition, car loans, household bills, holidays) to be doubly sure. Be aware that there may be a downward pressure on rentals going forward due to oversupply from projects soon to have TOP.

  12. #132
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    Quote Originally Posted by edwinleeap
    Thanks for all your advice. I am still quite new in property Investment and value allyour inputs. Am striving to make things less risky and more stable. Many thanks
    You are being modest.

    With a $3.6M portfoliio worth of properties, I don't think you are new.

    But if you are looking to reduce your risks and improve your stability, may I so boldly suggest that you drop one property (I assume you have 3 or more). Cash out the one with the least upside or lowest yield.

  13. #133
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    Quote Originally Posted by mkl22
    wah everyone here so daring and loan so much. i dare not even loan more than 20-25% of combined income.
    Maybe one has a 50k/m salary n even if he use 60% of his salary for housing loan, he still has 20k/m left for necessity provided his income is secured.

  14. #134
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    Not surprise why property market is still selling well. Lots of professionals besides business people are making more than 20k/mth. Household income will be at least $30-40k/mth. A loan of 2 $million is no big issue. Quite a lot of people out there are making more than MX9 ($11000/mth). Even a professor is more than that.
    Quote Originally Posted by Adva181
    Maybe one has a 50k/m salary n even if he use 60% of his salary for housing loan, he still has 20k/m left for necessity provided his income is secured.

  15. #135
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    Quote Originally Posted by edwinleeap
    Here is the 'bad' case scenario for discussion:
    Property price drop 20%
    Problem finding tenant (rental income drops 20-30% Rent at discount)
    Spouse stops working
    Interest rates rises

    Existing loan : 2 mil
    Estimated properties' value : 2.9 mil
    Combined gross income : 7 k monthly
    Rental income : 5 k monthly
    Monthly instalment est : 9 k monthly
    Cpf used to service instalment : 1 k (spouse stops work)
    Cash used to service instalment : 8 k

    Shortfall for at least the period without some tenants: 3 k

    So things can still turn nasty.
    Hi, your gross income is after CPF reduction etc?

    Also, where do you stay since you rent your 3++ mil property?

    Please advise. Thanks.

  16. #136
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    Quote Originally Posted by howgozit
    You are being modest.

    With a $3.6M portfoliio worth of properties, I don't think you are new.

    But if you are looking to reduce your risks and improve your stability, may I so boldly suggest that you drop one property (I assume you have 3 or more). Cash out the one with the least upside or lowest yield.
    Still new la. Buy first private property only end 2008. Others bought during Lehman crisis. I have thought of selling one to reduce liabilities, but buying back is going to be less profitable and at a higher quantum. So very reluctant to let go and practice "propertism - buy and not sell!".

  17. #137
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    Quote Originally Posted by yowetan
    Hi, your gross income is after CPF reduction etc?

    Also, where do you stay since you rent your 3++ mil property?

    Please advise. Thanks.
    I do not have a single 3+ million property. That is for people with wealth in excess of 10 million? I am staying in 1 and renting the others. Combined portfolio is 3 plus mill that's all. Income quoted is gross earned income. Hope that clarifies.

  18. #138
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    Yup. Buy and Keep. Especially good FH ones, walking distance to mrt, good rental yield of at least 5%, etc. Unfortunately, the new ones are difficult to get more than 3% yield as most expatriates have limited budget these days (anything more than 5k/mth for fewer than 5 years ago).
    Quote Originally Posted by edwinleeap
    Still new la. Buy first private property only end 2008. Others bought during Lehman crisis. I have thought of selling one to reduce liabilities, but buying back is going to be less profitable and at a higher quantum. So very reluctant to let go and practice "propertism - buy and not sell!".

  19. #139
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    Quote Originally Posted by edwinleeap
    I do not have a single 3+ million property. That is for people with wealth in excess of 10 million? I am staying in 1 and renting the others. Combined portfolio is 3 plus mill that's all. Income quoted is gross earned income. Hope that clarifies.
    Both of your property are private? One of them has rental yield of 7kSGD? This is very good; where's their location?

    Pardon my poor understanding, gross earned income is GROSS without CPF reduction? Please correct me if I am wrong.

    Thanks for sharing your experience.

  20. #140
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    Quote Originally Posted by yowetan
    Both of your property are private? One of them has rental yield of 7kSGD? This is very good; where's their location?

    Pardon my poor understanding, gross earned income is GROSS without CPF reduction? Please correct me if I am wrong.

    Thanks for sharing your experience.
    Yes gross is without CPF reduction.
    I sold my HDB and all properties are private condos now (sort of regretted not keeping HDB). Rental income does not come from 1 property only. A property with 7k rental will cost at least 2 to 3 million?

  21. #141
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    Quote Originally Posted by edwinleeap
    Yes gross is without CPF reduction.
    I sold my HDB and all properties are private condos now (sort of regretted not keeping HDB). Rental income does not come from 1 property only. A property with 7k rental will cost at least 2 to 3 million?
    Thanks for sharing so much.

    Mind if I ask a bit more? How many properties are you holding now?

  22. #142
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    Quote Originally Posted by yowetan
    Thanks for sharing so much.

    Mind if I ask a bit more? How many properties are you holding now?
    Still less than a handful la. Nothing compared to the forummers here!

  23. #143
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    Inflation at 5% has tilted investors to take on more loans than they normally would.

  24. #144
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    Quote Originally Posted by EBD
    Seriously, you work in a bank and have such a bad ability to see risk & perform what if scenarios?


    As an earlier poster pointed out.
    For a 1.5 mil loan @ 2.25% you will be paying 7k / month

    What do you plan to eat? Hope you don't need any electricity at home.
    You have zero margin for even living, never mind anything goes wrong - which it will.

    Do you think 2.25% is historical average interest rate?
    If it goes to 4% which is quite normal you will be in negative territory.

    You already have 450k loan. Altogether almost 2mil on only 7-8k.

    Don't take this as being rude but as Stalingrad said earlier, you are boxing out of your weight.

    Anyhow you will be saved from Bedok Resevoir as no bank in their right mind would lend you that much money.

    Nope... My friend who earns 8k, the bank allows him to loan up to 2mil. He is only 29.

  25. #145
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    Quote Originally Posted by Adva181
    Nope... My friend who earns 8k, the bank allows him to loan up to 2mil. He is only 29.
    What is your friend's occupation?

  26. #146
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    Quote Originally Posted by yowetan
    What is your friend's occupation?
    Salesman... Hahaha

  27. #147
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    Quote Originally Posted by edwinleeap
    Do you guys think I am financially overstretched?

    Existing loan : 2 mil
    Estimated properties' value : 3.6 mil
    Combined gross income : 13k monthly
    Rental income : 7 k monthly
    Monthly instalment est : 6 k monthly
    Cpf used to service instalment : 2 k
    Cash used to service instalment : 4 k

    Any friendly advice on whether I can hold for the long term? Many thanks first!
    Very similar profile to me.
    Existing loan: 2.3mil
    Estimate properties value: 4mil
    Monthly income: 25k
    Rental income: 11k
    Monthly cash installment: 6k
    Monthly cpf installment: 2k
    Currently stay in humble 5room HDB flat..
    30yrs old.

  28. #148
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    Quote Originally Posted by Adva181
    Salesman... Hahaha
    Your friend inspired me.

  29. #149
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    Quote Originally Posted by Adva181
    Very similar profile to me.
    Existing loan: 2.3mil
    Estimate properties value: 4mil
    Monthly income: 25k
    Rental income: 11k
    Monthly cash installment: 6k
    Monthly cpf installment: 2k
    Currently stay in humble 5room HDB flat..
    30yrs old.
    ha ha. But you have the HDB!!! I wish I have kept the HDB and continue to stay there.

  30. #150
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    Quote Originally Posted by yowetan
    Nope. As a matter of fact, I still have an outstanding loan of 450k for my newly bought HDB flat.

    This is stretching it abit given ur net load is almost 2m. Assuming u cannot rent out ur hdb as its newly bought. With a 8k pm is stretch. Keep ur loan payment to 30% of ur total net income. Remember 1% int not going to be forever.

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