Wednesday, January 24, 2018

My Journey Of Purchasing My First Property [Part 2]

Hi Everyone!

This is the continuation from the "My Journey Of Purchasing My First Property [Part 1]" post, whereby I wrote about the first portion of my journey of purchasing my first property.

1) Process of Purchasing a property

So after we decided on the property to purchase, we got our agent to conduct the next course of action, which is negotiation. We did negotiate quite a substantial amount as the seller wants to follow the valuation price and forgo the listed price. However, we still manage to get the property a bit lower than the valuation. So after negotiation, we will need to do the following

 - Pay 5% down payment (cash only)
 - Pay 15% payment (cash + CPF)
 - 3% or 7%(depending on ABSD, ABSD only applies to buyer who purchased second property, be it HDB or private property)
 - Lawyer fees
 - Valuation fees
 - insurances (if needed)

So we paid the 5% to the buyer to exercise the OTP (option to purchase), along with the caveat. So many might asked, what's OTP and what is a caveat? An OTP, occurs when you want to exercise the purchase by making the 5% deposit. A caveat is a legal binding to both buyer and seller, especially to seller. This would means that the seller must adhere to this purchase, and cannot accept any other offers within the purchase period unless buyer backed out. Buyer does not have any effect on this caveat, just that the buyer will lose the deposit.

After which, you will need to hire a lawyer to help you to settle the legal stuff and payment stuff including signing the contract, passing the 5% down payment and inform the amount that you wish to deduct from CPF for the 15% down payment. Until then, will have to wait till 8 weeks to 12 weeks for the completion exercise to end.

So how about lawyer fees, valuation fees and stamp duty? is it counted inside the purchase price? Unfortunately, these are the addition fees that you have to pay on top of the purchase price. The lawyer fees should be around $2500 to $3500 (depending on what kind of service you expecting), of course we go for the lower one. For the valuation fee, I think is a standard fee, this will be done by the bank that you loan money from (to pay the 80% of the property).

For Stamp duty, it is 3%, the calculation is at this website (stamp duty calculator) -, if you have existing property then you will have to pay the ABSD.

2) Bank to loan money for purchasing property

Next step is to get a bank where you can loan money from. there are many banks in Singapore (UOB, OCBC, DBS, Maybank and etc.) Each bank will have different ways to calculate the amount to loan you. You need to submit your income statement, credit card information and etc. from there, they will calculate how much that you can get a loan from. Do note that they take into consideration of the number of credit cards you have (it doesn't matter if you didn't use - that's what I think)

So after a few assessment done by different banks, I decided to go for UOB for the housing loan, as they go by fixed deposit rate, which is quite low (which means good!).

So after which, they will bring along an insurance agent while signing the housing loan contract. Do note that you do not need to obligate to sign the housing insurance from the agent (it's optional).

So with this, I have conclude the chapter of purchasing the property. Soon, we will update about the renovation process.

Friday, January 5, 2018

CPF - Should you or should you not

Hi everyone!

Once again, the period of getting interest from cpf is here. Not everyone is excited but I am cause I am looking to every single ways to make my money working for me and getting interest/dividends are one of the ways!

So you might ask, do I even top up my cpf and if yes, how much do I top up every year? Personally I don't do any top up cause I don't have much savings to put in cpf especially I need more cash flow in the future (for my family). However, once I have extra savings, I might put some in cpf and the rest in other instruments.

Some people might asked, cpf money, you will not be able to withdraw until 55 years old. It's like can see but cannot touch, is it that worth it? Some people might see cpf as a liability as part of their salary are credited to cpf and they are unable to touch it. For me, I treat cpf as a long term saving program (especially for SA account) as it helps me to save and also earn quite a good amount of interest.

How about transferring OA to SA? Is it a good choice? Firstly, there isn't a fixed answer for this as there are pros and cons in transferring OA to SA. Let's say you are still young and want to build your family in the near future like buy a house and etc, I would suggest not to transfer your OA to SA yet until you have sufficient funds for it. The reason is because transferring from OA to SA is an irreversible move, once you transfer to SA, you won't be able to transfer it back to OA. So settle your big item first that requires your OA funds. After which, you can slowly consider how much to transfer in order to earn the attractive interest of 4% (extra 1% for the first 60k)

Will JYKL be doing the transfer? Yes, I will be doing it soon as I want to earn more interest in my cpf account by putting it more in SA cause the earlier you do, the more interest you will be able to get (compound interest effect). However do think carefully as you might need to use your OA for other stuff.

Thanks for reading!