Debt Trap
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The purchase of a flat is like setting yourself up for a debt trap.
These days, everyone is taking up 30 year mortgage. Effectively, you are signing away 30 years of your adult working life to servicing a loan. But the ironic part is that, once you reach 40, there is a high possiblity that you might get retrenched. So in actual fact you might have only 10 years to service your mortgage.
Even if you manage to pay off your flat. So far there is no precedent of a flat lasting more then the stated lease of 99 years. The first generation of flats are being en bloc under the SERS scheme. You are lucky if the compensation for the old flat can offset the value of the new flat. If not, you would have to take another mortgage again. Seems like there is an incidental insidious policy of keeping everyone in perpetual debt. -
Forget what they want you to believe. We are all actually renting the flat, as in the end we need to return it.
They also want us to believe the flats are heavily subsided.
Same as renting the car for 10 years here.
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So why bother to buy a flat? I rent and keep my money in other investments. I can cash out and emigrate any time I want. The drop in rental prices in recents years was really good for me...
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Wise guy!!!!!Originally posted by oxford mushroom:So why bother to buy a flat? I rent and keep my money in other investments. I can cash out and emigrate any time I want. The drop in rental prices in recents years was really good for me...
Should encourage more people to do that. -
The recent revision in allowing the property loan quantum to be capped at 90% of the property valuation price is another insidious policy to entrap Singaporeans in more debt.
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My wife and me have paid upfront for the 127k for our 4 room flat with every single cent in our CPF ordinary account. Guess what the nightmare isn't over yet. It get's better.
As you all know, CPF pays an interest of 2.5% to the balance in the ordinary acccount. When you use your all your savings in your ordinary account to pay upfront for your flat, you think your nightmare is over? Far from it.
DO you know that the moment, you borrow from your CPF account to pay for your flat, the interest start compounding? What interest? The 2.5% interest. Every month CPF will calculated the interest accured each month as if the amount you have loaned remained with CPF. It will update your statement monthly to show you how much you owed in interest.
You are asking "What the... ?"
Yes, you owe yourself interest payments! If you ever sell your flat you need to return what ever you have borrowed from cpf ordinary account with interest.
What if you don't sell your flat? If you decide not to sell your flat? The principal amount owed to the CPF account, with the compound interest will continue to compound!
To date, I owed my cpf ordinary account $3k in interest payments after 1 year of owning the flat. In 30 years time,I will owe myself $140k in interest!
If at that point of time(after 30 years) my 4 room flat gets EN BLOC under the SERs scheme. I need to be compensated at least $267k for the 4 room flat. $127k + $140k =$267K. If HDB decided to compensates less then $267k, I will have to fork out the difference in cash as interest payments. As under En Bloc scheme, all your funds (whatever you have borrowed from your ordinary account with interest from the day you borrowed) will need to be returned back to CPF first, before you are allowed to purchase your SERS new flats.
I did a calculation based on the 127.5k 4 room flat using the old rule of 20% down payment, and remaining lump sum service by 30 years mortgage.
You need to take out $25,500 from your cpf account to pay the 20% downpayment under the old rule. After 30 years at 2.5% compounding interest rate, the total amount you need to return cpf with accured interest is $53,487.97.
As for the remaining lump sum, $102,000 that you will pay with installments over 30 years to HDB at 2.6% interest rate. The total sum with interest that you will need to draw out from your cpf is $147,005 to pay up the mortgage.
$147,005 will be split into 360 installments of $408.35 to be withdraw from cpf every month to service the mortgage. Every month, once the $408.35 is out of your account, cpf will start calculating the interest as if the money has remained inside. Over 30 years, the principal with interest accured with be $218617.34 ($147,005 principal/ $71,117 interest)
So the final grand total amount you have to return to cpf if you flat is EN BLOC in 30 years is $272105.31. (20% deposit $53,487.97, 30 year mortgage monthly payments $218617.34)
Now compare this with the upfront payment of $127.5k compounding at 2.5%. Grand total:$267,349.
The difference is $4756.
However, if you take a 30 year mortgage, the total amount that you have withdraw from cpf is $172,505 ( $25,500 for 20% downpayment, $147,005 for monthly installments). As you need to use $45,005 of your cpf ordinary account balance as interest payments to HDB.
At the 31st year, $172,505 will compound at a faster rate then then the $127,500 as the principal is bigger. -
Orwell76, you have awaken from the Singapore MATRIX that is so well woven onto the Singapore minions.
Did you take the "rarely available and contraband Red Pill" to counter the effects of the "Blue Pills" that have been so profusely and freely dispensed ?
While you maybe committed to a THIRTY YEAR Mortgage, do not forget that the Singapore Government, the Members of Parliament from the Ruling Party, and the NTUC are all telling us to accept the reality of SHORT TERM EMPLOYMENT CONTRACTS of FIVE YEARS.
How is the mortgage to be serviced when the Employment Contract expires in Five Years, and is not renewed ?
How is the mortgage plan to be reviewed, when one continue to be jobless in an economy that continue to retrench, and many desk-jobs are continuously being out-sourced to countries with cheaper labor but accustomed to high technology and fluent with the English Language ?
With Commercial Banks taking over from HDB in providing housing loans, will these Commercial Banks be more "flexible" than the Government runned HDB - in helping the Singapore minions to overcome his predicament ?
Will Singapore see more displaced homeowners living off the streets ?
Will we see the darker side of Hong Kong's economic-social problems being duplicated in Singapore ?
The World is changing and getting more competitive, but the million dollar salaried Elite Political Leadership is quite clueless as to how to respond to the challenges - as how many of them has actually joined the Q-Line waiting for something that means something of value to themselves ?
Can they understand the predicament of the Singapore minions ?
The seemingly best solution to inject some 'ZIP' - into the strenuous lack of imagination to resolve our economic predicament - is with the Integrated Resorts : a clever word to hide the forbidden word : "Casinoes".
Perhaps the Elite will expect the HDB Mortgagees to hedge against the high interests at these IR Facilities ? -
Originally posted by Atobe:
My family's flat is also fully paid for.
Orwell76, you have awaken from the Singapore MATRIX that is so well woven onto the Singapore minions.
Did you take the "rarely available and contraband [b]Red Pill" to counter the effects of the "Blue Pills" that have been so profusely and freely dispensed ?
While you maybe committed to a THIRY YEAR Mortgage, do not forget that the Singapore Government, the Members of Parliament from the Ruling Party, and the NTUC are all telling us to accept the reality of SHORT TERM EMPLOYMENT CONTRACTS of FIVE YEARS.
How is the mortgage to be serviced when the Employment Contract expires in Five Years, and is not renewed ?
How is the mortgage plan to be reviewed, when one continue to be jobless in an economy that continue to retrench, and many desk-jobs are continuously being out-sourced to countries with cheaper labor but accustomed to high technology and fluent with the English Language ?
With Commercial Banks taking over from HDB in providing housing loans, will these Commercial Banks be more "flexible" than the Government runned HDB - in helping the Singapore minions to overcome his predicament ?
Will Singapore see more displaced homeowners living off the streets of Singapore ?
Will we see the darker side of Hong Kong's economic-social problems being duplicated in Singapore ?
The World is changing and getting more competitive, but the million dollar salaried Elite Political Leadership is quite clueless as to how to respond to the challenges - as how many of them has actually joined the Q-Line waiting for something that means something of value to themselves ?
Can they understand the predicament of the Singapore minions ?
The seemingly best solution to inject some 'ZIP' - into the strenuous lack of imagination to resolve our economic predicament - is with the Integrated Resorts : a clever word to hide the forbidden word : "Casinoes".
Perhaps the Elite will expect the HDB Mortgagees to hedge against the high interests at these IR Facilities ?
[/b] Never let yourself be indebted for too long.Actually it's not a bad idea just to rent a home instead of buying one, especially if you are just beginning your career. -
I think they should lower retirement age instead of raising it. Nobody stays gainfully employed after 40.
In Singapore, everyone has a potential to be a bankrupt. You never finish paying... -
Effectively you are paying more than that. Why? You need to pay interest to banks for the loan taken. That is aimost double of the supposing value of the house. Then if you sell the house, you have to pay back the amount + interest you have taken from CPF. I think the sum is much more that what you have thought.
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Seven eleven,
Since when did I take a loan from the bank ??? Read again. I cleared everything from my CPF account. -
This is a totally different way of looking at thing. THINKING OUT OF THE BOX.Originally posted by orwell76:I think they should lower retirement age instead of raising it. Nobody stays gainfully employed after 40.
In Singapore, everyone has a potential to be a bankrupt. You never finish paying...
Instead of raising the retirement age (from 62 to 65 then to 67), it is worth to consider to lower the retirement age from 62 to 55 (then to 50 then to 45).
Those 55 and above who are still gainfully employed in the civil services are generally rich enough to last their remaining life with their current assets accumulated over the many good years. They should get out of the job market and surrender their places to be filled by the young ones coming out of the schools. One place vacated could contribute to 3 or more places for new recruits. -
At the end of the day, no matter what is the government policy on retirement age for its civil service, the companies in the market will still play their own ways to maximize the benefit to their share holders.
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Originally posted by Atobe:
The wage slavery system is very sophisticated in Singapore. You pay for your own prison cell with 5,10,15,20,25 and 30 years mortgages. You can choose 3,4,5 and executive prison cells. You can have it design and build too.
Orwell76, you have awaken from the Singapore MATRIX that is so well woven onto the Singapore minions.
Did you take the "rarely available and contraband [b]Red Pill" to counter the effects of the "Blue Pills" that have been so profusely and freely dispensed ? -
At least its one pocket into another right? You will not be losing the interest to a bank or hdb. At the end of the day, you still get back the interest you pay back to your CPF account. The only disadvantage is illiquidiy of your money.Originally posted by orwell76:Yes, you owe yourself interest payments! If you ever sell your flat you need to return what ever you have borrowed from cpf ordinary account with interest.
But still, it is great to see another Singaporean who has awaken from the Matrix. -
Mortgage is a very insidious form of control. Subtle yet effective.
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Originally posted by Atobe:
5 years contract? Thought it is half year, 1 year and maybe 2 years contract. Never heard of 5 years.
While you maybe committed to a THIRTY YEAR Mortgage, do not forget that the Singapore Government, the Members of Parliament from the Ruling Party, and the NTUC are all telling us to accept the reality of [b]SHORT TERM EMPLOYMENT CONTRACTS of FIVE YEARS.
[/b]
O, one reason I want to migrate is to enjoy more union employee protection than the pathetic non-actions that NTUC offers. BTW guess who was the head of NTUC many years back? Hint: Only in Singapore, you define a walk-over as "elected". -
Anyone subscribe to the conspiracy that "fiat money" is a form of control?
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HihiOriginally posted by orwell76:My wife and me have paid upfront for the 127k for our 4 room flat with every single cent in our CPF ordinary account. Guess what the nightmare isn't over yet. It get's better.
As you all know, CPF pays an interest of 2.5% to the balance in the ordinary acccount. When you use your all your savings in your ordinary account to pay upfront for your flat, you think your nightmare is over? Far from it.
DO you know that the moment, you borrow from your CPF account to pay for your flat, the interest start compounding? What interest? The 2.5% interest. Every month CPF will calculated the interest accured each month as if the amount you have loaned remained with CPF. It will update your statement monthly to show you how much you owed in interest.
You are asking "What the... ?"
Yes, you owe yourself interest payments! If you ever sell your flat you need to return what ever you have borrowed from cpf ordinary account with interest.
What if you don't sell your flat? If you decide not to sell your flat? The principal amount owed to the CPF account, with the compound interest will continue to compound!
To date, I owed my cpf ordinary account $3k in interest payments after 1 year of owning the flat. In 30 years time,I will owe myself $140k in interest!
If at that point of time(after 30 years) my 4 room flat gets EN BLOC under the SERs scheme. I need to be compensated at least $267k for the 4 room flat. $127k + $140k =$267K. If HDB decided to compensates less then $267k, I will have to fork out the difference in cash as interest payments. As under En Bloc scheme, all your funds (whatever you have borrowed from your ordinary account with interest from the day you borrowed) will need to be returned back to CPF first, before you are allowed to purchase your SERS new flats.
I did a calculation based on the 127.5k 4 room flat using the old rule of 20% down payment, and remaining lump sum service by 30 years mortgage.
You need to take out $25,500 from your cpf account to pay the 20% downpayment under the old rule. After 30 years at 2.5% compounding interest rate, the total amount you need to return cpf with accured interest is $53,487.97.
As for the remaining lump sum, $102,000 that you will pay with installments over 30 years to HDB at 2.6% interest rate. The total sum with interest that you will need to draw out from your cpf is $147,005 to pay up the mortgage.
$147,005 will be split into 360 installments of $408.35 to be withdraw from cpf every month to service the mortgage. Every month, once the $408.35 is out of your account, cpf will start calculating the interest as if the money has remained inside. Over 30 years, the principal with interest accured with be $218617.34 ($147,005 principal/ $71,117 interest)
So the final grand total amount you have to return to cpf if you flat is EN BLOC in 30 years is $272105.31. (20% deposit $53,487.97, 30 year mortgage monthly payments $218617.34)
Now compare this with the upfront payment of $127.5k compounding at 2.5%. Grand total:$267,349.
The difference is $4756.
However, if you take a 30 year mortgage, the total amount that you have withdraw from cpf is $172,505 ( $25,500 for 20% downpayment, $147,005 for monthly installments). As you need to use $45,005 of your cpf ordinary account balance as interest payments to HDB.
At the 31st year, $172,505 will compound at a faster rate then then the $127,500 as the principal is bigger.
I bit lost here,
so what you are saying is that you use your CPF funds to pay for downpayment, then rest u took a loan from HDB.
End up, u will have to pay the loans interest of 2.6% for HDB and also the 2.5% for your CPF funds? That add up to be actually 5.1% Right?
If that is true, then i dun think i will ever be able to buy a HDB for myself, Lucky, me dad flat is fully paid for, I rather used the CPF funds to invest for retirement. -
Hello Cecil,
Nope I cleared everything from my CPF account to pay for the flat.
I did a calculation for 30 year mortgage for the benefit of those who has a mortgage.
Well, HDB charges an interest of 2.6%. Depending on the loan amount and the number of years of mortgage you take, it is used to calculate the total amount you need to pay for the full tenture of the loan. The amount is then divided into number monthly installment that you need to pay to service the principal and interest payment.
The funds that you withdraw from you CPF account every month to pay your HDB installment attracts an interest of 2.5%pa every month. -
Originally posted by orwell76:
Mortgage is a very insidious form of control. Subtle yet effective.Originally posted by orwell76:
The Singapore Government a.k.a the Ruling Party has devised every means of controlling the Singaporean vassals in this 21st Century Feudal System.
Anyone subscribe to the conspiracy that "fiat money" is a form of control?
Everyone's political right is held to ransom by the mortgage - cross the Ruling Party, and the Bank will be under pressure to scrutinize the mortgage with a magnifying glass.
Besides the mortgage being a form of control, National Service is one of the many other forms of control that is available to the Ruling Party aka the present Singapore Government.
With National Service, every Singaporean men will be subject to Civil Law and also Military Law.
For more information of the Singapore Feudal System - visit my last post at the thread - "Who's afraid of China ?"
http://www.sgforums.com/?action=thread_display&thread_id=144889&page=6 -
to the extent of calling people going overseas to earn a living as some cannot get jobs here as quitters.
because once you go there and bring some assets over , they cannot control you, so they accuse and label as quitters. -
Originally posted by orwell76:My wife and me have paid upfront for the 127k for our 4 room flat with every single cent in our CPF ordinary account. Guess what the nightmare isn't over yet. It get's better.
As you all know, CPF pays an interest of 2.5% to the balance in the ordinary acccount. When you use your all your savings in your ordinary account to pay upfront for your flat, you think your nightmare is over? Far from it.
DO you know that the moment, you borrow from your CPF account to pay for your flat, the interest start compounding? What interest? The 2.5% interest. Every month CPF will calculated the interest accured each month as if the amount you have loaned remained with CPF. It will update your statement monthly to show you how much you owed in interest.
You are asking "What the... ?"
Yes, you owe yourself interest payments! If you ever sell your flat you need to return what ever you have borrowed from cpf ordinary account with interest.
What if you don't sell your flat? If you decide not to sell your flat? The principal amount owed to the CPF account, with the compound interest will continue to compound!
To date, I owed my cpf ordinary account $3k in interest payments after 1 year of owning the flat. In 30 years time,I will owe myself $140k in interest!
If at that point of time(after 30 years) my 4 room flat gets EN BLOC under the SERs scheme. I need to be compensated at least $267k for the 4 room flat. $127k + $140k =$267K. If HDB decided to compensates less then $267k, I will have to fork out the difference in cash as interest payments. As under En Bloc scheme, all your funds (whatever you have borrowed from your ordinary account with interest from the day you borrowed) will need to be returned back to CPF first, before you are allowed to purchase your SERS new flats.
I did a calculation based on the 127.5k 4 room flat using the old rule of 20% down payment, and remaining lump sum service by 30 years mortgage.
You need to take out $25,500 from your cpf account to pay the 20% downpayment under the old rule. After 30 years at 2.5% compounding interest rate, the total amount you need to return cpf with accured interest is $53,487.97.
As for the remaining lump sum, $102,000 that you will pay with installments over 30 years to HDB at 2.6% interest rate. The total sum with interest that you will need to draw out from your cpf is $147,005 to pay up the mortgage.
$147,005 will be split into 360 installments of $408.35 to be withdraw from cpf every month to service the mortgage. Every month, once the $408.35 is out of your account, cpf will start calculating the interest as if the money has remained inside. Over 30 years, the principal with interest accured with be $218617.34 ($147,005 principal/ $71,117 interest)
So the final grand total amount you have to return to cpf if you flat is EN BLOC in 30 years is $272105.31. (20% deposit $53,487.97, 30 year mortgage monthly payments $218617.34)
Now compare this with the upfront payment of $127.5k compounding at 2.5%. Grand total:$267,349.
The difference is $4756.
However, if you take a 30 year mortgage, the total amount that you have withdraw from cpf is $172,505 ( $25,500 for 20% downpayment, $147,005 for monthly installments). As you need to use $45,005 of your cpf ordinary account balance as interest payments to HDB.
At the 31st year, $172,505 will compound at a faster rate then then the $127,500 as the principal is bigger.
I won't be surprise to see more and more singaporeans become homeless in future. -
Originally posted by Lowclassman:
Perhaps that will be the reason for a change to take effect, will it not be? [b]I won't be surprise to see more and more singaporeans become homeless in future.[/b] -
U didn't. I did and had to pay bank the loan thru CPFOriginally posted by orwell76:Seven eleven,
Since when did I take a loan from the bank ??? Read again. I cleared everything from my CPF account.