What house should I buy after selling my small condo?
 

I am a 26 year guy who has been working for 2 years after uni. I bought a small condo early this year (parents help+my saving) and currently paying mortgage on my own.

I am planning to move out this condo in 6 year time (year 2024). Reason is: I may have a family (with kid) at that time. A small condo may not be enough.

In order to buy a bigger place, I cant buy BTO or first-hand EC because HDB authoity request applicant no owning priate property or property trading within the last 30 month.

Some options in my mind that need your advice:

Option 1: we (me and future wife) buy a bigger condo under wife name without selling this small condo.

Option 2: sell this condo and buy a bigger resale HDB. Any money left invest into stock,bond, REIT, etc to generate a 4-6% annual return.

Option 3: sell this condo and buy a bigger resale condo.

My personal view:
Option 1 is good. We could own 2 properties with low stamp duty tax. Whats more we could use small condo to rent. However, we may not have enough saving for the heavy downpayment without selling small condo (estimate 500k sgd at least)

Option 2: imagine I sell this condo at 900k sgd and pay the remaining mortage of 500k sgd. i could have 400k spare cash(I paid my mortage using cash). Using 100k for HDB, remaining 300k sgd go to investment. But hdb doesn’t retain value.

Option 3: similar to option 2, but all 400k spare cash may need be used as downpayment. I don’t favor this option personally.

What do you think?

I am in a similar situation as you. My condo will be ready in 3 years time.

My plan is to stay in this condo whether I get married or not by then. If any kids come along the way, I will get a bigger new condo.

There are other considerations you should consider to make the decision.

For me these include central location of the house and living near parents. I don't intend to own a car.

Dont be overly concerned about housing as marriage is not certain as of now. The govenment also makes constant housing or property policy changes. You can just make the decision when things are more firmed up.

Option 2 would be my choice

Option 1 and 3 is out. More debt n uncertain future will make life edgy for you. Your health and mental state may suffer. Option 2 is best. Go for bto. I'm already sitting on paper gain of more than half a million, of course these days u wont see such a high quantum. But u never know.

Thanks for ur input

Thanks.

I guess I cant go for bto given tat I must not have owned condo or transact condo within last 30 months.

Guess resale hdb maybe a choice though value not retained..

What if there is option number 4? Why don't you rent your condo and buy bigger property in Singapore? Like this you have extra money to pay for your loan and you still have 2 properties at the end of the day... What do you think?

Thanks. This is my option 1 actually.

Detail plan:
year 2018: my small condo worth 750k, my housing loan 600k
year 2024: my small condo worth 900k (assume only), my housing loan 500k.

If I take home equity loan, which is 80% of market price-existing loan-CPF used for payment, I can cash out 900kx80%-500k=220k.

Together with my future wife, we might probably afford downpayment of 500k for a 3rm new condo in OCR area.

But the catch is: we will be on debit of 1.2million....for 30 years......

Ask yourself these questions:

1. Are you in a secure job, ie do you see career longevity in your current job?
2. Will you be able handle a financial emergency? Such as expensive medical emergency? This requires at least 6 months of salary on standby all the time.
3. If you own 2 properties and have to handle two housing loans or even just one big loan, will you be able to hack the monthly mortgage payment if there is no rental income for an extended period of time say 2 to 6 months?
4. Will you be ale to handle the mortgage payment on a single salary should your wife decides to take a break to look after your kids?


I am putting out these questions because I have walked the path before, and survived! My wife and I have 2 properties after 10 years of our marriage till today - different properties but always 2. One to stay, one to earn rental.

By the way, we dare go into this because we are both civil servants and already worked 35 years!

That's really useful advice from the experienced. Thanks!!!

I will talk about numbers based on estimation:

Year 2024, I cash out 220k SGD from my 900k SGD small condo. This loan is 30 year tenure at interest rate 2% pa. Therefore, monthly mortgage is 739 SGD.

Year 2024, we buy a 3rm condo in OCR at 1.5 million price under my wife name. Downpayment@25%=375k. StampDuty@BSD ONLY (assume wife Singaporean, no property under her name) = 44600, miscellaneous fee (legal, etc) =10k. Total estimate 430k SGD. Loan 1.125million for 30 year tenure at interest rate 2%pa. Therefore monthly mortage is 4158 SGD.

Total monthly mortage = 739+4158=4897 SGD or 5000 SGD to be safe. The small condo can rent out at 2000 SGD per month.
Our monthly salary should be above 12k SGD/per month in year 2024.

So back to your questions:

Q1: I work as IT support in banks. It's a relative more stable job compare to traders or dealers. However I havent finalized my career path yet.

Q2:I have ISP, Rider, ECI (multiple) to support me in case of illness. However I dun have emergency fund now.

Q3: Given my family monthly income at at least 12k per month with 5k monthly mortage, I think it's a bit challenging and need careful planning.

Q4: If wife stay at home. Very challenging for me given that my salary need go to kid, parent, mortage, family and probably myself. Unless I can earn 12k per month in 2024