Issue 314

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 CONTENTS FROM THE

p2 7 Singapore Home Financing Myths that

EDITOR
Welcome to the 314th edition of the
Singapore Property Weekly.
are Making You Poorer
Hope you like it!
p10 Resale Property Transactions
Mr. Propwise
(May 22 May 26)

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 SINGAPORE PROPERTY WEEKLY Issue 314

7 Singapore Home Financing Myths that are

Making You Poorer
By Alvin Lock (guest contributor) and refinancing decisions easier for
everyone.

Myth #1 The more I borrow, the more I

pay

If you are into investing, you may have heard

of the mantra, cash is king. Heres the thing:
By taking up a loan, you free up truckloads of
cash. At a 1+% interest rate currently, home
loan interest rates are easily lower than most
investment returns. Take for instance the
Singapore stock market, which has
In this article I want to shed some light into
yielded 8.4% on average over the past 10
several misbeliefs we often have about home
years.
loans. I hope itll help make property financing

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 SINGAPORE PROPERTY WEEKLY Issue 314
This is almost 8 times the home loan interest
rate! Shouldnt you be thinking of freeing up
your cash?
Myth #2 The HDB mortgage interest rate
will always be at 2.6%
I hate to burst your bubble, but the common
saying change is the only constant also
applies to the 2.6% interest rate of the HDB
loan. The HDB loan interest rate is derived
based on the prevailing CPF ordinary account
(OA) interest rate, plus a margin of 0.1%.
So this means HDB interest rate may vary
based on the market situation. For example,
in the first half of 1999, the CPF OA interest
rate went up to 4.41%. Consequently, the
HDB loan interest rate was almost twice what
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it is now. It is important to understand the
risks involved when going into any type of
loan and to be prepared for potential
fluctuations.
Myth #3 I should take a shorter loan
tenor and pay it down faster so I will pay a
lot less interest
Lets begin by illustrating a simple example of
the additional interest payable across two
different loan tenors for the same loan
amount, at the same interest rate.
Loan Amount: $500,000
Interest Rate: 1.5% p.a.
Loan Tenor A: 25 Years
Loan Tenor B: 15 Years
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 SINGAPORE PROPERTY WEEKLY Issue 314
As can be seen from the simple table above,
you would only pay an additional of $900 at
the end of the third year if you opt for a 25-
year loan tenure. At the end of five years, it is
$2,500 more, and even at the 10-year mark,
the additional installment annually is only
$1,000, which is 0.2% of the total loan
amount.
By saving this small amount, youd have to
fork out $1,100 more per month, and $13,200
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per year if you were to opt for a shorter loan
tenor. Unless you are very confident about
your career/business prospects and income
profile, this additional $1,100 per month may
be a strain on your cash flow.
Bear in mind how financial institutions
operate. When you are doing well, everyone
is eager to lend you more money (even
though you dont need it). During bad times,
they flee faster than a kid chasing an ice
cream truck. Your mom didnt lie to you about
saving for the rainy day.
But what if you strike Toto or 4D (i.e. get
rich)? Fret not. Instead of taking the risky
short loan tenor, you can always review your
loan portfolio every two to three years and
make a lump sum payment if it is within your
means.
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 SINGAPORE PROPERTY WEEKLY Issue 314
Myth #4 I love my bank and my bank
loves me
We understand that your bank may treat you
well today, as the market is highly competitive
for home loans. But dont forget that at the
end of the day, the banks will want the best
for themselves.
The truth is that there is never going to be a
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single financing institution that will forever
offer you the best financing/refinancing
packages. Do yourself a favour and do some
research. This is to ensure that your bank
isnt short-changing you of the best terms
available, as compared to their competitors.
Heres another pro tip: Apart from your home
loans, you may also want to reconsider
keeping all your banking relationships with
just one bank. The innocent looking All
Monies Guarantee, a clause found in most
loan contracts, gives the bank the right to
take the money from your cash and deposits,
liquidate your investments, etc. for immediate
repayments should you default on your loans.
It goes without saying that you are definitely
risking it all by parking all banking
relationships with one institution.
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 SINGAPORE PROPERTY WEEKLY Issue 314
Myth #5 I should use my CPF monies to
pay off my home loan
If you find yourself thinking about using CPF
to pay off your home loan, think about the
following questions:
Do I have spare cash?
Can that cash generate better returns?
The amount in your CPF Ordinary Account
(OA) earns a risk-free interest rate of 2.5%
p.a. Come to think of it, are there any other
investment products that can promise you the
same rates (or more) with absolutely no risk?
As a comparison, DBSs savings account
interest rate is 0.05% for the first $250,000.
If you cant think of anything else, then of
course the sensible decision would be to pay
up your home loans using your cash on hand.
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Additionally, the 2.5% interest-generating
balance can and will definitely help to tide you
through times of need. Be it for a change of
job, when dealing with unforeseen medical
emergencies or when you simply need to take
a break from work, your CPF can take care of
your home loans, assuming you have
sufficient balance in your account to do so.
Again, prepare for the rainy day!
Myth #6 I risk losing my property if I re-
mortgage it
This is slightly more relevant for private
property owners. The idea of having to re-
mortgage, cash out, or apply for an equity
term loan for your property shouldnt be a
taboo. This is especially so if you have fully
paid off your property, or are almost getting
there.
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 SINGAPORE PROPERTY WEEKLY Issue 314
While it may be comfortable for you to have
that peace of mind, think of the opportunities
you are missing out on. When you cash out
on your property, especially when there is an
increase in value (and when home loan
interest rates are still low), the value of
cashing out becomes evident if you have
other debts to deal with. Take for example:
From the above table, you should be able to
conclude that the borrowing cost of a home
loan is a fraction of the rates charged for car
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loans and personal loans. Home loans, unlike
other loans, also go through an amortization
schedule instead of a flat interest rate. You
can even enjoy a longer loan tenor of up to
age 75, or a maximum of 35 years, whichever
is lower. No doubt, this would help to ease
your cash flow.
For those of us with a bigger risk appetite,
cashing out allows us to jump at business or
investment opportunities. Take for example
the property investors who made a fortune
out of the 2008 global financial crisis through
property flipping.
By cashing out your property, you can take
advantage of the next opportunity that arises.
The last thing you want is to be restricted by
the lack of funds despite affordable borrowing
costs.
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 SINGAPORE PROPERTY WEEKLY Issue 314

Myth #7 Married couples should do service monthly loan instalments.

everything together
This myth is for the married couples. While
you may share everything with each other,
having a home liability together is definitely a
no go. With the exception of combining your
incomes to qualify for a specific loan amount,
you wont be able to borrow as much when it
comes to purchasing your second or third
property, simply because of
maximum loan-to-value ratio.
The solution to get around this would be to:
Apply for the home ownership in joint
names, BUT
Apply for the home loan in a single name.
Summary: What the Savvy Property Owner
does when borrowing
If I have identified a potential property
investment opportunity today, I would check
through the financing packages available
from banks and select a suitable option,
either with a two to three year lock in period if
the rates are attractive or ideally no lock in at
the
all.
I would then apply for the maximum loan
quantum and tenor I can qualify for to
manage my financing comfortably without
overstretching my cashflow, and review my
loan portfolio every two to three years.

Fret not, you can still use either of your CPF

monies to make down payments or even to

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 SINGAPORE PROPERTY WEEKLY Issue 314
I would leave my CPF monies alone to let
them earn risk free returns of 2.5% p.a.
unless I have better use of my spare cash for
other investments or for a new property. I
would also check periodically to see if I have
positive equity that I can extract from my
property through a cash out, and I would not
take a property loan commitment with my
spouse unless it was necessary.

Alvin, from Redbrick Mortgage Advisory, has

more than 11 years of experience and track
record in Retail and Private Banking. His core
expertise encompasses a full spectrum of
wealth management services including
Investment Advisory, Portfolio Management
and Financing, Margin Trading, Legacy
Planning, and Property Loans. To get a free
consultation on your new loan or refinancing
needs, please head to
www.propwise.sg/mortgage/

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 SINGAPORE PROPERTY WEEKLY Issue 314

Non-Landed Residential Resale Property Transactions for the Week of May 22 May 26

Postal Area Transacted Price Postal Area Transacted Price

Project Name Tenure Project Name Tenure
District (sqft) Price ($) ($ psf) District (sqft) Price ($) ($ psf)
2 76 SHENTON 592 1,039,888 1,757 99 8 KENTISH COURT 1,270 1,178,000 927 99
2 THE ARRIS 969 1,675,000 1,729 FH 9 OUE TWIN PEAKS 570 1,888,888 3,311 99
2 LUMIERE 678 1,030,000 1,519 99 9 OUE TWIN PEAKS 570 1,870,600 3,279 99
3 THE REGENCY AT TIONG BAHRU 926 1,550,000 1,674 FH 9 OUE TWIN PEAKS 1,399 3,890,000 2,780 99
3 QUEENS 1,184 1,360,000 1,149 99 9 OUE TWIN PEAKS 1,604 4,222,800 2,633 99
3 YONG SIAK VIEW 1,055 1,090,000 1,033 FH 9 OUE TWIN PEAKS 1,894 4,488,500 2,369 99
3 LANDMARK TOWER 1,033 880,000 852 99 9 HELIOS RESIDENCES 2,002 4,300,000 2,148 FH
4 THE AZURE 1,335 2,220,000 1,663 99 9 THE VERMONT ON CAIRNHILL 883 1,850,000 2,096 FH
4 THE COAST AT SENTOSA COVE 2,336 3,800,000 1,627 99 9 THE WHARF RESIDENCE 1,066 2,050,000 1,924 999
4 THE INTERLACE 807 1,115,000 1,381 99 9 RIVERGATE 2,088 4,000,000 1,916 FH
4 THE INTERLACE 3,488 4,150,000 1,190 99 9 THE PIER AT ROBERTSON 1,055 1,950,000 1,849 FH
4 MOUNT FABER LODGE 1,173 1,380,000 1,176 FH 9 THE PATERSON 1,421 2,500,000 1,760 FH
5 THE MAYLEA 527 777,777 1,475 FH 9 NEWTON EDGE 441 770,000 1,745 FH
5 THE PARC CONDOMINIUM 1,518 1,865,000 1,229 FH 9 MIRAGE TOWER 958 1,520,000 1,587 FH
5 THE PARC CONDOMINIUM 1,356 1,638,000 1,208 FH 9 WATERFORD RESIDENCE 1,195 1,870,000 1,565 999
5 BOTANNIA 1,206 1,380,000 1,145 956 9 RIVERSHIRE 2,088 3,100,000 1,485 FH
5 MONTEREY PARK CONDOMINIUM 1,023 1,163,000 1,137 999 9 UE SQUARE 1,528 2,268,000 1,484 929
5 HERITAGE VIEW 1,195 1,330,000 1,113 99 9 SOPHIA RESIDENCE 1,432 2,080,000 1,453 FH
5 THE INFINITI 915 995,000 1,088 FH 9 CAIRNHILL PLAZA 2,852 3,665,000 1,285 FH
5 LE HILL CONDOMINIUM 1,055 1,100,000 1,043 FH 10 THREE BALMORAL 614 1,471,000 2,398 FH
5 PEPYS HILL CONDOMINIUM 3,143 2,950,000 939 FH 10 MON JERVOIS 1,981 4,620,925 2,333 99
5 VISTA PARK 710 610,000 859 99 10 ONE BALMORAL 969 2,168,000 2,238 FH
5 VISTA PARK 990 848,000 856 99 10 ONE BALMORAL 1,410 3,024,000 2,145 FH
8 CITY SQUARE RESIDENCES 1,206 1,668,000 1,384 FH 10 POLLEN & BLEU 2,303 4,047,700 1,757 99

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 SINGAPORE PROPERTY WEEKLY Issue 314

Postal Area Transacted Price Postal Area Transacted Price

Project Name Tenure Project Name Tenure
District (sqft) Price ($) ($ psf) District (sqft) Price ($) ($ psf)
10 DRAYCOTT EIGHT 1,173 2,000,000 1,705 99 14 CENTRA LOFT 474 620,000 1,309 FH
10 MELROSE PARK 1,550 2,600,000 1,677 999 14 RESIDENCES 88 441 568,000 1,287 FH
10 ONE JERVOIS 1,292 2,050,000 1,587 FH 14 VACANZA @ EAST 1,012 1,110,000 1,097 FH
10 VALLEY PARK 764 1,150,000 1,505 999 14 THE LATTIZ 1,292 1,338,888 1,037 FH
10 ASTRID MEADOWS 2,433 3,625,000 1,490 FH 14 CASSIA VIEW 1,206 1,200,000 995 FH
10 SPRING GROVE 1,012 1,380,000 1,364 99 14 THE HELICONIA 1,335 1,230,000 922 FH
10 THE ELEMENT @ STEVENS 1,324 1,800,000 1,360 FH 14 HUA YU MANSION 1,905 1,300,000 682 FH
10 CORONA VILLE 1,528 1,830,000 1,197 FH 15 FULCRUM 775 1,525,000 1,968 FH
10 ORCHARD BEL AIR 3,229 3,800,000 1,177 99 15 FULCRUM 818 1,454,000 1,777 FH
10 PINETREE CONDOMINIUM 1,851 2,180,000 1,177 FH 15 THE BELVEDERE 1,012 1,650,000 1,631 FH
10 PROXIMO 2,164 2,350,000 1,086 FH 15 PEBBLE BAY 2,626 3,700,000 1,409 99
11 THE LINCOLN RESIDENCES 1,324 2,420,000 1,828 FH 15 IMPERIAL HEIGHTS 452 632,000 1,398 FH
11 NEWTON 21 1,539 2,420,000 1,572 FH 15 THE MAKENA 1,507 2,100,000 1,394 FH
11 EVELYN MANSIONS 797 1,150,000 1,444 FH 15 COSTA RHU 2,217 3,020,000 1,362 99
11 NINETEEN SHELFORD ROAD 947 1,240,000 1,309 FH 15 THE MAKENA 1,582 2,120,000 1,340 FH
11 VILLA DES FLORES 2,174 2,700,000 1,242 FH 15 IMPERIAL HEIGHTS 452 597,500 1,322 FH
11 HILLCREST ARCADIA 2,530 2,300,000 909 99 15 THE MAKENA 1,152 1,490,000 1,294 FH
12 NOVA 88 549 810,000 1,476 FH 15 COSTA RHU 2,239 2,880,000 1,286 99
12 DOMUS 904 1,320,000 1,460 FH 15 COASTARINA 678 850,000 1,253 FH
12 RIVERBAY 753 971,300 1,289 999 15 WHITESCAPE 807 930,000 1,152 FH
12 RIVIERA 38 883 1,060,000 1,201 999 15 IVORY 624 700,000 1,121 FH
12 BLISS LOFT 807 845,000 1,047 FH 15 BLU CORAL 1,324 1,395,000 1,054 FH
12 BALESTIER POINT 1,141 1,110,000 973 FH 15 PARK EAST 1,550 1,590,000 1,026 FH
12 CALARASI 1,733 1,588,000 916 FH 15 MANDARIN GARDENS 1,001 840,000 839 99
12 NADIA MANSIONS 2,282 2,050,000 898 FH 16 SUNHAVEN 1,744 1,580,000 906 FH
13 18 WOODSVILLE 1,259 1,500,000 1,191 FH 16 THE BAYSHORE 1,432 1,280,000 894 99
14 WATERBANK AT DAKOTA 624 1,015,000 1,626 99 16 STRATFORD COURT 1,152 910,000 790 99

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 SINGAPORE PROPERTY WEEKLY Issue 314

Postal Area Transacted Price Postal Area Transacted Price

Project Name Tenure Project Name Tenure
District (sqft) Price ($) ($ psf) District (sqft) Price ($) ($ psf)
17 THE GALE 1,033 850,000 823 FH 22 THE LAKESHORE 1,109 1,162,000 1,048 99
17 CARISSA PARK CONDOMINIUM 1,302 970,000 745 FH 22 PARC OASIS 1,076 880,000 818 99
18 NV RESIDENCES 764 750,000 981 99 23 ESPA 904 1,000,000 1,106 999
18 THE PALETTE 1,066 980,000 920 99 23 HILLVIEW HEIGHTS 1,668 1,660,000 995 FH
18 CHANGI RISE CONDOMINIUM 1,496 1,200,000 802 99 23 PARK NATURA 2,034 2,020,000 993 FH
18 CHANGI RISE CONDOMINIUM 1,130 880,000 779 99 23 PARKVIEW APARTMENTS 1,087 750,000 690 99
19 THE SCALA 893 1,200,000 1,343 99 23 REGENT GROVE 1,195 785,000 657 99
19 TERRASSE 538 640,000 1,189 99 25 PARC ROSEWOOD 581 628,000 1,080 99
19 THE MINTON 2,551 2,580,000 1,011 99 25 WOODGROVE CONDOMINIUM 1,184 740,000 625 99
19 THE MINTON 1,087 1,030,000 947 99 26 MEADOWS @ PEIRCE 2,680 2,750,000 1,026 FH
19 RIVERSOUND RESIDENCE 1,066 982,000 922 99 27 THE NAUTICAL 764 815,000 1,066 99
19 THE QUARTZ 1,055 950,000 901 99 27 THE NAUTICAL 1,410 1,180,000 837 99
19 TREASURE GARDENS 1,033 900,000 871 FH 27 YISHUN EMERALD 1,206 800,000 664 99
19 ROSYTH VILLE 1,798 1,360,000 757 999 28 H2O RESIDENCES 1,130 1,100,000 973 99
19 REGENTVILLE 1,152 790,000 686 99
20 THOMSON GRAND 947 1,385,000 1,462 99
20 CENTRO RESIDENCES 818 1,150,000 1,406 99 NOTE: This data only covers non-landed residential resale property
20 THOMSON GRAND 1,356 1,628,000 1,200 99 transactions with caveats lodged with the Singapore Land Authority.
20 BRADDELL VIEW 1,701 1,370,000 806 102 Typically, caveats are lodged at least 2-3 weeks after a purchaser
signs an OTP, hence the lagged nature of the data.
20 FAR HORIZON GARDENS 1,948 1,368,000 702 99
21 SOUTHAVEN II 1,313 1,410,000 1,074 999
21 SOUTHAVEN II 1,539 1,500,000 974 999
21 PANDAN VALLEY 1,647 1,600,000 972 FH
21 HILLVIEW GREEN 1,615 1,525,000 945 999
21 MAYFAIR GARDENS 1,798 1,470,000 818 99
21 FREESIA WOODS 2,562 1,988,000 776 FH

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