Read the full article here.
Join us on Facebook:
www.facebook.com/iCompareLoans
www.facebook.com/SGpropertyBuyer
www.facebook.com/sghomeloan
Showing posts with label Singapore housing loan. Show all posts
Showing posts with label Singapore housing loan. Show all posts
Sunday, November 24, 2013
Monday, September 2, 2013
Home Loans With Different Rests: Computing Their Effective Rates
Read the full article here.
Join us on Facebook:
www.facebook.com/iCompareLoans
www.facebook.com/SGpropertyBuyer
www.facebook.com/sghomeloan
Join us on Facebook:
www.facebook.com/iCompareLoans
www.facebook.com/SGpropertyBuyer
www.facebook.com/sghomeloan
Wednesday, August 14, 2013
Thursday, June 20, 2013
Taking a Mortgage Loan for the Self-Employed
Read the full article here.
Join us on Facebook:
www.facebook.com/iCompareLoans
www.facebook.com/SGpropertyBuyer
www.facebook.com/sghomeloan
Join us on Facebook:
www.facebook.com/iCompareLoans
www.facebook.com/SGpropertyBuyer
www.facebook.com/sghomeloan
Tuesday, August 25, 2009
Invest in Singapore Property: Building under construction payment schedule
Payment Schedule of BUC properties
The below is a typical payment schedule for the Singapore Property Buyer. (This is not indicative of all cases)
1% of the purchase price
Option to purchase.
4% of the purchase price – 14 days after Option to purchase.
Exercise option
Payment of Stamp Duty (~3%)
28 days from option to purchase
15% of the purchase price
12 weeks after exercising option to purchase.
If the property that you bought is an uncompleted Condominium, then you will have to pay progressively as the building achieves various milestones.
10% of purchase price – Timing depends on speed of construction
Notice of foundation work completion.
10% of purchase price
Notice that reinforced Concrete framework of the unit has been completed.
5% of the Purchase Price
Notice that the brick walls of the unit have been completed
5% of the purchase price
Notice that the ceiling of the Unit has been completed.
5% of the purchase price
Notice that the door and window frames are installed and the wiring and plastering have been completed.
5% of the purchase price
Notice that the car park, roads and drains serving the housing project have
been completed.
25% of the purchase price
Payable 14 days after notice of vacant possession and the Temporary Occupation Permit of Certificate of Statutory Completion n respect of the unit (or a certified copy thereof)
A certificate by the qualified person engaged by the vendor that the building and all roads and drainage and sewerage works serving the Housing project have been completed and that the water and electricity supplies, and gas supplies (if any) have been connected to the unit.
15% of the purchase price
On Completion date. Of which 2% is payable to the vendor (i.e. the developer) and 13% is payable to the Singapore Academy of law as stakeholder.
Whether you can afford the condominium or not, buying a condominium under construction can be a good way to gradually put up the cash for buying a property.
Smoothing out Funding of a Private property
In the case where you have the earning capacity, but you will need some time to recover after the initial 20% downpayment. The Singapore home loan installment will be lesser at the earlier stages, this enables you to save up and build up your cash reserves as there may be many other costs associated with owning a private property.
If you are Singapore property investor, if your view is that the property market will pick up in a few years, buying a property under construction is similar to buying shares on “Contra”, except that this “contra” gives you several years of holding “option”.
Many speculators like this feature which gives them the chance to finance a property cheaply and flip the property for a profit.
Genuine Home Buyers can get burnt buying a Property Under Construction
Due to the ease of financing, holding on to a Building under construction during the early stages can be rather cheap. This means that speculators can easily get in and bid up the prices for genuine buyers, creating a squeeze on the prices.
This means that such buyers will tend to end up paying a higher price due to cheap singapore home loans.
How to profit from Property Under Construction?
Due to the presence of speculators, when the pressure mounts and when they cannot turn a profit flipping the property and cannot lease the property out and starts to default. You can then stand on the side lines to punish these greedy speculators and pick up the properties cheaply.
The below is a typical payment schedule for the Singapore Property Buyer. (This is not indicative of all cases)
1% of the purchase price
Option to purchase.
4% of the purchase price – 14 days after Option to purchase.
Exercise option
Payment of Stamp Duty (~3%)
28 days from option to purchase
15% of the purchase price
12 weeks after exercising option to purchase.
If the property that you bought is an uncompleted Condominium, then you will have to pay progressively as the building achieves various milestones.
10% of purchase price – Timing depends on speed of construction
Notice of foundation work completion.
10% of purchase price
Notice that reinforced Concrete framework of the unit has been completed.
5% of the Purchase Price
Notice that the brick walls of the unit have been completed
5% of the purchase price
Notice that the ceiling of the Unit has been completed.
5% of the purchase price
Notice that the door and window frames are installed and the wiring and plastering have been completed.
5% of the purchase price
Notice that the car park, roads and drains serving the housing project have
been completed.
25% of the purchase price
Payable 14 days after notice of vacant possession and the Temporary Occupation Permit of Certificate of Statutory Completion n respect of the unit (or a certified copy thereof)
A certificate by the qualified person engaged by the vendor that the building and all roads and drainage and sewerage works serving the Housing project have been completed and that the water and electricity supplies, and gas supplies (if any) have been connected to the unit.
15% of the purchase price
On Completion date. Of which 2% is payable to the vendor (i.e. the developer) and 13% is payable to the Singapore Academy of law as stakeholder.
Whether you can afford the condominium or not, buying a condominium under construction can be a good way to gradually put up the cash for buying a property.
Smoothing out Funding of a Private property
In the case where you have the earning capacity, but you will need some time to recover after the initial 20% downpayment. The Singapore home loan installment will be lesser at the earlier stages, this enables you to save up and build up your cash reserves as there may be many other costs associated with owning a private property.
If you are Singapore property investor, if your view is that the property market will pick up in a few years, buying a property under construction is similar to buying shares on “Contra”, except that this “contra” gives you several years of holding “option”.
Many speculators like this feature which gives them the chance to finance a property cheaply and flip the property for a profit.
Genuine Home Buyers can get burnt buying a Property Under Construction
Due to the ease of financing, holding on to a Building under construction during the early stages can be rather cheap. This means that speculators can easily get in and bid up the prices for genuine buyers, creating a squeeze on the prices.
This means that such buyers will tend to end up paying a higher price due to cheap singapore home loans.
How to profit from Property Under Construction?
Due to the presence of speculators, when the pressure mounts and when they cannot turn a profit flipping the property and cannot lease the property out and starts to default. You can then stand on the side lines to punish these greedy speculators and pick up the properties cheaply.
Friday, July 3, 2009
Singapore SIBOR Home loan mortgage
Courtesy of www.PropertyBUYER.com.sg
Singapore Interbank Borrowing Rate is commonly referred to as SIBOR.
Sibor is traded amongst banks at the Association of
Banks Singapore (ABS)
Contact us
Tel: 6100 - 0608 sms: 9782 - 8606
Email: loans@propertyBUYER.com.sg
http://www.propertybuyer.com.sg/contactus.php
The Singapore economy is still hurting, however the absolute worst may be over.
Given that the economy has stabilized, the Sibor and SOR tends to stay low
in a weak economy.
Reduced Risk of Major melt down.
So in short, the major risks of credit crisis or financial meltdown is much
reduced. Sibor and SOR should not hike due to panic.
Risk of Inflation
Each medicine comes at a price. The price is a hang-over or side-effects lasting
several years.
Obama's massive fiscal stimulus and that of many countries are going to hit
the fan soon.
Is the USA printing money
You cannot create something out of nothing. What the USA did by pumping
the economy is similar to creating 1+ Trillion dollars out of thin air.
The only reason why it is not a PURE "PRINTING money" exercise is
because the "Printing" is financed through debt.
The extra + 1 Trillion is created, but debt is created to finance it, so there is
minus - 1 Trillion. So +1 trillion - 1 trillion in debt = 0 (not printing).
But when you add 1 trillion to a 14 trillion dollars economy, that is something
like 7% of US GDP. Surely after some of the deflationary pressures are
sorted out, if the US do not pull this money out, a serious inflation may
appear.
So far, the US government have reiterated that they have plans in place to suck up the
excess liquidity. We think that would be tough. Take it away too soon, economy falls
back into recession.
SOR and SIBOR is quite directly affected by US Fed funds rates and policies.
If the US suffers from inflation, the world's economy may suffer as well. And
Sibor and SOR may shoot up too. We cannot rule out this possibility.
Get Home Loan or Refinance Home loan with www.PropertyBUYER.com.sg
We never emphasize cheap loans, we never emphasize we are the best
home loan company.
What we do is a research focused approach to help
busy home owners sort out the home loans and refinance home loans
balancing risk and rewards for each possible option they choose.
ABOUT US Contact us
Tel: 6100 - 0608 sms: 9782 - 8606
Email: loans@propertyBUYER.com.sg
Contact us
Download FREE Property Checklist / Guide (Kiasu Property Checklist)
Tuesday, March 17, 2009
Singapore Home Loan and Car Home: An Anomaly (Something not quite right)
Article contributed by www.PropertyBUYER.com.sg
HOUSING LOAN
Many banks have cut back on home loan lending. Even the lending Loan to valuation ratio has been reduced from 80% to 70% in some cases.
We all know that Free-Hold or 999 lease hold land appreciates over the longer term of 10 years or 20 years cycle. This coincides with the loan tenure of typically 20 to 30 years cycle. In other words, lending money to individuals for property purchases for first homes are actually very safe banking activities as the land or property is used as collateral not only keeps it's value, but appreciates over the longer time horizon.
There are some 270,000 private houses and condominiums in Singapore. Assuming 10% of households are in negative equity, that is 27,000 units.
And assuming that those 27,000 are in negative equity to the tune of 10%. Assume that their loan size is $500,000. 10% of $500,000 is $50,000 per household. Even if we assume all of these households default on their repayment, we are talking about: -
$50,000 x 27,000 units of housing = $1.35 Billion of losses for banks.
100% CAR LOANS
Since a few years ago, we have seen MAS relaxing rules on banks for Car loan lending. Banks started to lend out 100% for car loans.
Almost everyone knows that except in rare circumstances, most cars are depreciating assets.
If a car of $110,000 price has a scrap value of $10,000. In Singapore cars have a life span of 10 years. This means the depreciation is $10,000 a year. But we all know that cars have steeper depreciation in the earlier years.
So let's say: -
Year 1 - Depreciation = $15,000
Year 2 - Depreciation = $15,000
Year 3 - Depreciation = $13,000
Year 4 - Depreciation = $12,000
Year 5 - Depreciation = $10,000
By the end of each year, the car is worth: -
year 1 - Value of car = $110,000 - $15,000 = $95,000
year 2 - Value of car = $80,000
Year 3 - Value of car = $67,000
Year 4 - Value of car = $55,000
Year 5 - Value of car = $45,000
Assuming that the car's values fall linearly and assuming that the car owner pays up linearly over the course of the 10 years. I.e. $110,000/10 = $11,000 of repayment every year in principle.
Year 1 - Amount owed = $110,000 - $11,000 = $99,000
Year 2 - Amount owed = $99,000 - $11,000 = $88,000
Year 3 - Amount owed = $88,000 - $11,000 = $77,000
Year 4 - Amount owed = $77,000 - $11,000 = $66,000
Year 5 - Amount owed = $66,000 - $11,000 = $55,000
What this means is that, in the case of default (i.e. person stops paying for his installment), in Year 1, bank is owed $99k while car is worth $95k.
Negative Equity in Car loan
Year 1 - Amount owed - Value of car = $99,000 - $95,000 = $4,000
year 2 = $88,000 - $80,000 = $8,000
year 3 = $77,000 - $67,000 = $10,000
Year 4 = $66,000 - $55,000 = $11,000
Year 5 = $55,000 - $45,000 = $10,000
What this means is, the bank stands to lose $4,000 to $11,000 in each of these car loans if the loans are not recoverable from the car owner.
There were some 3,000 COEs (Certificates of entitlement per month) therefore about 30,000 cars sold each year, imagine if 50% of these cars sold were through 100% loans.
And Imagine if 20% of these people default on their loans.
That is 15,000 cars x 20% = 3,000 car loans in trouble. Let's assume the average car loan size $50,000, that is $150,000,000 (of 150million of problem for the banks). Since 100% car loan financing has been around for roughly 3 years. A rough estimate of that would be $0.5 Billion of problems which will hit the bank's bottom line.
WHY HOME LOAN is 90% Maximum (Most banks lend only 80% now) and Car Loan is 100%
Car loans is a small magnitude problem of $0.5 billion of potential losses versus that of housing loan of $1.35 billion of potential losses. Both are easily absorbed by the banks which are operationally profitable.
However, we do feel that Car loans is another problem that will blow up should the economy head further south.
It is a small magnitude problem comparatively with car loans no doubt, but still I do not see the logic of such risk taking behaviour by the banks by giving 100% car loans.
If banks are going to lend 100% for cars in which their collateral is suspect, why not lend 90%, 95% or 100% for Houses?
Nevermind short term house price volatility, because on a longer term, property value tends to go up. Banks will tend to have better Collateral that backs the money they lent out.
Now you see where this logic goes?
Banks charter is to make money.
Banks executives are compensated on profitability of banks, not on risk management.
(No one will pad the CEO on the shoulder for having the safest rating, but making just a bit of money)
Banks, like all organizations are run by people. If there are no rules, human behaviour dictates that banks may take excessive risks just like any organizations would, when they are allowed to do so in order to achieve a reward for meeting objectives or avoid NOT meeting objectives and getting fired or demoted.
This calls for a back-to-basic ground rule and a return to some kind of a keynesian economics whereby some regulatory control are essential.
Milton Friedman's Free Market only works within a certain range, at the extreme end of tight credit squeeze or excessive credit, Free market mechanism breaks down and industries are permanently damaged and do not bounce back in years leading to massive unemployment.
They can be reached at: -
http://www.propertybuyer.com.sg/contactus.php
HOUSING LOAN
Many banks have cut back on home loan lending. Even the lending Loan to valuation ratio has been reduced from 80% to 70% in some cases.
We all know that Free-Hold or 999 lease hold land appreciates over the longer term of 10 years or 20 years cycle. This coincides with the loan tenure of typically 20 to 30 years cycle. In other words, lending money to individuals for property purchases for first homes are actually very safe banking activities as the land or property is used as collateral not only keeps it's value, but appreciates over the longer time horizon.
There are some 270,000 private houses and condominiums in Singapore. Assuming 10% of households are in negative equity, that is 27,000 units.
And assuming that those 27,000 are in negative equity to the tune of 10%. Assume that their loan size is $500,000. 10% of $500,000 is $50,000 per household. Even if we assume all of these households default on their repayment, we are talking about: -
$50,000 x 27,000 units of housing = $1.35 Billion of losses for banks.
100% CAR LOANS
Since a few years ago, we have seen MAS relaxing rules on banks for Car loan lending. Banks started to lend out 100% for car loans.
Almost everyone knows that except in rare circumstances, most cars are depreciating assets.
If a car of $110,000 price has a scrap value of $10,000. In Singapore cars have a life span of 10 years. This means the depreciation is $10,000 a year. But we all know that cars have steeper depreciation in the earlier years.
So let's say: -
Year 1 - Depreciation = $15,000
Year 2 - Depreciation = $15,000
Year 3 - Depreciation = $13,000
Year 4 - Depreciation = $12,000
Year 5 - Depreciation = $10,000
By the end of each year, the car is worth: -
year 1 - Value of car = $110,000 - $15,000 = $95,000
year 2 - Value of car = $80,000
Year 3 - Value of car = $67,000
Year 4 - Value of car = $55,000
Year 5 - Value of car = $45,000
Assuming that the car's values fall linearly and assuming that the car owner pays up linearly over the course of the 10 years. I.e. $110,000/10 = $11,000 of repayment every year in principle.
Year 1 - Amount owed = $110,000 - $11,000 = $99,000
Year 2 - Amount owed = $99,000 - $11,000 = $88,000
Year 3 - Amount owed = $88,000 - $11,000 = $77,000
Year 4 - Amount owed = $77,000 - $11,000 = $66,000
Year 5 - Amount owed = $66,000 - $11,000 = $55,000
What this means is that, in the case of default (i.e. person stops paying for his installment), in Year 1, bank is owed $99k while car is worth $95k.
Negative Equity in Car loan
Year 1 - Amount owed - Value of car = $99,000 - $95,000 = $4,000
year 2 = $88,000 - $80,000 = $8,000
year 3 = $77,000 - $67,000 = $10,000
Year 4 = $66,000 - $55,000 = $11,000
Year 5 = $55,000 - $45,000 = $10,000
What this means is, the bank stands to lose $4,000 to $11,000 in each of these car loans if the loans are not recoverable from the car owner.
There were some 3,000 COEs (Certificates of entitlement per month) therefore about 30,000 cars sold each year, imagine if 50% of these cars sold were through 100% loans.
And Imagine if 20% of these people default on their loans.
That is 15,000 cars x 20% = 3,000 car loans in trouble. Let's assume the average car loan size $50,000, that is $150,000,000 (of 150million of problem for the banks). Since 100% car loan financing has been around for roughly 3 years. A rough estimate of that would be $0.5 Billion of problems which will hit the bank's bottom line.
WHY HOME LOAN is 90% Maximum (Most banks lend only 80% now) and Car Loan is 100%
Car loans is a small magnitude problem of $0.5 billion of potential losses versus that of housing loan of $1.35 billion of potential losses. Both are easily absorbed by the banks which are operationally profitable.
However, we do feel that Car loans is another problem that will blow up should the economy head further south.
It is a small magnitude problem comparatively with car loans no doubt, but still I do not see the logic of such risk taking behaviour by the banks by giving 100% car loans.
If banks are going to lend 100% for cars in which their collateral is suspect, why not lend 90%, 95% or 100% for Houses?
Nevermind short term house price volatility, because on a longer term, property value tends to go up. Banks will tend to have better Collateral that backs the money they lent out.
Now you see where this logic goes?
Banks charter is to make money.
Banks executives are compensated on profitability of banks, not on risk management.
(No one will pad the CEO on the shoulder for having the safest rating, but making just a bit of money)
Banks, like all organizations are run by people. If there are no rules, human behaviour dictates that banks may take excessive risks just like any organizations would, when they are allowed to do so in order to achieve a reward for meeting objectives or avoid NOT meeting objectives and getting fired or demoted.
This calls for a back-to-basic ground rule and a return to some kind of a keynesian economics whereby some regulatory control are essential.
Milton Friedman's Free Market only works within a certain range, at the extreme end of tight credit squeeze or excessive credit, Free market mechanism breaks down and industries are permanently damaged and do not bounce back in years leading to massive unemployment.
They can be reached at: -
http://www.propertybuyer.com.sg/contactus.php
Subscribe to:
Posts (Atom)
Posts
