Happily Ever After - Part 4

The biggest LIABILITY of all time- the FLAT
There are some who think of their flat is their biggest asset, think again. Anything that makes you pay , interests included and yet do not earn anything is a LIABILITY!

Flats today cost about 300k ( 4 room flat) for a BTO project, and much more for a 2nd hand flat.
So lets talk about BTO for now.
From what I had known as rules are like forever changing. What applies to me may not applies to anyone. For the full step by step of applying please go to  HDB website

As you can see, from the start of application to be in a queue is already a $10. Some couples like my sister actually paid a few $10 before they manage to secure a decent number in a queue. Some of the queue number they obtain are simply OBSENCE that they did not even bother checking if there are any units left.

After you had manage to choose a flat, an option fee is pay to secure the booking. Even though this amount is subsequently refund if there is enough money in the CPF account. But still cash is needed.

Then comes the downpayment which is normally paid via the CPF. As I do not know how the banks work. I will share my experience with HDB. I was not working when the downpayment was made. this 10% was paid using SO's CPF and om top of that an additional $5000 was made as we are not married. (Under the Fiance/Fiancee scheme which amount will be used to offset the flat once we submit our marriage certificate.) After hearing that the HBD will empty the CPF account before any loan is offered, SO quickly emptied his CPF account by investing his money in the OA.

When we finally collected our keys like 4 years later, as my pay was relatively low and I started working for only 2 yeat plus, the amount was insufficient. SO was made to sell a part of his investment, transfer the money back to his OA to make payment for the remaining 10%. So we finally collect our keys to the flat. As SO was working as a cab driver since 2 years ago, his CPF contribution to the OA is stagnant. The loan amount taken was around 150k. So for the 30 years loan that we are able to secure, monthly payment is made via my CPF account with another $50 to be made in cash.

For couples who are both working and contributing to the CPF OA, please make sure you paid the maximum amount affordable per month so as to cut the loan period. A 2.6% interest per year is not sexy. And to my horror, after a yearly statement recieve, majority of the amount I had made, most of it had went to paying interest instead of principal sum. Luckily I change to a higher even though still lower pay job, I manage to pay for the loan solely via CPF.

4 months ago, due to 2 years of extra money in the CPF due to the good bonus recieve in 2010 and 2011, and the small excess amount accumulate over the years, I manage to make an additional payment of 9k which result in reduction of loan repayment by 1yr and 8months!

After this I had actually make a lot of noise at SO whose investment amount was like a 60k, which will cut the repayment period by years. But after I did a slow calculation, his investment returns are aound 4% which is more than 2.6% interest, so I decide to leave the money as it is. Hopefully after 8 years, this 60K will grow to pay off the flat in 1 shot. Thats when I will be more or less DEBT-FREE.

Having a huge saving is nice, but being debt-free is sexy!