I have a friend who recently got a queue number for BTO flat in Havelock road. A 4 room flat cost >$400k. He told me his monthly loan will be $1,700 (if he get a 4-room flat). He say it is too expensive but he has been trying for a long time to get a HDB flat and he couldn't wait anymore.
Correct me if I am wrong. Assuming his total income is $8,000, ALL his CPF-ordinary a/c monthly contribution goes to paying the home loan. OMG, no retirement funds.
I wonder how can I afford to buy a $400K HDB flat.
HDB flats will be getting more and more expensive in future.
How much loan does one had to borrow. That is the most important thing. Assuming your salary is $8000 per month, you can use the maximum of about CPF$1600 per month, this amount will not be enough to service your loan and you have to top up cash.
For my condo, I had been paying progressively in 1993 until TOP in 1995.
Since I had 100 per cent CPF financing ( lucky one to have 100%. bought at $435,000 with cash $5000 deposit and valued at $455,000 by bank to secure my loan). I used all my wife and my CPF which is about $200,000 over and a 20 years loan on $230,000. Every month been paying about $2200 CPF and down to $1800 CPF. Still got about $100,000 to go for another 4 years. Looking back, the interest had been over $300,000. Even If I sell it now, I still can cover back the interest and some decent profits of at least $150,000.
My advice is not to borrow so much and cut short the number of years. If you had to buy, try not to pay so much cash over CPF. There is no big deal of staying in expensive houses. I know many rich income friends, settle for 3 rm. Cash is king when the day come for investments, they strike it rich and be able to buy properties outside Singapore.
There will a price to pay if you want to show other people that you live in BTO 5 rm or condo. At the end of the day you will worrying or struggling to pay of the loan.