HDB Mortgage SLAVES

[Goh Meng Seng]

I have been writing a lot on HDB policies and the ills of it recently basically because I am keeping up the pressure on the Minister of National Development to do something about it.

Mr. Mah Bow Tan has been very hardworking recently. I should say that he has made his utmost efforts recently to appear in Main Stream Media (MSM) to explain his HDB pricing policy is still "affordable".

Mr. Leong Sze Hian of TOC (The Online Citizen) has written quite a number of comments and queries on HDB policy. He has made many valid points and HDB has so far unable to provide satisfactory answers to all the questions raised so far.

According to Mr. Mah Bow Tan and his statutory board HDB, HDB flats are still "affordable", citing the "fact" that most Singaporeans are using less than 30% of their income for their HDB mortgage payment.

However, I should point out here that the Minister and his people have missed the point totally. They have based their "affordability" argument on a mortgage of 30 years. When I bought my HDB flat, I have tried to choose to go a mortgage of 15 years instead of 25 years. We settled for a 20 year mortgage instead.

My reason for a shorter mortgage is that the longer mortgage you have, the more interests you pay. And the increase of interests is not linear but rather compounded. Furthermore, imagine if you buy your flat at the average age of 27, if you go for 30 years of mortgage, it would mean that you could only pay off your mortgage at the age of 57! And if you use all your money in CPF to pay the mortgage, you will have no money for your retirement!

So what happen if you don't have enough savings for your retirement? In fact, the problem of insufficient retirement financing is surfacing slowly. The extend of the problem will explode in the next two decades when 3 generations of Singaporeans have spent all their money in financing their mortgage (for 3 decades) and have nothing left for retirement at all.

Now PAP government will tell you that oh, you can actually do a reverse mortgage of your flat! How nice of that, right? But it would mean that after slogging for 30 years, you will have nothing left to leave for your children!

In fact, the kind of "precision mathematics" that the PAP government has laid out for most Singaporeans is that most of us will be enslaved by the whole system! You will be slave to your HDB mortgage for all your working life and please make sure that you don't lose your job during this 30 years period else you will be living like those campers at Sembawang Park, Changi Beach, East Coast Park... without a roof over your head. But the best thing is this, even if you managed to pay off your mortgage for the 30 years of your productive life, you will be left with nothing for retirement!

Thus, the PAP government will OFFER you to reverse mortgage your HDB flat! Meaning that you have paid hefty interests (believe me, the total amount of interests you are paying may even be 50% of the loan if you loan from banks!) in paying for your HDB flats, you will end up selling it away cheap cheap to the government or banks! And if you die early, the government of bank will have the last laugh in taking your whole flat without paying anything further!

It means that, we will practically become SLAVES of our HDB mortgage! I would advise my young readers that if you are looking for a flat, make sure that you could pay off your mortgage in 15 years at your comfort zone... preferably 25% of your total household income. At the very worst, take only 20 years of mortgage and nothing more than that. If you can't, you better consider other alternatives. Don't be enslaved by this system, this myth of "affordability".

I will continue to fight the PAP, urging people of Tampines to vote Mah Bow Tan out, to send a strong signal to PAP that we do not want to be enslaved by the very system that they have built. We don't want our children to pay crazy prices for just a PUBLIC HOUSING which will in the end enslave them for the rest of their lives. We want to tell the PAP government that they could no longer fool us with such flawed argument and mathematical calculations. Most importantly, we want change to the way on how our lives are being governed.

Goh Meng Seng

 

[Wang Ye]

Clap clap clap clap! Well written GMS! Support you all the way! Besides never like that lousy sore loser whose only talent seems to be brown nosing.

 

[QXD]

When I got my brand new HDB in Bukit Merah in 2003, people laughed at the "astronomical" price of 330K that I got it for a 5rm instead of $240K at Punggol or SengKang. We had a combined income then of $5K.

I'm the one who's laughing now.

So to me, the politicizing of HDB affordability is one of arguing over a glass that half full or half empty.

 

[Goh Meng Seng]

When I got my brand new HDB in Bukit Merah in 2003, people laughed at the "astronomical" price of 330K that I got it for a 5rm instead of $240K at Punggol or SengKang. We had a combined income then of $5K.

I'm the one who's laughing now.

So to me, the politicizing of HDB affordability is one of arguing over a glass that half full or half empty.

You haven't see the full impact just yet. Just hope that you don't have children else you will see who is really laughing last... the government.

Goh Meng Seng

 

[johnny333]

I'm the one who's laughing now.

When do your children expect that they'll be able to pay off your loan?

 

[commoner]

with interest at all time low, not much of an impact yet,,,

when interest goes up to 5% and more, and the max CPF withdrawl at 120% of value/date of purchase, you will see that you CPF will hit the limit faster.

also based on Mabok tan affordability at 30% of total income, that is provided you don't lose your job, must have your health insurance fully covered and no unexpected events occur over 30 years......

 

[Man in the streets]

Well done Goh Meng Seng!

And also many thanks to Leong Sze Hian !

Those local people still believe that HDB houses are affordable and continue to vote PAP, their children and childrens children will pay for big price.

More than 70% are HDB slaves fail maths.

 

[Tiu-leh-see-fart]

well said Mr Goh.

the word affordability in their dictionary is that as long as leaseholders can afford to pay every month to keep the HDB staff and PAP people alive, nevermind how long they pay.

These bastards only look at monthly payment becos they take passive income every month.

HDB creates a huge passive income themselves.

So stupid people also think that can pay monthly ok already, they never learn, they fail maths terribly.

Affordability means paying monthly to create a massive income for PAP people.

Just think about it, let say 100 familees pay $800 per month to HDB.....wow, PAP is fucking Rich.

 

[jw5]

GMS

If you keep asking him questions, when is he going to have time to answer my question on Goal 2010?
Seriously though, keep up the good work all the way to the next GE.
I have a suggestion as well. Rather than simply put your research and thoughts into long articles or speeches, start going to the ground and ask individual voters this question: As an ordinary singaporean, has your life improved in recent years or has it become tougher? Do you see your life progressing in the same proportion or pace as the country and the elite individuals or foreigners in the country?

 

[Man in the streets]

This is practical, voters are the ones who create then and now. They have blood also on the HDB mortgage.

GMS

If you keep asking him questions, when is he going to have time to answer my question on Goal 2010?
Seriously though, keep up the good work all the way to the next GE.
I have a suggestion as well. Rather than simply put your research and thoughts into long articles or speeches, start going to the ground and ask individual voters this question: As an ordinary singaporean, has your life improved in recent years or has it become tougher? Do you see your life progressing in the same proportion or pace as the country and the elite individuals or foreigners in the country?

 

[Papsmearer]

Goh, u are right, but u are wasting your breath here. Sinkies are too stupid to realise this. And u are not giving them a solution. U are just telling them what is wrong with the system. The whole thing is a big scam. To me, the only solution is to rent, or stay with your parents or siblings. If u rent, at least u still preserve your CPF for retirement. if u share a flat with family or friends and create a 2 family unit instead of a 1 family unit, at least the cost is spread over more people. Otherwise, do what other FTs do. Like for example, malaysians. 300,000 of them cross the border every day to work in S'pore. In Malaysia, their homes cost 1/3 what it does here and its freehold. U have to give them some options.

 

[boring]

ah goh, thanks for ur afford. for me i had my unit fully paid before my 20yrs loan 4yrs ago. i had my pigeon hole 9yrs ago , i fully paid them with my balance cpf and save the knn interest. for HDB, don't need rocket maths, they simply over price with current econmic, super high valuation CUM cov for open market pigeon hole and also very high price for new flats, average BTO about 290k ++(4 rm, low floor) and 300 - 400k ++ for DBSS (also 4rm low floor). to stop people from buying house is not practical as people need house , the top people simply laugh through their way to collect all this houses revenue and do nothing to help the people. marbork tan :oIo::oIo::oIo:

 

[Watchman]

You haven't see the full impact just yet. Just hope that you don't have children else you will see who is really laughing last... the government.

Goh Meng Seng

Queenstown is anytime better than Senkang .

Senkang is a big landfill for Singaporeans .

 

[ChaoPappyPoodle]

I would like to clarify on issues related to first time buyers.

I understand that they usually have to wait between 2-3 years upon signing for a flat. Upon signing, they are given a price but their flat will only be available in 2-3 years' time. If prices of flats increase during this waiting period, do they have to pay the difference between the price they signed for and the actual price when they receive their flats?

 

[scroobal]

Bro, just becareful of mixing politics and financial planning advice in the same post. Some of us have little understanding of how this stuff works.

1974 / 2010
5 room marine pde flat cost $36K / $600K ($12K interest saved for 20 vs 30 yrs)
3 room marine pde flat cost $16K / $320K ( $5K interest saved for 20 vs 30 yrs)

$12K over 30 years is about $4OK at 4% vs capital appreciation of over $500K
$5K over 30 years is about $17K at 4% vs capital appreciation of over $280K

The interest saved from cutting 10 years from 30 year loan to 20 years in terms of opportunity cost is not much. The property for this landlocked country have little parallel elsewhere. The other issue is that people will downgrade from the intended property to a cheaper property to pay off at 20 years instead of 30 years.

The central political issues are

1) CPF has failed as retirement fund and now acts as an escrow acct for the Govt to collect HDB installment payments.
2) Failing to provide affordable housing
3) Failing to provide jobs to secure affordable housing

I have been writing a lot on HDB policies and the ills of it recently basically because I am keeping up the pressure on the Minister of National Development to do something about it.

 

[0939]

3o years of loan, you have to slog for at leat 15 years of interest before you actually paying your loan. With mine calculations, it will be at least 100 per cent of your loan. This is easy calculation. What if you are retrench or lose your jobs. The other problem is your children, unless they are very bright. Or they will not be able to buy new flat, provided they have rich parents. How many of us are born lucky?.

 

[popdod]

so what is the remedy?

Don't get married, don't buy house
and
continue to leech at your parents or in laws place?

:p

 

[SickSinkies]

public housing pigeon hole , not even worth $10,000 .

 

[borom]

1974 / 2010
5 room marine pde flat cost $36K / $600K ($12K interest saved for 20 vs 30 yrs)
3 room marine pde flat cost $16K / $320K ( $5K interest saved for 20 vs 30 yrs)

$12K over 30 years is about $4OK at 4% vs capital appreciation of over $500K
$5K over 30 years is about $17K at 4% vs capital appreciation of over $280K

The interest saved from cutting 10 years from 30 year loan to 20 years in terms of opportunity cost is not much........

I agree with your arguments about the 3 central political issues.

However your point about interest savings, I do not agree as you are using a low base i.e .$36k/$16k.

Its because prices have risen to so high that interest burden is an issue.
How much is the interest burden of a $600k loan @ 4% interest p.a (your assumption ) over 10 years?
Interest due are normally added to the housing loan outstanding and effectively you will also have to pay interest on interest if at some stage your monthly repayment is not enough to cover the interest payable.

On top of that factor in interest payments on the renovation loans,car loans, HP loans and credit cards -and it can be a hefty sum.

There is also the danger of capital loss if prices were to drop -esp at these prices for 25 to 30 year old leasehold properties.

 

[VIBGYOR]

HDB flats affordable?

You think a million dollar man is qualified to make comments about afford-ability?

Ask those earning 1,000 per month and see their reactions...