One pitfall MND Khaw did not foresee is this ...that a down-grader will eventually lose his roof.
What happen when a retiree wants to downgrade..???
He has no stable income and hence he cannot take further loan against his existing property, be it for payment to contra for a lower value property
Thus he is forced to rent a place after he sold his house for a minimum period of 6 months or a year as some landlord wants to avoid the hassle of re-finding a new tenant in a short time..
Now the danger is..during these 6 months or one year he may do one of the following.
1. House hunt for another lower value property until he finds the one that that he really like.
2. Take a view ( big danger here) and defer ( say 6 months) and that property price will definitely slide and he will get a better price in the months ahead. There are many property shorts in this forum.
3. Gleefully counting his cash and wondering what to do with it. Maybe take a punt on the STI or maybe visit. MBS just for the short thrill.
The real danger is that when one is cash rich, money easily flow out...He may lose on the stocks or on the casino table and try harder to re-coup ,ending with the roof being taken away from him...Putting monies in the miserably fixed deposit at 0.075% is definitely the least attractive.
So can Mr. Khaw seriously look into this scenario and tweat the TDR to protect the genuine downgrader..that is
1. Allow down-grader to further use bank loan ( primarily the use of equity based lending) to contra for private property.
2. Look into shorter 2 or three month rent lease to allow these transitional house -owner. This is to ensure they buy their home in the shortest time .
The TDSR ruling is to help owner to right size but it must not lead them to stay " naked" ( i.e. go without a house) and be tempted to use the monies for other purpose and possibly resulting in the lost of their roof...
Can Mr. Khaw re-look at the TDSR..??
What happen when a retiree wants to downgrade..???
He has no stable income and hence he cannot take further loan against his existing property, be it for payment to contra for a lower value property
Thus he is forced to rent a place after he sold his house for a minimum period of 6 months or a year as some landlord wants to avoid the hassle of re-finding a new tenant in a short time..
Now the danger is..during these 6 months or one year he may do one of the following.
1. House hunt for another lower value property until he finds the one that that he really like.
2. Take a view ( big danger here) and defer ( say 6 months) and that property price will definitely slide and he will get a better price in the months ahead. There are many property shorts in this forum.
3. Gleefully counting his cash and wondering what to do with it. Maybe take a punt on the STI or maybe visit. MBS just for the short thrill.
The real danger is that when one is cash rich, money easily flow out...He may lose on the stocks or on the casino table and try harder to re-coup ,ending with the roof being taken away from him...Putting monies in the miserably fixed deposit at 0.075% is definitely the least attractive.
So can Mr. Khaw seriously look into this scenario and tweat the TDR to protect the genuine downgrader..that is
1. Allow down-grader to further use bank loan ( primarily the use of equity based lending) to contra for private property.
2. Look into shorter 2 or three month rent lease to allow these transitional house -owner. This is to ensure they buy their home in the shortest time .
The TDSR ruling is to help owner to right size but it must not lead them to stay " naked" ( i.e. go without a house) and be tempted to use the monies for other purpose and possibly resulting in the lost of their roof...
Can Mr. Khaw re-look at the TDSR..??
