(These are my thoughts on the DBSS project, The Premier, in Tampines...)
Based on a $400,000 5 rm unit:
5% downpayment - $20,000 by Cash
9 weeks later, 15% downpayment - $60,000 by CPF, Cash and Grant
Loan starts to be paid off the moment I sign the Sales and Purchase Agreement based on the Progressive Payment Schedule. Means I start to pay about 3 years before I move in.
99 Years Leasehold starting from TOP
Bound by 5 years NOT to sell. Even if I need the money.
Comparing this HDB-based project with a freehold condominium unit in a less "hot" area, and comparing a regular 5-room HDB unit with this DBSS project, the differences are not balanced. If we imagine a line with a Freehold condo at one end and a regular 5-room HDB at the other, this DBSS project's payment scheme and price range is heavily skewed towards that of a condo but with the benefits and prospects of resaleability skewed towards the other end.
Although the location is good and the units are fitted with good stuff, all the above factors are serious considerations. Although I'm 28, I'm at the start of my career. I have to consider my marriage funds and my personal savings net.
I'm lucky to have gotten a queue no that allows me to choose from at least 120 5 room units, but I have to SERIOUSLY reconsider jumping into this expenditure because with interest charges incurred, the flat will cost me at least $500,000 by the end of my payment period, just around the time when I may retire.
CPF employer contribution rates are going down and the current $4500 ceiling is dropping year after year or may not be secure. Meaning I have to fork out cash in the future if the loan is too big. After 50 years of age, my 20% contribution will also drop. And who is to say that in the next 25 years at least, there will be no more CPF changes. By retirement, I will have a home but I will have very little left to survive on, unless I sell the unit after a while but chances of making a profit are impossibly low. I have to sell it at more than $400,000 exclusive of my interest charges and (discounting my renovation costs) I doubt there will be buyers who will pay almost $500,000 for a HDB project. I may be wrong, but its a risk.
To me, after thinking through all the factors above, it seems like a bad buy. The project will lock up our (fiancee and me) money in the long term and if there are opportunities to invest, there is no money to invest. I may have a good job but 25 years is a long time to be locked up in an expensive expenditure. Anything that costs 6 figures requires 6 figures kind of thinking. I'm no player of the property market but I understand the simple concept of budgeting and planning for the future.
Therefore, its a very tough decision to make. Guess I may have to settle for private property someday. At least I have the freedom to buy and sell it and to get a freehold. Also, at least there are facilities for the price I pay. But its going to be more expensive.
Oh well...life is tough...
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