Posted on July 5, 2009 - by Helmi Hakim
Should You Take Housing Loan or Pay Your HDB House In Full If You Got The Money?
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If you recently read my blog, I spoke of my aspirations to accumulate my money as soon as possible, so that when I get married in 4 years time, I can pay my 4 room HDB house, in full, IMMEDIATELY. (clearing the biggest loan, one can have in a lifetime)
My rationale is that, when you start up a family, the 2 most important things that you need to have is YOUR house and sufficient life insurance coverage (MONEY) to leave for YOUR wife & children should you go to heaven.
My rationale of getting “resale” HDB house because,
1) enjoy HDB grant of $40,000 (if you stay within 2km from your parents’ house and your household income is less than $8000)
2) (touch wood) should I go bankrupt in my daring entrepreneurial pursuit, creditors cant touch my house. My family still have roof over our head, in the worst case scenario.
3) If I pay my house in full, another 3 years (HDB ruling), I can start scouting and buy my first private property (condominium).
So you see, that I have been saying on playing it SAFE. Security…Safety….Now…..Let us look at the OTHER OPTION. Let us look at the other side of the coin. Read more…
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July 5, 2009
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puzzlebird said:
just curious, why we need to wait another 3 years after paying off for HDB before going for condo? There seems no such rule.
As long as we have cash, we can go condo any time… anyway, good post.
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July 5, 2009
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wiseinvestor said:
I would say depends on one level of financial intelligence and personal risk.
Personal risk – This is like buy term insurance instead of life and then invest the difference. Some people spend the difference such that it is better for him to buy life insurance to have the forced savings.
Financial intelligence – The danger of not paying off for housing is that one may ends up investing in structured products and Sunshine Empire.
As a result, it is very hard to say whether one should pay off completely or not, at least for the case of primary residence.
But for the case of second house for investment, one must use leverage as in mortgages, even Li Ka Shing do not put in $1 millions in cash for a property for rental purposes even if he got the cash.
Anyway, download famous author of Rich Dad Poor Dad latest book for free at his own website, conspiracyoftherich.com, by 07 July 2007.
Free reading of book ends on 07 July 2009, after which it will be published as hardcopy and selling for more than $20.
It is very informative and readable, like Rich Dad Poor Dad.
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July 5, 2009
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puzzlebird said:
just curious, why we need to wait another 3 years after paying off for HDB before going for condo? There seems no such rule.
As long as we have cash, we can go condo any time… anyway, good post.
P.S. – Sorry, forgot to tell you great post!