What should you do before upgrade HDB to Private Condo
Congratulations on taking the next step in upgrading your existing home! Whether you are buying your first home, upgrading from a HDB to a private condo, or moving from a private condo to a landed property, there are several important things to consider before making your next move.
One of the biggest mistakes that many people make is focusing solely on their cash and income requirements for the next property. While these are important factors, it’s also essential to consider how much savings you need to have in order to tide you over in case of any unforeseen circumstances. For instance, if you decide to leave your job to start a new business with no fixed income, how much would you need to save up to ensure that you can continue making your mortgage payments and maintain your current lifestyle?
Before upgrading to your next property, it’s important to have a contingency plan in place. Ideally, you should have at least six months’ worth of living expenses saved up in an emergency fund. This will ensure that you have enough funds to cover your expenses in case of any unexpected financial setbacks, such as a job loss or business downturn.
Additionally, it’s crucial to consider the other costs associated with your new property, such as maintenance fees, property taxes, insurance and not forgetting building a safety net for unforeseen circumstances. Make sure to factor in these costs and ensure that they fit within your budget before making any final decisions.
Let’s take a look at the scenario below
Jane, age 30, and Eugene, age 35, are both upgrading from an HDB to a private condo. They have both received promotions in their careers and now earn $7,500 and $8,500 per month, respectively, with no existing financial loans. After calculations, it has been determined that both Jane and Eugene are eligible to purchase a private condo priced at approximately $2,457,679 with a maximum loan amount of approximately $1,843,259. They are looking to purchase a new launch condo that cost $2,100,000
Currently they owned a HDB with an outstanding loan. Below shows the breakdown:
- Outstanding loan amount: $250,000
- Planning to sell their HDB at: $650,000
- CPF used by Eugene: $100,000
- CPF used by Jane: $80,000
- Existing Amount in CPF OA (Eugene): $150,000
- Existing Amount in CPF OA (Jane): $100,000
- Total Cash Saving: $250,000
After calculating their resale proceeds (minus legal fee, agency fee, and resale levy) and total funds, they have built up a safety net where their total funds can last them 2.9 years (worst scenario) without having any monthly income. They do not need to worry about financial stability in the short term.
PS: The above scenario may vary depending on the interest rates offered by banks during the specific month or year, or be subject to new government policies. It’s important to note that financial calculations can fluctuate over time due to potential interventions by banks and government regulations
In conclusion, upgrading to your next property is a significant milestone, and it’s important to approach it with careful consideration and planning. Make sure to build up a safety net before you purchase or upgrade your home. You can also click the button below to get a free consultation and free financial planning.
Do follow our Facebook and Instagram to get more property insights!
Click below and get a free consultation and financial planning