Updated: Dec 19, 2019
After staying with our parents for the past decades, most of us will be very nervous, yet looking forward to buying our first home when we are getting married. I believe you would agree with me that this is the biggest decision and also one of the biggest milestones. 😉
I recall somewhere eight years ago, a close friend of mine just got married and planning for their first home. We had a few rounds of chat, discussions and understanding of the market performance to run through their options. 🧐
We explored all the options available for them, mainly, Condominium(Brand New & Resale), Executive Condominium(Brand New & Resale) & HDB(BTO & Resale)
As my friend have just started working for only couple of years and having spent quite a fair bit on their wedding, private condominium (brand new & resale) were out of their budget.
We analysed that based on their income & savings, they could comfortably an executive condominium, especially during then, there was a BRAND new executive condominium coming up. They were convinced that they should be getting an executive condominium. 🤗
However, before the new executive condominium was launched, my friend decided to purchase a RESALE HDB instead, as they have actually went to check out the HDB market on their own and found a resale HDB property which they like and were 'educated' by their friends and family that HDB is always the best option and you will definitely make money with all the various CPF housing grants given. 🤐
Fast forward to today where i met up with them recently, as they were planning to upgrade to a condominium and wanted to find out more about the market again.
"THEY WERE SHOCKED❗"😨
The current market price of their HDB is the same as per what they had paid 8 years ago‼
What does this means to them❓🤔 It actually means that they are making a loss on their purchase, their HOME and SUPPOSEDLY, their ASSET‼
Check out this calculation for them:
Indicative Selling Price: $400,000
Outstanding Loan: $280,000 CPF Refundable with Accrued Interest: $200,000
This means that the selling price would not be able to cover for their outstanding loan, as well as the refund of their CPF‼ There is a SHORTFALL of $80,000❗
At the same time, we took a look at the performance of that executive condominium that i was supposed to bring them to buy.
The owners of that executive condominium are selling at almost 40% profit❗
My friend was so STUNNED LIKE VEGETABLE and deeply regretted her decision made 8 years ago. She lamented how much difference it would make to her and her family lives (especially now that she has 3 kids) if she would have taken my advice instead.
Nonetheless, there is still time for her to make a difference❗
I went through what's Property Wealth Planning again with her, shared with her the current market performance, as well as where she could put her money in this time round.
Though i feel sad for her that she has missed the boat once, made a wrong decision, at the same time, I am happy that she finally understand the essential of a good Property Wealth Planning plan and has decided to take the RIGHT action this time round❗
She has decided to cut her losses, learned from her mistakes and make back the money❗
I have also successfully managed to help her to appeal to CPF to waive off the losses she made in her CPF account, which means that she would not have to take out extra CASH to put into her CPF account upon selling❗
A new listing for sale, a Property Wealth Planning plan and most touching parting sentence, 'I'm sorry for not taking your advice and respecting your profession 8 years ago, but i definitely TRUST you this time round, and will listen to you'