Hi Guys! What’s up? You have heard of sell 1, buy 2. Sell 1, buy 3. Sell 1, buy 4. Or even sell 1, buy 5. And yet still have a savings. How did they do it? In today’s video, I will show you step-by-step how you can do it too. It is easier to follow this with a case study. Let’s say you and your spouse, both 45 years old have a HDB flat fully paid. Resale value, says $500K. You have a combined CPF OA balance of, say $40K. CPF withdrawn $220K. Accrued interest $44K. That means if you sell your HDB flat, you will have to return $264K back to your CPF accounts first. Altogether, you have $540K to play with, comprising $500K resale value and $40K CPF OA balances. Step 1: Decide how much savings you are comfortable with. Out of this $540K, let’s say you want to
save at least $100K. Now, you are left with $440K to play with. Step 2: Divide the balance by 0.29, which
is 29%. Why 29%? 25% for down payment. 4% for Buyer’s Stamp Duty. $440K/0.29=$1.51m. This is the total value of property you can
buy. Step 3: Decide what you want to buy. With $1.51m, you can buy a resale 3-bedroom or even a 4-bedroom condo. Or you can buy a 2-bedroom condo for own stay and a 1-bedroom condo for investment. Let’s say you decide to buy a resale $800K 2-Bedder and a new launch $700K 1-bedder. Total $1.5m. Step 4: Segregate between Cash and CPF After selling your HDB flat, you will have to return $264K back to your CPF accounts. Now your CPF OA balances have $304K, comprising $264K from your sale proceeds and $40K which you already have. Your net sale proceeds in cash is $236K after refunding to CPF. Step 5: Compute all your Purchase Payments Starts with 5% compulsory cash first, which is $75K. Then makes the remaining 20% down-payment with CPF, which is $300K. Now your CPF OA balances are almost used up. So for the rest of the payments, you will
use cash. Buyer’s Stamp Duty is about 3% for property value below $1m. Total amount is $34,200. Legal Fee is $3000 per purchase. Total $6000. Step 6: Compute your Cash Savings Total cash you used is $115,200. Your remaining cash balance is $236K – $115,200=$120,800. This is your cash savings! Tell me whether you think the cash savings look good to you. Make sure you scroll down to make any comment. And log in using your gmail account. But wait! We are not over yet! You still have housing loans to handle! Step 7: Compute TDSR required salaries Both you and your spouse, 45 years old can take up loans up to age 65, ie. 20-year loan tenor. Total Debts Servicing Ratio or TDSR is 0.6 or 60% of your gross salary. It uses 3.5% interest rate to compute instead of the current rate of about 2.2%. The computed instalments based on 3.5% are $3480 for the 2-bedder and $3045 for the 1-bedder. Your TDSR gross salaries required will be
$5800 and $5075 respectively. If you don’t have that level of salaries, there are some ways to overcome it. One of the ways is to do pledging. Click on the link above to watch my video
on pledging. Step 8: Compute your Actual Obligations Your computed monthly instalments based on 2.2% are $3092 for the 2-bedder and $2706 for the 1-bedder. Out of the 37% total CPF contributions, 19% goes to your OA balance if you are 45 years old. You can use that 19% to pay partially for your monthly instalment. Therefore, your cash obligations are $1990 for the 2-bedder and $1742 for the 1-bedder. Your combined disposable income after all these deductions is $4968. If you can rent out your 1-bedder at say $2000 per month, then it becomes $6968. With disposable income of $6968 and cash savings of $120,800, is this comfortable to you? Let me know what you think. If you want to know more, check out my video description below. And check out these 2 videos too! Bye!