Tuesday, March 23, 2010

Reality check

I'm going to get a resale flat soon. Let's work out some details and see if I need to quicken my savings or I've enough.

Supposing I am getting a 4 room hdb. The going rate now is 400k, which includes like 30k COV. Let's put it as 450k market rate with COV of 50k. Since I'm a first time applicant and I'm going to find a flat that is near my parents, there will be a grant of 40k, which is deposited to the CPF so that I can use it to pay for deposit or the down payment . I've to pay a 10% down payment of the resale price or the value of the price, whichever is lower. So 10% of the value (450k - 50k COV = 400k value) is 40k. Of this 40k, 20k can be paid using combined CPF or cash, in whatever combination since I'm taking hdb loan. I'll pay all using CPF in that case. I still need to pay some nonsense like options and what fees...just put it as $7k. I also need to pay the housing agent commission of 1%, which is $4.5k.

To put it clearly,

Value of flat = 400k
COV = 50k
Total amt of CPF + grant of 40k = 60k (combined cpf is only 20k, so plus 40k grant is 60k)
Down payment using CPF = 40k
Nonsense fees (cash) = 7k
Housing agent commission (cash) = 4.5k

Then there is the stamp duty to worry about. Based on the selling price or the market value, whichever is higher, the first 180k is $1 per $100. The next 180k is $2 per $100 and thereafter is $3 per $100. Since I assume the selling price is 450k,

First 180k = $1800
Next 180k = $3600
Last 90k = $2700

Total = $8,100 in cash or using CPF.Thankfully this can be paid with grants or CPF. What the hell am I paying stamp duty for?

Let's tally up the figures:

Amt of cpf that is going to be wiped out
= Stamp duty + down payment
= 8,100 + 40,000
= $48,100

Amt of cash needed
= Cov + nonsense fee + commission for agent
= 50k + 7k + 4.5k
= $61,500

This is frightening. Did I calculate something wrongly? I've already saved 50k last year. I wanted to save 45k this year only, but it looks like I'll have to go all out again. 'Looks' like? I think I'm already going all out!!

Wedding preparation:
Package - 3.5k
Rings - 4k
Dinner - 17k
Total: 30k

Renovation + furniture:
Total :50k

Estimated sum = 60k + 30k + 50 k = 140k!

Pat helped me put up this. Million thanks to him. I better stick to my figures rather than HDB. $1.4 k per month burden to shoulder. $1.4k... Nobody is going to take pity on me, hence I will have to make it alone. THAT alone is reason enough for me to succeed.

I still want to maintain my savings of 50k a year, say 4.5k per month. Let's do a quick calculation:

On a per month basis,
Personal expenses: 2.5k
Housing payment: 1.4k
Savings: 4.5k
Expenses from living away from parents: 2k

Total = $11,000.

Hey ho, let's go!


Dou said...

lol i find ur 50K saving per year too ambitious. Otherwise u should be earning alot hahaha.

Beside if u earn more than 11K per month, u cant even buy a HDB flat i think

la papillion said...

Hi Dou,

There's what people told me too, 50k is too ambitious. But I did it nevertheless last year. You can search for it in the past articles.

"I still want to maintain my savings of 50k a year, say 4.5k per month. Let's do a quick calculation:

On a per month basis,
Personal expenses: 2.5k
Housing payment: 1.4k
Savings: 4.5k
Expenses from living away from parents: 2k

Total = $11,000.

Hey ho, let's go!"

Actually, I meant I am going to earn $11k in the future so that even after I paid for my housing loans, I still will be able to save 50k per year. To do that, I need to earn more. How much? $11k loh, as calculated.

I'm not earning anyway close to it, but can I do it? Damn I'll try.

AK71 said...

Hi LP,

Buying his own place is a man's biggest financial commitment (for most of us anyway). You are taking a big step forward. :-)

Congratulations and happy flat hunting. It can be fun.

Createwealth8888 said...

A man is not a man; until there is a house that he may call his castle.

A woman is not a woman; until she has a place she may call her home.

And neither a man nor a woman can say anything about their house, until they are the masters of it, and own it outright and unencumbered

Bolt said...

CW8888, I like your comments on A Man and A Women. Begining to understand why "ang mo" always want their kids to stay away from them when they get married.

Createwealth8888 said...

Hi Bolt,

You may like to read more on home ..


Drizzt said...

hey man i dunno whether to be happy that you are buying a flat or cry that you are buying a flat lol


la papillion said...

Hey drizzt,

I'm neutral. Perhaps I should be more inclined to feel happy, because firstly, I can be independent. Secondly, I can increase my income.

It should be good. But I don't feel great...moody swings of life.

mm said...

Hi Lapap,

Its me again. I should swing by more often :P

I guess from my point of view, there is REALLY NO NEED to pay an arm and leg just to want to stay in a certain location. Having lived in the US for several years, Singapore is really puny. Take for eg. AMK. A 5room there costs in excess of 500K but one in Woodlands is around 330K. And AMK is only 20mins away by train from Woodlands.

Y hold oneself down with so much debt??

Saving 50K is very do-able. Please do take good care of your health while doing so. No point having money but no health to spend it :P

One of my friend died in his sleep 4 yrs ago. A healthy man in his mid 30s. He was a doctor and running several clinics, cos' he want to stay in LANDED property.... I think it was the stress that killed him.

My wife and I always like to keep our life very simple and stress free. the best things in life are free... like the love of your GF (wife) and the affection of children.

Don't let societal's pressure make you believe that you got to be so-and so or live in such and such an address so that you can show to the whole world that you have "arrived"...

I leave you with this quote from Ralph Waldo Emerson which I read more than 20yrs ago and it affected me deeply...

"To laugh often and much; To win the respect of intelligent people and the affection of children; To earn the appreciation of honest critics and endure the betrayal of false friends; To appreciate beauty, to find the best in others; To leave the world a bit better, whether by a healthy child, a garden patch, or a redeemed social condition; To know even one life has breathed easier because you have lived. This is to have succeeded."
Ralph Waldo Emerson, (1803 - 1882) American Essayist & Poet


la papillion said...

Hi mm,

Thanks for dropping by :)

You always provided me with things to think about, haha :) Thanks for sharing with me your point of view, it's certainly helpful.

I remembered reading about the quotes before but I've forgotten about it. Good time to be reminded of it ;)

bummy said...


It is indeed frightening when you calculate the amt of cash you need to buy a flat + marriage. but many have succeeded and reading what you done so far, i firmly believe you can to. What you cannot control is hdb prices, which appears to still have legs of its own and hence may derail your plans.

You are a detailed thinker so there will be no surprises for you in the numbers you have calculated, which are more or less in line with what is required. Option fees while paid upfront in cash can be used to offset the down payment, so you save about $5k there.

la papillion said...

Hi bummy,

Thanks for believing in me, though you have not even seen me before. It's very nice to have encouraging voices telling me that I can do it :)

I must have missed the part on the option downpayment part, thanks for point that out. I'll not change the article, since the figures are not THAT exact anyway :)

Paul said...


Very nice and detailed coverage you have there. Mind if I link your post?

I also did a recent blog post on $$ calculations for getting a resale flat too.


Just managed to seal the deal for my 3-room in Serangoon (sob. cannot afford too much).

Estimated Cashflow:
COV: $5k
Agent fee: $3k
Wedding: ~$30k in all
Renovation: $15k

Wipes out about ~$53k in cash. Not to mention CPF as well.

la papillion said...

Hi Pau,

Sure sure, no problem, just link up :)

Wah, you're also getting a resale...then you can feel the pressure :) haha

Money can earn back one :)