Cannot buy property when cash flow is tight?

One day, you walked into a show gallery and fell in love with the condo on display. You
identified a unit and hesitated when informed of the monthly installment. After some quick
calculation in your mind, you came to the conclusion that it will be very tight on your budget
(or you do not have the cash for the down payment) even when your level of income
qualifies you to borrow from the bank.

Sheepishly, you tell the sales rep that you will have to think about it – meaning you are not
going to buy!

Don’t be disheartened. You can still be able to buy your dream property if you know how!

Let’s look at the ways you can do it.

Construction at the foundation stage and high unit

If you are financially tight, do not go for a condo where the construction is almost half or
three quarter completed. Even if you buy a high unit, the construction will reach your unit fast
- by that time, you will have to pay a higher progressive interest amount (based on 65% loan
release) and then shortly, start your loan repayment upon delivery of vacant possession.

Instead, go for a high unit (make sure the price difference for each higher unit is not a lot)
where the construction is only at the foundation stage. At this point, you only need to service
your progressive interest for the completion of the piling/foundation stage (10%) every month
(which is little) till the construction reaches your high unit which is 2 - 3 years later.

By the time, your salary or income would most likely have risen by then.

Developer’s package

Nowadays, developers offer sales packages that can help people to buy. For example, a lot
of developers offer high rebates (at least 10%) where buyers do not need to pay any down
payment upon signing of the S&P Agreement.

Secondly, do look for sales packages where the developer will give “cash back” to their
buyers (upon vacant possession). Such cash backs can greatly ease your cash flow as you
can use the money to renovate your new condo or even pay your loan monthly installments!

When the condo is completed, and if your cash flow is tight, you can temporarily rent out
your new condo for one or two years. At the end of the two years period, you may then
decide to sell for a profit, by which time, you can be exempted from paying the Real Property
Gains Tax (after 5 years from S&P date).

EPF withdrawal
Do you know that you can still buy your dream home even if you do not have the money to
pay for the down payment or when the bank can only give you are margin of financing of
80%? Yes, you can withdraw from your EPF Account 2 and the eligible amount is the
difference between the purchase price and the loan amount plus an additional 10% of the
purchase price. With the additional 10%, you can use the money to service your monthly
progressive interest and your loan repayments when your condo is completed.

As you can see, there are a lot of ways to help you to buy your dream property even when
you do not have the money for the down payment or when your cash flow is tight.

End.