Using Cash or CPF to buy property

[dragon]

Hi Dennis, I read with interest your posted article "Housing Loan for Investing vs Home Purchase, any difference?". For property investors, you mentioned it's better to use cash rather than CPF. If I do so, may I pls know what would you suggest to use all the accumulated CPF-OA for, as it earns only 2.5% per annum if I leave it with the CPF Board? I understand only one-third of it can be used to buy stocks. Thanks in advance!

[Dennis Ng]

Hi Dennis, I read with interest your posted article "Housing Loan for Investing vs Home Purchase, any difference?". For property investors, you mentioned it's better to use cash rather than CPF. If I do so, may I pls know what would you suggest to use all the accumulated CPF-OA for, as it earns only 2.5% per annum if I leave it with the CPF Board? I understand only one-third of it can be used to buy stocks. Thanks in advance!

Other than stocks, can use 100% of CPF to invest into Unit Trusts. Of course, one can invest in funds with lower sale charges through online medium.

[dragon]

Hi Dennis, I read with interest your posted article "Housing Loan for Investing vs Home Purchase, any difference?". For property investors, you mentioned it's better to use cash rather than CPF. If I do so, may I pls know what would you suggest to use all the accumulated CPF-OA for, as it earns only 2.5% per annum if I leave it with the CPF Board? I understand only one-third of it can be used to buy stocks. Thanks in advance!

Other than stocks, can use 100% of CPF to invest into Unit Trusts. Of course, one can invest in funds with lower sale charges through online medium.

I understand now, thanks Dennis!

[boonseah]

Hi Dennis, I read with interest your posted article "Housing Loan for Investing vs Home Purchase, any difference?". For property investors, you mentioned it's better to use cash rather than CPF. If I do so, may I pls know what would you suggest to use all the accumulated CPF-OA for, as it earns only 2.5% per annum if I leave it with the CPF Board? I understand only one-third of it can be used to buy stocks. Thanks in advance!

Other than stocks, can use 100% of CPF to invest into Unit Trusts. Of course, one can invest in funds with lower sale charges through online medium.

Hi Dennis,

you mentioned that it's better to use cash rather than cpf to invest in properties. Is equity loan the main reason behind it? Any other benefits to use cash?

Thanks.

[Dennis Ng]

Hi Dennis, I read with interest your posted article "Housing Loan for Investing vs Home Purchase, any difference?". For property investors, you mentioned it's better to use cash rather than CPF. If I do so, may I pls know what would you suggest to use all the accumulated CPF-OA for, as it earns only 2.5% per annum if I leave it with the CPF Board? I understand only one-third of it can be used to buy stocks. Thanks in advance!

Other than stocks, can use 100% of CPF to invest into Unit Trusts. Of course, one can invest in funds with lower sale charges through online medium.

Hi Dennis,

you mentioned that it's better to use cash rather than cpf to invest in properties. Is equity loan the main reason behind it? Any other benefits to use cash?

Thanks.

yup, using CPF will reduce amount of Equity Loan in future. Which is why I suggest for investment property, one should minimise or avoid using CPF altogether. Only use CPF for your Home Purchase.

[investor10]

Hi Dennis,
Can one take an Equity Loan from a private property home?

If can, then the portion paid by CPF would have to be excluded from the Equity loan tabulation, am I correct?

If this is the case, what is the benefit of using CPF for private property home verses using CPF for private investment property?

Thanks in advance

[Dennis Ng]

Hi Dennis,
Can one take an Equity Loan from a private property home?

If can, then the portion paid by CPF would have to be excluded from the Equity loan tabulation, am I correct?

If this is the case, what is the benefit of using CPF for private property home verses using CPF for private investment property?

Thanks in advance

Hi investor10,
this is how it works:

Market Valuation of Private Property: S$1.5 million
Housing Loan outstanding S$500,000
CPF utilised S$200,000.

Max = 70% of market valuation = S$1,050,000.
Max Equity Loan = S$1,050,000 - S$500,000 - S$200,000 = S$350,000.

Thus, as far as possible try to minimise usage of CPF if your intention is to take an equity loan on the private property.

[investor10]

thanks Dennis for the illustration

[moneyisfreedom]

Hi Dennis,
Can one take an Equity Loan from a private property home?

If can, then the portion paid by CPF would have to be excluded from the Equity loan tabulation, am I correct?

If this is the case, what is the benefit of using CPF for private property home verses using CPF for private investment property?

Thanks in advance

Hi investor10,
this is how it works:

Market Valuation of Private Property: S$1.5 million
Housing Loan outstanding S$500,000
CPF utilised S$200,000.

Max = 70% of market valuation = S$1,050,000.
Max Equity Loan = S$1,050,000 - S$500,000 - S$200,000 = S$350,000.

Thus, as far as possible try to minimise usage of CPF if your intention is to take an equity loan on the private property.

Hi Dennis:

For the 70% of market valuation, is this a standard proportion you can take ? Are there any kind of restrictions ?

[TanKS]

Is equity loan only available to private properties, or does it include HDB? Thanks!

[Dennis Ng]

Hi Dennis,
Can one take an Equity Loan from a private property home?

If can, then the portion paid by CPF would have to be excluded from the Equity loan tabulation, am I correct?

If this is the case, what is the benefit of using CPF for private property home verses using CPF for private investment property?

Thanks in advance

Hi investor10,
this is how it works:

Market Valuation of Private Property: S$1.5 million
Housing Loan outstanding S$500,000
CPF utilised S$200,000.

Max = 70% of market valuation = S$1,050,000.
Max Equity Loan = S$1,050,000 - S$500,000 - S$200,000 = S$350,000.

Thus, as far as possible try to minimise usage of CPF if your intention is to take an equity loan on the private property.

Hi Dennis:

For the 70% of market valuation, is this a standard proportion you can take ? Are there any kind of restrictions ?

Currently, it is diffciult to get more than that, a few months ago, it can be about 80%.

[boonseah]

Currently, it is diffciult to get more than that, a few months ago, it can be about 80%.

Hi Dennis,

will the equity loan be further reduced to 60% due to latest cooling measures?

[Dennis Ng]

Currently, it is diffciult to get more than that, a few months ago, it can be about 80%.

Hi Dennis,

will the equity loan be further reduced to 60% due to latest cooling measures?

Hi Boonseah,
it's a mute point. Currently, some banks can still grant up to 70%, as 60% financing refers to a person having an existing Housing Loan and want to finance purchase of new property.

[boonseah]

Currently, it is diffciult to get more than that, a few months ago, it can be about 80%.

Hi Dennis,

will the equity loan be further reduced to 60% due to latest cooling measures?

Hi Boonseah,
it's a mute point. Currently, some banks can still grant up to 70%, as 60% financing refers to a person having an existing Housing Loan and want to finance purchase of new property.

Hi Dennis,

Thanks for the clarification.

I view Equity loan as "an additional loan from banks due to the increase in property valuation".
If someone has taken an equity loan but sometimes later the property valuation drops due to mkt crash etc, will there be any problem like banks demand a partial equity loan payment etc?

Thanks.

[Dennis Ng]

Hi Dennis,

will the equity loan be further reduced to 60% due to latest cooling measures?

Hi Boonseah,
it's a mute point. Currently, some banks can still grant up to 70%, as 60% financing refers to a person having an existing Housing Loan and want to finance purchase of new property.

Hi Dennis,

Thanks for the clarification.

I view Equity loan as "an additional loan from banks due to the increase in property valuation".
If someone has taken an equity loan but sometimes later the property valuation drops due to mkt crash etc, will there be any problem like banks demand a partial equity loan payment etc?

Thanks.

70% is safe. All these questions and more are covered in my Secrets to Making Money in Property Seminar, so I would urge you to attend if you have NOT.

Investing in knowledge reaps the most returns.