Should I get a 4-room or a 5-room?

[Moredhel]

I am planning to get a HDB via the BTO exercises coming up this year.

 

Am caught up in an indecision on which type I should apply for.

 

Generally, my combined monthly OA cpf contributions would add up to about 1650.

 

 

The crux of my indecision is whether I should:

 

1) Apply for a 5-room at 410k HDB loan for 30 years which is around 1630 repayment per month.

 

2) Apply for 4-room at est 320k HDB loan for 30 years which is around 1280 repayment per month.

 

3) Apply for 4-room at est 320k HDB loan for 21-22 years which is around 1630 repayment per month.

 

 

My points of consideration is that if I get a 5-room, and MBTs policies still maintains itself, the potential returns of a 5-room unit if I sell it in future would be significantly higher than a 4-room. As such, I I down grade from 5r to 4r in future, I would have a comfortable CPF excess to service the new loan. While if I get a 4-room, the difference of 350-400 per month is not significant enough to offset any back up payments especially when it takes generally 4-6 months to cover a single loan payment. And upgrading would be an exercise of extreme financial penny pinching.

 

Does it make more sense to go for the 5-room or 4-room(term of loan) in such circumstances?

 

 

[Mdfaz]

Hi, now may not be a good time to apply... election is near. after election, there could be major changes depending on results and whether MBT is still around... So wait for a while more if you can... I'm also waiting till end of year; intend to sell off my executive but i will wait and see first.

[Tigerwoods]

Go for the 5-room flat if the locaiton is best for you to Settle down for good as you will need the space for little ones.

If I have to live only in HDB flats for my enitre life, I will go for the biggest flat and by the time I old I will stay in the smallest flat.

 

[Rainbowbiatch]

5-room. mai tu liao.

anyhow oso use cpf to pay.

by then when u reach 65, the gov policy for claiming your cpf might have reach 80yrs of age..

you get my drift?

[Iisterry]

Bro

 

I'll say, weigh the location options, your need for space, spouse input, etc and decide on 4 or 5 room.

 

If you are thinking abt MBT policies, HDB prices have increased from <100k to 400-500k nowadays? A increase of 4-5 fold. If you wish to see history repeat itself for you to benefit, the price of HDB for the next generation must be in the range of 2-2.5 million. Can you picture such a scenario?

 

Pick an option where you are financially comfortable with sufficient allowance for future family expansion. You can sleep a lot more peacefully at night.

 

If you are financially strapped, it would also make more sense not to deplete your CPF in one shot. Leave it inside so that you have sufficient buffer in case you or your partner get retrenched. At 2.5% / annum, your CPF will double in roughly 30 years.

[Baphomet]

5-room. mai tu liao.

anyhow oso use cpf to pay.

by then when u reach 65, the gov policy for claiming your cpf might have reach 80yrs of age..

you get my drift?

 

 

I agree with you sis/bro

[Altivo]

i'm currently maxing out my CPF for mortgage payments - just keeping to the mininum sum requirement. Then seperately put aside cash for savings/emergency. At the rate CPF withdrawal rate is being raised, I feel CPF has lost it's intended purpose for retirement leow.

[Baphomet]

i'm currently maxing out my CPF for mortgage payments - just keeping to the mininum sum requirement. Then seperately put aside cash for savings/emergency. At the rate CPF withdrawal rate is being raised, I feel CPF has lost it's intended purpose for retirement leow.

 

 

just take it that its not your money. You never had it before and you never will. You will feel better.

 

I never see my gross pay. I only see net pay.

[Altivo]

just take it that its not your money. You never had it before and you never will. You will feel better.

 

I never see my gross pay. I only see net pay.

 

exactly... that's why I'm maxing out my CPF for mortgage loh. Afterall, it's my money too, and I can either leave it in CPF and hope to withdraw it... or use it to pay my house. The latter makes better sense... hahaha

 

 

[Ben5266]

Take 5 room if you are a risk taker.

If you want to minimize risk, take 4rm and leave some spare cash in your cpf.

Why? Assuming after married, you would want to have baby.

Your wife might want to quit her work for a few years when the baby is small.

If you have balance in you cpf, you will have this luxury.

Granted, your pay will increase in the next few years but it is also possible that you might not have a steady income for a short while.

 

Never mind if your buddy or classmate make more money from their property. As long as you are vested, you are not too far off.

[Moredhel]

Bros and sis, thanks for your advice.

 

I take it that most people here would go for the 5-room considering that CPF is an unknown in the future and whatever excess for the buffer is too low to make financial sense.

 

Listerry, I understand and am not looking for the prices to increase that much, for the benefit of the next generation of Singaporeans. But I'm a realist and I know that even if the oppo were to be voted in next election, MBT's policies have already cause the rot to sink in and short of scrapping the entire system, for the next 20-30 years, housing prices will still increase, abeit at a slower rate.

 

I'm more looking at this scenario:

 

*Median Prices:

 

197* 4 Rm Hdb: 40-50,000

2011 4 Rm Hdb: 450-500,000

 

197* 5 Rm Hdb: 70-80,000

2011 5 Rm Hdb: 520-700,000

 

So in the scenario, an initial outlay of 20-30,000 would result in exponential returns in the long term. Which is why most Singaporeans are leaning towards getting the best they can afford. I understand that it's all paper value, but to someone who needs to upgrade, it's still of tangible value.

 

My concern is that I do not wish to under-'invest' which would lead to a hard time upgrading in future, nor do I wish to over-expose myself where a change in work/situation would result in considerably more debts and hardship. So looking for the fine line to tread. Also taking into account monthly expenses/subsidies and initial renovation/legal costs for a 5-rm vs a 4-rm, my thinking is that a 4-rm would be a conservative 'investment' which can be afforded with some buffer, and a 5-rm is a better returns long term 'investment' if there is holding power.

 

Problem is that the buffer is rather low due to previous work issues so trying to find the balance.

 

 

Anyone has any other advice on considerations to take into account?

[Hiphiphoray]

Just a guide........

 

me bot sembawang 5 room for 223k

sold @ 365k

now staying tpy 5room @ 562k

i think now worth abt 680k liao........

 

Anyway im not concern with the sales profits or outstanding loan.

 

Cos now we can leave house @ 8.15am and yet send our son to nursery and both me & wify to work place by 9-9.15am.

 

Can easily reach home by 6.45pm. (no need pass under erp entries!!!! hehehehe )

 

What im saying is........Location can be a bigger factor than $$$. Especially when it makes our daily lifes so much more comfortable than many others out there.

 

[Ben5266]

The conservative person win during bad time.

The risk taker win during good time.

 

Stay in-between, => both head can't reach the shore/bank.

 

What time is it?

 

[Altivo]

End of the day, just buy a flat which you like and are comfortable in paying the mortgages. Price appreciation if any would be a bonus. Anyway, HDB has a MOP of 5 yrs. Who knows what the market would be like 5 yrs later.

[Altivo]

The conservative person win during bad time.

The risk taker win during good time.

 

Stay in-between, => both head can't reach the shore/bank.

 

What time is it?

 

Tiger time!

[Ngck]

Will your wages rise more?

 

OA contribution rate will fall as u age.. please take that into consideration.

 

Future nobody knows. maybe 1million 4 room flat. Maybe stagnant. Maybe drop abit.

[Hiphiphoray]

HDB change rules like change underwear..........and the housing market is uncertain. Nobody knows which direction it will go.

 

i wont waste time doing all these calculations if i were you.

 

Just get a roof and make babies rah...........dont stress too much.

 

 

Bros and sis, thanks for your advice.

 

I take it that most people here would go for the 5-room considering that CPF is an unknown in the future and whatever excess for the buffer is too low to make financial sense.

 

Listerry, I understand and am not looking for the prices to increase that much, for the benefit of the next generation of Singaporeans. But I'm a realist and I know that even if the oppo were to be voted in next election, MBT's policies have already cause the rot to sink in and short of scrapping the entire system, for the next 20-30 years, housing prices will still increase, abeit at a slower rate.

 

I'm more looking at this scenario:

 

*Median Prices:

 

197* 4 Rm Hdb: 40-50,000

2011 4 Rm Hdb: 450-500,000

 

197* 5 Rm Hdb: 70-80,000

2011 5 Rm Hdb: 520-700,000

 

So in the scenario, an initial outlay of 20-30,000 would result in exponential returns in the long term. Which is why most Singaporeans are leaning towards getting the best they can afford. I understand that it's all paper value, but to someone who needs to upgrade, it's still of tangible value.

 

My concern is that I do not wish to under-'invest' which would lead to a hard time upgrading in future, nor do I wish to over-expose myself where a change in work/situation would result in considerably more debts and hardship. So looking for the fine line to tread. Also taking into account monthly expenses/subsidies and initial renovation/legal costs for a 5-rm vs a 4-rm, my thinking is that a 4-rm would be a conservative 'investment' which can be afforded with some buffer, and a 5-rm is a better returns long term 'investment' if there is holding power.

 

Problem is that the buffer is rather low due to previous work issues so trying to find the balance.

 

 

Anyone has any other advice on considerations to take into account?

 

[Grindcore888]

need a four room but want a five room