Top 5 Best Non-Touristy Things to Do in Singapore
Singapore, a vibrant city-state known for its iconic skyline and diverse culture, offers a plethora of experiences for both tourists...
Read More
TLDR
When considering buying a property in Singapore, it’s crucial to understand the true costs and risks involved. High monthly repayments can be challenging, especially with fluctuating interest rates. Buyers should assess their holding power and not overextend themselves financially. Strategic decisions like selling, downgrading, or gear refinancing can help manage repayments effectively. It’s essential to weigh the potential capital gains and losses against interest rates before making a property investment in Singapore.
Are you thinking of buying a property in Singapore? Whether you are already a homeowner or just starting to explore the market, it is important to understand the true cost of owning a property, especially with prices reaching all-time highs.
In this article, I will share one of my client’s experience of owning a condominium worth $2 million, with a 75% loan at a floating rate. After four years, the property has appreciated to $2.48 million, but the interest rate has increased from 1% to 3.55%, making the monthly repayment of $6,700 with $4,000 going into interest servicing.
If you are feeling the pain of owning a property due to high monthly repayments, it may be time to consider your options. I advised my client to either sell and downgrade to a lower-priced property, cashing out the difference of $400,000 to $500,000 to use as a buffer for monthly repayments, or do a gear refinance to retain the property while cashing out a certain amount of money. By doing either, my client would be able to realize the profit he made, nearly 100% on his capital of $500,000, after taking into account the down payment.
I emphasise the importance of understanding the risks and rewards of buying a property in Singapore, particularly in terms of interest rates and potential capital gain and loss. Most home buyers in Singapore take up mortgage loans, with many going for the full 75% loan in a low-interest environment. While this is a good strategy to ride the wave up, it also means that buyers are highly leveraged, with a 25% down payment. If the property price goes up by 25%, they will gain 100% return on capital. However, if the property price goes down by 25%, they will lose their entire capital if they sell.
I will advise buyers to consider their holding power and not to overstretch themselves when committing to buying a property. Monthly mortgage repayments include the principal and interest, with interest being an expenditure. In a high-interest environment, someone who borrows 75% to buy a house will have to pay 3.75% of the property price in the first year in the form of interest, translating to roughly $75,000 for a $2 million property or around $6,000 a month in just interest payments alone.
In summary, while buying a property in Singapore can be a good investment, it is crucial to understand the risks and rewards, particularly in terms of interest rates and potential capital gain and loss.
Be mindful of your holding power, and don’t overstretch yourself when committing to a property. Consider your options if you are feeling the pain of high monthly repayments, such as selling and downgrading or doing a gear refinance.
With the right strategy, you can realize the profit you make and enjoy the rewards of owning a property in Singapore.
Should You Buy, Sell or Wait?
If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?
It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.
I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.
I can help you by:
- Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
- Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.
You May Also Like …
Top 5 Reasons : How Investing in a Luxury Condominium in Singapore Can Boost Your Portfolio
Investing in a luxury condominium in Singapore is an attractive option for investors looking to diversify their portfolio and enjoy...
Read More
Top 5 : Benefits of Investing in Newer vs. Older Singapore Property Market Condos for International Buyers
Singapore's property market has always been an attractive investment option for international buyers, thanks to its stable economy, strategic location,...
Read More
Top 5 Considerations : Uncover the Secrets of Buying Older Properties – What They Won’t Tell You!
Buying an older property can be a dream come true for many homebuyers, as these homes often come with unique...
Read More
Expert Tips : Top Property Investment Strategies in Singapore
TLDR Singapore offers lucrative property investment opportunities with its stable economy and political climate. To succeed, investors should conduct thorough...
Read More
5 Biggest Mistakes I Made When Starting Out In Singapore Property Investing
Investing in Singapore property can be an excellent way to generate passive income and build long-term wealth. However, like any...
Read More
Top 5 Rules for Investing in Singapore’s Property Market – Expert Insights!
Investing in Singapore's property market has long been considered a lucrative and stable investment option. With its robust economy, strong...
Read More
Top 5 : Is Investing In Properties Worth In Singapore?
Investing in properties has long been considered a reliable and profitable venture, and Singapore, with its robust real estate market,...
Read More
5 Cons of Buying a New Development
Luxury properties in Districts 9 and 10 of Singapore are highly coveted, and for good reason. From stunning views and...
Read More
Top 5 Places to Try Durian in Singapore
Durian, often referred to as the "King of Fruits," is a unique and polarizing delicacy in Southeast Asia. With its...
Read More
4 Fresh Trends among Young Homebuyers Could Shake Things up in Singapore’s Real Estate Scene
TLDR Younger generation in Singapore is reshaping house hunting by showing a preference for quality of life over location. Millennials...
Read More
Top 5 Factors : Why Not All Properties Appreciate Steadily
Real estate has long been considered a lucrative investment option, with the potential for significant returns. However, not all properties...
Read More
Say Goodbye to “Sell One, Buy Two” Approach in 2024
TLDR Summary: The "Sell One, Buy Two" real estate tactic, popularized in 2016-2017, involves selling a property and buying two...
Read More
Top 5 Best Hidden Photography Locations in Singapore
Singapore, a vibrant city-state known for its iconic landmarks and bustling urban landscape, is also home to numerous hidden gems...
Read More
3 Things You Need to Know if You Are Buying a Second Property
TLDR When considering buying a second property in Singapore, ensure eligibility by meeting the Minimum Occupancy Period (MOP) and understanding...
Read More
2024 Residential Property Market Outlook
TLDR The market outlook for 2024 suggests continued uncertainties affecting housing demand and risk appetite due to geopolitical tensions, macroeconomic...
Read More
Top 5 Tips : Spot These Warning Signs Before Making a Home Purchase!
Purchasing a home is one of the most significant financial decisions you will make in your lifetime. It's essential to...
Read More
3 Exciting Residential Sites Coming Soon!
TLDR The Lion City is undergoing rejuvenation with upcoming developments in coveted areas like Clementi and sites near MRT stations....
Read More
Top 5 : Questions Should Investors Be Asking Before Investing In Singapore’s High-End Rental Market
Singapore's high-end rental market has been a hot topic of discussion among investors worldwide. With the city-state's robust economy, excellent...
Read More
Are Early Bird Discounts At New Launches Genuine Or A Marketing Gimmick?
TLDR When considering investing in new property projects, understanding developers' pricing strategies is crucial. Early bird discounts are not just...
Read More
