Saturday, October 29, 2011

How much interest you pay for your housing loan ? (Revision 02)

Revision 02 (last paragraph): updated on November 5, 2014

I took 80% housing loan 2 years back for my new home with 3-Year Fixed Rate Package from Maybank Singapore (1.6%, 2.6% & 2.9%) in June 2009 with loan tenure of 20 years and it turns out to be a bad bet. I paid S$18,800.96 interest (until June 2012) for the loan amount of $284,000 , and that's effective interest of 6.62%!

It is my mistake to extend my original loan tenure of 10 years to 20 years. My intention is to bet on the equities market and additional investment at real estate in Singapore. It is not a good bet as for now. I have reviewed carefully and decided to change some of my strategies next year, especially housing loan.

It is easy to look back 2 years ago of what you should have done:
(1) I should have sticked to my original housing loan tenure of 10 years
(2) I should have selected the 3-months SIBOR pegged housing loan packages
(3) Even with equities investment, I should have followed my original plan of Starhub single investment at S$1.91 andd keep it with dividend yield of 10.47%.

It is time to look forward! I have done the survey on the home loan rates available at Singapore. I will place a certain lump sum downpayment next year June (re-finance) to reduce the housing loan to S$169,447. With this amount, here are the big picture.

CIMB 3-Year Fixed Rate Package stands out among the peers, with fixed rate of 0.98%, 1.38% and 1.98%, the total interested paid for 3 years is only $3,235.49, and that's a mere 1.91% effective interest that you pay for the loan amount. I will be out of debt at age 35, sound like a good plan.

By then, year 2015, I hope the equities market is on the bull cycle, and that will be really double bonus for me. :) Let's plan and God will take care the rest.








Take note, the lump sum down payment during re-finance next year is about 32% of the remaining loan balance.

If I refinance with another 20 years, the total interest will be $106,016 (42.5% of loan balance). If I refinance with 10 years, the total interest will be $37,019 (14.8% of loan balance). That is one of the reason why I want to reduce the remaining loan and the interest is then greatly reduced to only 1.91% !

Take note, due to CPF OA contribution rate change, the monthly OA contribution has now increased from $1,035.51 to $1,150.20 , you can wipe them off for housing loan monthly payment.

Typical Singaporean (in my case) who takes CPF 2.6% loan will enjoy much lower interst in the long run due to the low interest rate of fix 2.6% throughout entire 20 years, but it is still a big amount of money. We are talking about 30% of interest.

If they take 80% loan and spread 20 years (which many Singaporen did that or even 30, 35 years), the total interest is $80,511 (28.3% of loan amount).

Updated on November 5, 2014
======================
Looking back at the blog written 3 years ago, I am happy to say we have fully paid our HDB housing loan in June, 2014.

Once you have cleared your HDB housing loan, you will receive this important document - The Land Titles Act Lease document. 



You have to pay S$450 lawyer fees while you do the HDB housing loan redemption.

Friday, September 30, 2011

Monday, August 1, 2011

August 2011 actions ...

BUY MEWAH

SELL RAFFLES EDUCATION @ S$0.61, profits 11.7% (include dividends)

BUY CAPITAMALLASIA (INCREASE STAKES)

BUY CSC HOLDINGS (INCREASE STAKES)

BUY MEWAH (INCREASE STAKES)

BUY HOTEL PROPERTIES (INCREASE STAKES)
CONTRA SELL HOTEL PROPERTIES @ S$2.09, profits 4.0%

BUY SABANA SHARI'AH COMPLIANT INDUSTRIAL REIT

Sunday, July 17, 2011

July 2011 actions...

BUY HEALTHWAY

SELL GOLDEN AGRICULTURE @ S$0.725, profits 10.5% (include dividends)

BUY CAPITAMALLASIA (INCREASE STAKES)

Tuesday, June 21, 2011

June 2011 actions ...

SELL MAPLETREE INDUSTRIAL TRUST @ S$1.16, profits 28.4% (include dividends)

BUY CAPITALAND

BUY MIDAS

BUY RAFFLES EDUCATION

Friday, May 27, 2011

May 2011 actions...

BUY SPICEi2i EXCESS RIGHTS (ALL EXCESS RIGHTS GRANTED)

SELL ALLGREEN @ S$1.59, profits 43.9% (include dividends)

BUY CSC HOLDINGS (increase stakes)

BUY CAPITALAND (increase stakes)



Monday, April 4, 2011

April 2011 actions...

SELL LIAN BENG @ S$0.34, profits 21.4%
SELL LIAN BENG @ S$0.34, profits 17.2%

BUY SPICEi2i RIGHTS
BUY SPICEi2i EXCESS RIGHTS

Thursday, March 17, 2011

March 2011 actions...

BUY LIAN BENG (INCREASE STAKES)

BUY WINGTAI (INCREASE STAKES)

BUY CAPITAMALLASIA (INCREASE STAKES)

Friday, February 25, 2011

February 2011 actions...

BUY MIDAS (INCREASE STAKES)

BUY LI HENG (INCREASE STAKES)

BUY LIAN BENG

Wednesday, January 5, 2011

January 2011 actions...

SELL LIAN BENG @ S$0.315, profits 15.4% (include dividends)

SELL GOODLAND @ S$0.195, profits 11.4%

SELL YONGNAM @ S$0.305, profits 29.79%
SELL YONGNAM @ S$0.305, profits 5.2%

SELL SYNEAR @ S$0.245, profits 8.9%

SELL BANK OF AMERICA @ US$14.63, profits 9.2%
SELL BANK OF AMERICA @ US$14.63, profits 8.8%

BUY CAPITALAND (INCREASE STAKES)

BUY WINGTAI (INCREASE STAKES)

BUY ALLGREEN

BUY YONGNAM

BUY MIDAS (INCREASE STAKES)