Advice
8 min read
Hi Stacked Homes,
I’m an avid reader of stacked home article and subscriber of Stacked Youtube videos. I hope this email finds you well. =)
Appreciate some advice on a property related issue that we are currently facing. Our situation are as follows:
- My husband and I purchased our 1st property, a resale HDB in Sep 2020. We did not register as “owner-occupier” for this property so both our names are tied to this property.
- We are 37 (wife) and 36 (husband) years old currently
- Our resale HDB is 40 years old 4-room flat located at Serangoon Avenue 2. Purchased at SGD 459K. We hope to ideally and hopefully sell our current place at SGD 700k to offset the extensive renovation work that we put into the house as we bought from 1st owner, the house was in original condition from 37years ago so all the re-wiring, tiles etc has to be done.
The outstanding loan as of now is SGD 210,374. We are paying the loan SGD 830 X 2 (husband and wife) per month.
CPF plus accrued interest used on the property?
Husband: SGD 11,703 wife: SGD 8,996.18
Current OA
- CPF: SGD 52,268 (wife), SGD 38,883K (husband)
- Cash: 250K (total)
- Income: SGD 9K (wife), SGD 7K (husband)
We are both equity heavy at the moment and are looking into diversifying our investments into 2nd property. I would like to seek some advice when our property MOP in Sep 2025, we are thinking about these 3 options:
A. Sell our resale HDB, and purchase another resale HDB (5-room or 4-room premium apartment).
Then wait another 5 years to purchase the next condo for investment. There’s also concern that tenure will be shortened when we purchase the 2nd property if using this option.
B. Sell our resale HDB, and purchase 2 condos (ideally 3 bedroom for living and another condo for investment).
C. Pay ABSD, then purchase a 2nd condo
Thanks a lot for your time on this. Appreciate your advice.
Hi,
Thank you for writing in and for the support thus far.
This is a typical scenario that many HDB owners find themselves in, and, understandably, there’s a lot to think about before making the next step.
But before delving into the options you are considering, let’s first assess your affordability.
Selling
Recent 4-room HDB transactions along Serangoon Avenue 2:
| Date | Block | Level | Size (sqm) & Type | Completion year | Price |
| Feb 2024 | 238 | 10 to 12 | 84.00Simplified | 1985 | $658,800 |
| Jan 2024 | 309 | 07 to 09 | 93.00New Generation | 1985 | $599,000 |
| Jan 2024 | 315 | 07 to 09 | 103.00New Generation | 1985 | $690,000 |
| Dec 2023 | 309 | 01 to 03 | 95.00New Generation | 1985 | $579,000 |
| Dec 2023 | 315 | 07 to 09 | 93.00New Generation | 1985 | $620,000 |
Since your current block is unspecified, I will take the average price of these transactions as the selling price.
| Description | Amount |
| Sale price | $629,360 |
| Outstanding loan | $210,374 |
| CPF used plus accrued interest | $20,699 |
| Sales proceeds | $398,287 |
Obviously, your affordability hinges on the pathway you select. I will delve into this further as we explore the options you’re contemplating.
Buying
Option A. Sell your current HDB and purchase another HDB under the owner-occupier arrangement, occupier to purchase the second property after MOP
Let’s begin by examining your financial capacity.
Considering your higher income and eligibility for a larger loan amount, I will assume here that you will be listed as the occupier and proceed with acquiring the second property after the Minimum Occupation Period (MOP).
Husband’s affordability (Buying HDB)
| Description | Amount |
| Maximum loan based on the age of 37 with a monthly income of $7K at 4.8% interest* | $366,494 (25-year tenure) |
| CPF funds | $50,586 |
| Cash* | $250,000 |
| Total loan + CPF + cash | $667,080 |
| BSD based on $667,080 | $14,612 |
| Estimated affordability | $652,468 |
*Word on the ground is that the banks have revised their stress test interest rate to 4.8%
*I have allocated all your cash savings here
Wife’s affordability in 2030 (Buying a private property)
| Description | Amount |
| Maximum loan based on the age of 42 with a monthly income of $9K at 4.8% interest | $826,312 (23-year tenure) |
| CPF funds | $61,264 |
| Cash* | $398,287 |
| Total loan + CPF + cash | $1,285,863 |
| BSD based on $1,285,863 | $36,034 |
| Estimated affordability | $1,249,829 |
*I have allocated all the cash proceeds from your existing property here.
Do note that the Mortgage Servicing Ratio (MSR) of 30% applies to the husband when buying an HDB, unlike the Total Debt To Servicing Ratio (TDSR) of 55% which explains the large difference in maximum loan.
Another thing to note is that since you will only be purchasing the second property in 6 years, it is likely that you will have a larger amount of CPF funds and possibly cash savings so your affordability may be higher. That being said, property prices may also go up, so this affordability is difficult to assess now.
HDB median resale prices for Q4 2023:
| Towns | 4-Room | 5-Room |
| Ang Mo Kio | $594,000 | $788,000 |
| Bedok | $530,000 | $695,000 |
| Bishan | $707,000 | $918,000 |
| Bukit Batok | $593,000 | $767,500 |
| Bukit Merah | $856,000 | $959,000 |
| Bukit Panjang | $503,000 | $620,000 |
| Bukit Timah | * | * |
| Central | * | * |
| Choa Chu Kang | $508,000 | $603,000 |
| Clementi | $561,000 | * |
| Geylang | $615,000 | * |
| Hougang | $560,000 | $655,000 |
| Jurong East | $497,500 | $628,000 |
| Jurong West | $490,000 | $588,000 |
| Kallang/Whampoa | $830,000 | $880,400 |
| Marine Parade | * | * |
| Pasir Ris | $555,000 | $663,000 |
| Punggol | $605,000 | $670,000 |
| Queenstown | $928,000 | * |
| Sembawang | $551,000 | $602,900 |
| Sengkang | $575,000 | $610,000 |
| Serangoon | $600,000 | * |
| Tampines | $579,000 | $685,000 |
| Toa Payoh | $750,000 | $881,900 |
| Woodlands | $515,000 | $598,500 |
| Yishun | $520,000 | $660,000 |
Both of your individual affordability in this scenario is pretty healthy, offering you several options for both your primary residence and investment property (at present). However, since the purchase of the second property is planned for 6 years from now, it’s uncertain what options will be available within the $1.2M budget at that time.
Let’s examine the expenses involved if you choose this approach. I will assume a holding period of 10 years (10 years for the HDB, 5 years for the private property).
HDB
| Description | Amount |
| Purchase price | $650,000 |
| BSD | $14,100 |
| CPF + cash | $300,586 |
| Loan required | $363,514 |
Cost incurred
| Description | Amount |
| BSD | $14,100 |
| Interest expense (Assuming 4% interest with 25-year tenure) | $126,139 |
| Town council service & conservancy fees (Assuming $85/month) | $10,200 |
| Property tax | $4,600 |
| Total costs | $155,039 |
Private property
| Description | Amount |
| Purchase price | $1,200,000 |
| BSD | $32,600 |
| CPF + cash | $459,551 |
| Loan required | $773,049 |
Cost incurred
I will assume a rental yield of 3% for calculation purposes.
| Description | Amount |
| BSD | $36,600 |
| Interest expense (Assuming 4% interest with 25-year tenure) | $143,828 |
| Maintenance fees (Assuming $250/month) | $15,000 |
| Property tax | $24,000 |
| Rental income | $180,000 |
| Agency fee (Payable once every 2 years) | $9,720 |
| Total costs | $49,148 |
Total cost if you were to take this pathway: $155,039 + $49,148 = $204,187
Option B. Sell current HDB and purchase 2 private properties
As before, I will start by looking at your affordability.
Husband’s affordability (Buying a private property)
| Description | Amount |
| Maximum loan based on the age of 37 with a monthly income of $7K at 4.8% interest | $710,806 (28-year tenure) |
| CPF funds | $50,586 |
| Cash | $250,000 |
| Total loan + CPF + cash | $1,011,392 |
| BSD based on $1,011,392 | $25,055 |
| Estimated affordability | $986,337 |
It’s essential to note that when purchasing a private resale property, the Buyer’s Stamp Duty (BSD) must be paid in cash first, and you can subsequently apply for reimbursement from IRAS. This is because the BSD must be settled within 14 days of exercising the Option To Purchase (OTP), and there isn’t sufficient time to withdraw the funds from your CPF account.
Wife’s affordability
| Description | Amount |
| Maximum loan based on the age of 38 with a monthly income of $9K at 4.8% interest | $898,014 (27-year tenure) |
| CPF funds | $61,264 |
| Cash | $398,287 |
| Total loan + CPF + cash | $1,357,565 |
| BSD based on $1,357,565 | $38,902 |
| Estimated affordability | $1,318,663 |
Now let’s look at what are some available units on the market that match your affordability and requirements.
With a $980K budget (investment property)
| Project | District | Tenure | Completion year | Unit type | Asking price | Avg 2b rent (Sep – Nov 2023) | Rental yield |
| High Park Residences | 28 | 99 years | 2019 | 2b1b | $950,000 | $3,300 | 4.2% |
| Sol Acres | 23 | 99 years | 2019 | 2b1b | $928,000 | $3,725 | 4.8% |
| Kingsford Waterbay | 19 | 99 years | 2018 | 2b1b | $899,000 | $3,433 | 4.6% |
With a $1.3M budget (own stay)
| Project | District | Tenure | Completion year | Unit type | Asking price |
| High Park Residences | 28 | 99 years | 2019 | 3b2b | $1,300,000 |
| Parc Life | 27 | 99 years | 2018 | 3b2b | $1,270,000 |
| Kingsford Waterbay | 19 | 99 years | 2018 | 3b2b | $1,299,000 |
I’m not sure if you are familiar with these projects, but what’s great about these projects is that they’re mass-market developments with an array of facilities shared among many residents. As such, they’re suitable for families and your maintenance cost would be lower compared to boutique developments. However, it’s important to visit a couple of properties and consider their location, facilities and layout since this is an own-stay project and very subjective in terms of what’s suitable or not.
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That said, while it is feasible to find a young 3-bedroom unit for $1.3M, these options are relatively limited and typically located in the outskirts.
Now, let’s examine the expenses associated with pursuing this path. I’ll maintain the same 10-year holding period.
Let’s suppose your husband purchases a unit at Sol Acres for investment.
These are some of the recent 2b1b transactions:
| Date | Size (sqft) | PSF | Price | Address |
| Jan 2024 | 614 | $1,499 | $920,000 | 14 Choa Chu Kang Grove #13 |
| Oct 2023 | 614 | $1,516 | $930,000 | 14 Choa Chu Kang Grove #25 |
| Aug 2023 | 614 | $1,508 | $925,000 | 14 Choa Chu Kang Grove #22 |
For calculation purposes, I willl employ the average transacted price of $925,000 as the purchase price, along with an average rent of $3,725.
| Description | Amount |
| Purchase price | $925,000 |
| BSD | $22,350 |
| CPF + cash | $300,586 |
| Loan required | $646,764 |
| Description | Amount |
| BSD | $22,350 |
| Interest expense (Assuming 4% interest with 28-year tenure) | $230,176 |
| Maintenance fees (Assuming $250/month) | $30,000 |
| Property tax | $65,400 |
| Rental income | $447,000 |
| Agency fee (Payable once every 2 years) | $20,115 |
| Total gains | $78,959 |
For your own stay, let’s say you were to buy a unit at High Park Residences.
These are some of the recent 3-bedroom transactions:
| Date | Size (sqft) | PSF | Price | Address |
| Oct 2023 | 872 | $1,454 | $1,268,000 | 31 Fernvale Road #10 |
| Sep 2023 | 872 | $1,457 | $1,270,000 | 29 Fernvale Road #12 |
For calculation purposes, I will use the average transacted price of $1,269,000 as the purchase price.
| Description | Amount |
| Purchase price | $1,269,000 |
| BSD | $35,360 |
| CPF + cash | $465,198 |
| Loan required | $839,163 |
| Description | Amount |
| BSD | $35,360 |
| Interest expense (Assuming 4% interest with 27-year tenure) | $296,363 |
| Maintenance fees (Assuming $350/month) | $42,000 |
| Property tax | $13,640 |
| Total costs | $387,363 |
Total cost if you were to take this pathway: $387,363 – $78,959 = $308,404
Option C. Pay ABSD and purchase a second property
It’s important to note that when purchasing a second property the Loan To Value (LTV) ratio for your second loan will be reduced to 45% if you have an existing mortgage loan. And of the remaining 55%, 25% will need to be paid in cash.
Similarly, let’s first assess your affordability.
With $250,000 in cash on hand, which will cover the 25% cash down payment, your budget could potentially go up to $1 million. However, taking into account the substantial amount required for Additional Buyer’s Stamp Duty (ABSD), let’s adjust the budget to $800,000.
These are some of the younger available units on the market that fall within this price range:
| Project | District | Tenure | Completion year | Unit type | Asking price | Avg 1b rent (Sep – Nov 2023) | Rental yield |
| High Park Residences | 28 | 99 years | 2019 | 1+S | $750,000 | $2,644 | 4.2% |
| Sol Acres | 23 | 99 years | 2019 | 1b | $775,000 | $3,079 | 4.8% |
| Kingsford Waterbay | 19 | 99 years | 2018 | 1b | $738,000 | $2,783 | 4.5% |
Again, I will assume you purchased a unit at Sol Acres.
These are some of the recent 1-bedroom transactions:
| Date | Size (sqft) | PSF | Price | Address |
| Nov 2023 | 495 | $1,454 | $720,000 | 6 Choa Chu Kang Grove #06 |
| Oct 2023 | 495 | $1,434 | $710,000 | 6 Choa Chu Kang Grove #01 |
| Oct 2023 | 495 | $1,515 | $750,000 | 6 Choa Chu Kang Grove #15 |
For calculation purposes, I’ll utilise the average transacted price of $726,667 as the purchase price, along with an average rental rate of $3,079.
| Description | Amount |
| Purchase price | $726,667 |
| BSD | $16,400 |
| ABSD | $145,333 |
| CPF + cash | $621,000 |
| Loan required | $267,400 |
| Description | Amount |
| BSD | $16,400 |
| ABSD | $145,333 |
| Interest expense (Assuming 4% interest with 27-year tenure) | $94,436 |
| Maintenance fees (Assuming $200/month) | $24,000 |
| Property tax | $49,900 |
| Rental income | $369,480 |
| Agency fee (Payable once every 2 years) | $16,625 |
| Total gains | $22,786 |
We will also consider the cost of holding the HDB.
| Description | Amount |
| Interest expense (With an outstanding loan of $210,374 at 4% interest and assuming a 20-year tenure remaining) | $68,520 |
| Town council service & conservancy fees (Assuming $85/month) | $10,200 |
| Property tax | $4,350 |
| Total costs | $83,070 |
Total cost if you were to take this pathway: $83,070 – $22,786 = $60,284
What should you do?
Let’s do a quick summary of the costs incurred for the 3 options.
| Potential pathways | Costs incurred over 10 years | Properties |
| A. Sell current HDB and purchase another HDB under the owner occupier arrangement, occupier to purchase second property after MOP | $204,187 | 1 HDB, 1 private property |
| B. Sell the current HDB and purchase 2 private properties | $308,404 | 2 private properties |
| C. Pay ABSD and purchase a second property | $60,284 | 1 HDB, 1 private property |
While all three options ultimately result in owning two properties, the type of property you hold could potentially impact your potential gains.
HDB
| Year | RPI | % Change |
| 2013-Q4 | 145.8 | – |
| 2014-Q4 | 137 | -6.04% |
| 2015-Q4 | 134.8 | -1.61% |
| 2016-Q4 | 134.6 | -0.15% |
| 2017-Q4 | 132.6 | -1.49% |
| 2018-Q4 | 131.4 | -0.90% |
| 2019-Q4 | 131.5 | 0.08% |
| 2020-Q4 | 138.1 | 5.02% |
| 2021-Q4 | 155.7 | 12.74% |
| 2022-Q4 | 171.9 | 10.40% |
| 2023-Q4 | 180.4 | 4.94% |
| Average | – | 2.30% |
Non-landed private property
| Year | Index | % Change |
| 2013-Q4 | 147.6 | – |
| 2014-Q4 | 142.5 | -3.46% |
| 2015-Q4 | 137.4 | -3.58% |
| 2016-Q4 | 133.8 | -2.62% |
| 2017-Q4 | 135.6 | 1.35% |
| 2018-Q4 | 146.8 | 8.26% |
| 2019-Q4 | 149.6 | 1.91% |
| 2020-Q4 | 153.3 | 2.47% |
| 2021-Q4 | 168.4 | 9.85% |
| 2022-Q4 | 182.1 | 8.14% |
| 2023-Q4 | 194.2 | 6.64% |
| Average | – | 2.90% |
The graph and data clearly show that prices of non-landed private properties have been increasing at a faster pace than HDBs since 2017. Therefore, in theory, retaining two private properties should offer better potential for capital appreciation compared to holding one HDB and one private property.
As that much is obvious, the key factor really lies in selecting the right developments.
If we were to consider the average growth rates:
| Potential pathways | Costs incurred over 10 years | Property value | Potential gains | Potential gains minus costs |
| A. Sell current HDB and purchase another HDB under the owner occupier arrangement, occupier to purchase second property after MOP | $204,187 | HDB – $650,000PTE – $1,200,000 | $350,350 | $146,163 |
| B. Sell the current HDB and purchase 2 private properties | $308,404 | PTE 1 – $925,000PTE 2 – $1,269,000 | $726,051 | $417,647 |
| C. Pay ABSD and purchase a second property | $60,284 | HDB – $629,360PTE – $726,667 | $401,164 | $340,880 |
Given the higher growth rate of private properties, Option B would yield the highest profits.
Although Option C generates a higher profit than Option A due to the longer holding period for the private property and a lower loan quantum reducing the interest expense, it is not an optimal choice for several reasons.
Firstly, your existing HDB is already 40 years old, raising concerns about lease decay if held for an extended period. With the current HDB market at a peak, it might be opportune to divest and restructure your portfolio.
Additionally, one advantage of property investment lies in leveraging the loan. However, with an existing mortgage loan, the LTV is significantly reduced, limiting this leverage. Lastly, as the property must be purchased jointly, a hefty ABSD is payable. Assuming an ABSD of $145,333 and a monthly rent of $3,079, it would take around 4 years to recoup just the ABSD, which is a considerable time frame. This does not include vacancy risk either. Therefore, Option C would be my least preferred choice.
Option A provides the opportunity to restructure your portfolio and potentially obtain a newer HDB flat with appreciation potential or better value retention. However, this comes at the expense of taking advantage of opportunities during the 5-year MOP. Nonetheless, this option offers a comfortable living space, potentially in a location of your choice, while maintaining an investment property and incurring lower costs compared to Option B.
Among the three options, Option B stands out as the most favourable on paper. With meticulously chosen properties, it presents a better potential for appreciation. While the costs are higher, primarily due to residing in one of the properties, the appreciation potential outweighs those of an HDB. The biggest drawback to this is the location though, as your own-stay project is limited to a budget of $1.3 million.
We hope that our analysis will help you in your decision-making. If you’d like to get in touch for a more in-depth consultation, you can do so here.
