My wife and I went for our 1st Comirnaty vaccine jabs today. We took the day off to rest and recover in case of side effects (nothing major so far). The entire vaccination process was smooth and efficient. Our 2nd Comirnaty vaccine jabs are in 4 weeks time and both of them have been brought forward from our original appointment dates. Might as well get this over and done with earlier rather than later. I feel it’s better to have some level of defence against the Covid virus and hope vaccination paves the way for restrictions to relax & countries to open up.
Anyway, my purchase offer price for the 3 bedroom apartment in this development has been accepted. After all, it has met the seller’s profit number and he doesn’t want to drag out the sale process from having to deal with the tenant & arranging for multiple viewings. I also want to avoid an extended sale process to ensure that the unit doesn’t get bid on by a few prospective buyers causing a potential price war in this hot property market. Before I move on to finalising the Option To Purchase (OTP) for the unit, I now have to think about how to structure this property transaction.
The important consideration is whether to buy the apartment in my name, my wife’s name or our joint names. My preference is for the property to be purchased under a single name as it allows us to better navigate Singapore’s difficult property market. If both of our names are used up to buy this apartment, we will have to decouple the next time if we want to buy a bigger family home or an investment property. That’s going to have administrative, legal fees and stamp duty implications. Although my wife earns more than me, I would like to keep her name free for the next place and not burden her with a big mortgage in the meantime. Let her have the luxury of being debt-free and she deserves it for having done so much for the family.
Photo by Anna Roguszczak on Pexels.com
While it’s my turn to step up financially, the main problem is that I don’t earn enough to get the 75% housing loan (after 25% downpayment) from the bank to buy the apartment in my name. Even if I could get it, this would already require me to liquidate some of my investments to make up for the shortfall after using up my CPF-OA and cash. Based on my monthly salary (fixed income) and annual bonus (variable income), I can only get a 60% housing loan from the bank and this requires a 40% downpayment. Given the price of the apartment, the 15% difference in downpayment translates to a large sum of money upfront that requires an even bigger liquidation of my investments.
I’m in the process of discussing with my bank on how to increase the 60% housing loan to 75% and it’s likely to require me to show funds. Meaning I have to set aside cash or investments that cannot be used for the downpayment and show the bank that I actually have the assets to bridge that 15% gap. Given that my US$ investments have grown over the past year, I may have enough to show funds with them but I can’t liquidate any of them prior to housing loan disbursement. While I may qualify for the 75% housing loan from the bank after setting this up, I still have to liquidate some of my S$ investments to make up for the shortfall after using up my CPF-OA and cash.
Although I have not selected a housing loan package with my bank yet, I did a rough calculation of the monthly mortgage payments with a 30 years loan tenure & 1.5% interest rate and added in the associated monthly maintenance fees. Together with my share of the monthly living expenses (car, utilities, cable, broadband, childcare, contributions to parents, groceries and dining), it would take up most of my monthly salary. I will have a lot less savings every month to use as emergency funds or even for investments.
This is classic lifestyle inflation and I’m knowingly engaging in it. I could make all the excuses to justify it but it comes down to building a life I want for my family. It’s the same reason why I chose to rent a 3 bedroom apartment now in the same development for my family to live in. Instead of choosing to live with my wife’s parents at their house to save on rental costs. I rather spend the money for my family to have a lifestyle they are happy with than to save the money on a lifestyle they are not. It’s not about over-spending on every luxury item and buying expensive stuff. It’s about spending on what matters to us. And I truly believe that buying a place in an area we want to live in that works for us (even if it’s expensive) would do more for us financially in the long run.