Which is My Best Option to Fund My Condo Purchase? (Guest Post)
A long time reader wishes to purchase a condo that is valued at $1.65 million. Currently, the family is staying at a 5-Room HDB valued at around $500,000 that is fully paid-up. This HDB can potentially rent for a gross rental income of $2,500 a month.
This post was originally posted here. The writer, Kyith Ng is a veteran community member and blogger on InvestingNote, with username known as Kyith and has 995 followers.
He considered 3 options.
Option 1:
- Sell current HDB
- Use the sales proceed + CPF + cash to buy the condo
- Do not leverage up
Option 2:
- Sell current HDB
- Use the sales proceed + CPF to purchase
- Also loan $300,000
Option 3:
- Keep HDB
- Use CPF + some cash to buy a condo
- Also Loan $900,000
- This will incur an additional ABSD of $198,000 since this is the second property they would own.
Other assets the family own include:
- CPF OA: $900,000
- Cash: $500,000
- Stocks and Bond: $1,500,000
So he asked for my second opinion. I can’t give much advice since I am not his planner. But I think I can provide him some guidelines how he can go about to identify which option is most ideal for his situation.