Home ownership in Singapore is one full struggle when it comes to raising the money for the equity or down payment. Your home loan mortgage may be secured by a real property, but you need to pay for the cash portion of the down payment from your very own pocket or own source of funds. Let us put it this way. If your credit application qualifies for an 80% loan, then you need to find cash and raise the remaining 20%. In Singapore, you are to pay, out of your own funds, the difference between the purchase price of the residential property and the approved amount under any credit facility. How do you think you can achieve this?
Borrow from your company or employer
It is possible to borrow money from your company. Companies have the prerogative to help their staff and lend the money they need for the equity. Some corporation is generous enough to lend money to their staff without interest in a few months.
Borrow from your parents, friends, or relatives
Based on the new ruling, you should be careful in making more borrowings because it will impact your credit application with the bank especially the approved amount. At some point, you probably need money that you don’t have handy. You can approach your parents, family, friends, or relatives who can draw out funds for you in a shorter term with little or no interest at all.
You can look into your total CPF savings and pay the down payment. If it is not enough, then you need to consider paying the balance in cash. Replenish your balance later when you paid the amount you had withdrawn from your CPF savings. Buying a home is the biggest and could be the longest financial commitment you may have and should be carefully planned before the actual purchase takes place. Your anticipated approved amount of loan entirely depends on your income, existing debt obligations, available savings, and existing expenses.
What can you afford?
To work out your budget, you need to anticipate additional expenses such as property taxes, insurance, and some buffer for possible interest rate rises. These things you need to pay in cash because you cannot take this from your CPF savings. This includes meeting your other existing financial commitments such as your current monthly living expenses.
Get your cash savings handy. You need this to look up your upfront payments when you decide to buy your homes. Remember, the CPF savings can only be used for freehold or leasehold land. Once you reached the allowed withdrawal limit, you are unable to use the CPF savings and need to pay the remaining amount in cash. It is a taboo to tell a seller to wait, when you really want that home. Having an immediately accessible source of cash that is about three to six months of your gross income. Loan equity and the repayments take a large chunk of your savings and expected income. This is more relevant when you are out there renting a property while waiting for your new home to get ready. The thing is that you need to get ready of the cash flow issues.