Have you ever heard the claim of 'Sell 1 HDB Buy 2 Condo'? Today we will be looking deeper into such an exciting claim and understand when such a claim is possible and applicable whilst providing some numbers and calculations to make sense of it all.
Intro
Whenever customers of Aaron comes across amazing claims in the real estate industry, be it through other videos and websites from agents or otherwise, they will call Aaron to verify. Some of these claims make it very attractive to the property investor looking for ways to earn money.
In every claim that we hear, it's always good to do research and calculations to find out if the claim is true and how true it is. Especially in property, Aaron's intent on not getting sold by an idea that is just not true. So he has done the necessary research and calculations to reveal the truth about the sell 1 buy 2 claim!
Unveiling the secrets
To provide an example, we take a hypothetical scenario of Mr Tan and his wife, who has sold a 600k property with no loan, taking back 400k CPF and 200k cash. On top of that, he has savings of 50k. So with this 650k in hand, he wants to test the sell 1 buy 2 claim.
Here's a table to illustrate what they plan to buy.
Mr Tan (Husband | $1.3million property | Mrs Tan (Wife) | $900k property |
CPF | 260k (25%) | CPF | 180k (25%) |
Cash | 65k | Cash | 45k |
Stamp Duty | 36.6k | Stamp Duty | 21.6k |
Total | 361.6 | Total | 246.6 |
Looking at this table, 650k does cover all that they need in order to make the downpayment for both properties. So the rest can be covered by loans, right?
Income for 75% loan
Here's where it gets interesting. The sell 1 buy 2 claim can only apply for a certain category of people. That is people who can pay off the downpayments of 2 condos and at the same time achieve the 75% loan for both properties.
Let's go back to Mr Tan and consider the income required for their loans to get approved.
Mr Tan's loan amount is 975k and Mrs Tan is 675k.
Husband Age | Income (without other loans) | Wife Age | Income (without other loans) |
48 | $10581 | 48 | $7325 |
42 | $8580 | 42 | $5940 |
35 | $7297 | 35 | $5052 |
Depending on if they are aged 48, 42 or 35, the table reflects the income levels required. If they are able to have such income levels, then definitely they will be able to successfully sell 1 buy 2, and good for them.
The question is, how many people fall into this category which can afford such a move.
Loan Tenure
There are also claims that one can loan by to 75 years old through refinancing. But with pulling loan tenures to high amounts, there are rules and regulation involved as well as sacrifices in the form of increased interest.
Refinancing with higher loan tenure might be able to reduce the monthly instalments amount payable but the interest is increased. Also, banks do not allow refinancing upon the first year of purchase of a property and you are not allowed to go for 40 years loan tenure. In fact, after calculating, the maximum loan tenure you can pull to would be 33 years based on the rules in place.
Conclusion
For anyone looking to pull off such a transaction, the first question to ask is if you have the income required based on your age. It's obvious that the younger you are the better, since you can make use of the full loan tenure of 30 years.
If one does not have the required income for taking up the loan, having the downpayment amount without being able to make the monthly installments is useless. We hope that, by going into the nitty gritty details of such claims, we can help property buyers better evaluate their situation and realise that the property market is not an easy one to make money in.
Aaron goes on a roll, revealing the truth behind 'sell 1 buy 2' claims! Watch the video to hear from him!