Private character or HDB Flats?
In Singapore, buying private character is something that speaks of wealth. character investments are quite important in this city-state, and owning several houses ensures well-being from a financial point of view, because of a few factors, such as CPF Interest Rate, the tolerance for interest rate spikes, and the availability of lower interest rates for the wealthy.
Private character owners pay lower interest rates than owners of HDB flats, in spite of of the fact that HDB flats cost less. The difference in rates ranges from 0.9% to 1.2%, which can be quite meaningful. The explanation is that for private character a bank loan is always the option, with rates ranging from 1.4% to 1.7%, while the HDB concessionary loan is around 2.6%, as it is pegged at 0.1% above the CPF rate.
In the event of choosing a bank loan, however, you need to consider your tolerance for interest rate spikes, because bank loan rates are variable, which method that they can easily spike, or drop, making them a riskier choice for the average Singaporeans, who can’t provide them rising too much. The advantage of the HDB concessionary interest rate loan is that it is nearly continued, which method there is no high risk of it rising dangerously during the loan tenure. In other words, HDB flat dwellers can’t provide private character, because they can’t provide the risk involved.
Those who can provide a bank loan have more to assistance from CPF (Central Provident Fund), too. In case of buying a house and deciding to make payments for the house using CPF money, which is an permissible option in the event of getting a bank loan, your CPF money is likely to increase at a much faster rate than what the loan initially was, and as you pay off more of the loan, the monthly payments decline, because of the fact that your home loan is little by little amortized, while the CPF grows at 2.5% compounding interest. If you use the HDB concessionary loan in this case, the interest rate is 2.6% – that is to say, 0.1% above the prevailing CPF rate.
HDB flats need to keep public housing, a fact that has drawn some measures, such as de-linking of new flat prices from resale flat prices, which makes these flats a less important asset than private character.
So, when it comes to the ultimate advantage of private character in Singapore, buying private character can’t be rivaled, as it’s simply a method to get wealthier, and far better an asset.