How To Use This Home Loan Calculator for Property Investment in Singapore
Are You Confused about getting a home loan for property Investment in Singapore like a HDB flat, a Condominium unit, or a landed property? should you Buy or Rent now? Which is less risky and more profitable as an investment? What about the home loans rates? what if it goes up or may be down in the future? what if the rents go up?...... To answer all your questions and to consider all your options, for each and every specific residential property investment that you are considering in singapore, this is "THE" place to be. You are at the right website. Without further ado, lets discuss how to use the home loan calculator and what it does for you.
This website will help you compare your property investment options in terms of profitability and risk. What happens if you pay too much Cash over valuation, what about home loans rates?, how much hard cash do you need inorder for investing in buying a property depending on the available funds in your CPF ordinary account?, When can you sell and possibly make money? How long should you be ready to hold on to the property investment before you sell in case you are investing in buying a property now? etc. We help you make more informed decisions and find more thought out answers with this online home loan calculator tool. But remember, the final decision is yours. This tool is only an approximation of reality. Do your homework and make your own decisions.
This Home Loan Calculator Website is split into three sections; one for estimating the cost of investing in buying a property, another for estimating the effect of home loans rates on your profits from investing in buying a property as opposed to the option to rent a house, and then a third section which helps you decide if now is a good time for investing in buying a property or perhaps you should wait a few years before you buy because the current property investment prices are high and you expect them to come down.
Buying Cost
To use this home loan calculator website, all you need is to fill up the columns shown in light yellow color. Basically, for the case where you are investing in buying a property, you should enter the "Valuation" price amount which is the "reasonable market price" in case of Condominium or landed property. For HDB flats, the official valuation report will provide you with this number. In othercases, your buying agent will help you assess the market price. Else, after viewing a few investment properties, you should be able to make your own "guesstimates". The COV or cash over valuation is the price premium that you are paying above this market price for the particular property investment. Note that the COV can also be zero or negative.
Buy or Rent Analysis
Inorder to consider buying a property or if it is better to rent a house, you need to find the market rental for similar unit near by and also the currently available best home loans rates. You may take bank mortgage loans or HDB mortgage loans. Searching for the best home loans rates may be done through websites like www.loanguru.com.sg. To find the cost of renting a house may be found from websites like www.propertyguru.com.sg or www.iproperty.com.sg. Enter this rental into the "monthly rental" field. For calculation sake, we assume that the rental will keep increasing for the next 15 years, at a compounding rate as entered in "rental growth%" field. 5% is a reasonable amount that we suggest to use as the average annual % increase in rental. The home loans rates must be entered into the "interest" fields for corresponding years. Make sure you click outside after entering the values into the input fields.
With this, various fields in the table tells you all the different information that you may need to consider the deal at hand. Example, "BreakEven mthly rental" column shows the equalant monthly rental that you have paid if you were buying a property today and sold it after "yr"(as shown in the left hand side column) number of years. if you sell too soon, the equalent rental is very high due to the overhead costs in buying and selling process. If you sell after longer period, the effective rentals you pay are reduced.
"Annual rent" column shown how much you would have paid if you were to rent the same unit annually instead of investing in the property. "Total Rent So far" shows the cumulative total amount that you spent on rentals until that year starting from now.
The most important column is the "Gain if Buying". This column shows the amount that you would gain if you were to invest in the property for "yr" number of years instead of renting the property. Notice that, initially the gain is negative number which means, if you are staying only for small periods, then renting is profitable. But as the staying peiod gets longer, the "gain if buying" amount gets bigger and eventually becomes positive. Negative number means you lose money instead of gaining. Or, in other words, you will gain if you were to buy and hold for long enough. The basic assumption behind these numbers is that you will be able to sell the property at the same price that you bought it. This is not the actual case. By Looking at the historical variation of house prices in singapore (available from HDB and URA websites), you may "guesstimate" a prediction of future house prices for the best and worst cases. In the next section, this information may be included in you analysis to decide if you want to invest in property now, or invest later or even just continue renting.
"BreakEven SP % Drop" column shows you how much drop in price can you afford when you sell, without taking a loss when compared to renting the house. During initial years, the percentage drop is negative, which means price should go up to breakeven. Later, the percentage is negative, which means you could sell even when the price is down from where you bought and fro you, it would still be the same as renting. If the prices didnt fall so much when you sold, then you would actually make money!
"FreeStay % hike" means how much your selling price should go up if you were to effectively get absolutely free stay for the time. That is, you would get back all the money you spent in owning and holding the property for the period, like loan interest paid, tax paid etc.
Buy Now or Buy Later Analysis
This section helps you to consider the option of waiting for a while before you buy, based on the rental expense that you would have while you wait and the actual market price variation during and after your waiting period. it compares various scenarios like you buy now, or you buy 1 year later or 2 yrs later etc.
I guess, the rest of the information is pretty self explanatory. Enjoy, spend some time researching various options and dont jump into conclusions. Weigh all your options before you buy because this is probably by far the biggest investment that you would ever make in your life.
Dont forget that many of the columns and fields have tooltips or "pop up" help when you hover your mouse over it. So if you dont understand something, just hover your mouse over it.
Please note that the website or it's owners do not take any responsibility for any results or any type of implications or losses that might incur from using the information from this website. The user is solely responsible for all his/her actions in terms of using information from this site. We take no responsibility for the correctness or completeness of the information presented here.
Good Luck!.... and yes I do like to read comments from users. Please leave your thoughts below.
