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Behind The Scenes: Helping A First Time Buyer (From Confusion To Clarity)

Updated: May 20, 2020

Behind every happy closing photo is a story, and this particular case is no exception!

This is a story of how I was able to assist my client overcome challenges and confusion, eventually helping her achieve her goal of owning her first investment property. I’m very elated to share this with you. I would like to bring you behind the scenes to show you how I turned her dreams into reality, from the financing to the selection process of owning the "right" property.

Proud owner of an investment unit (Photo taken 1 week before Circuit Breaker)

I still remember vividly how it started. One fine afternoon, while I was working from home, my phone rang. It was a WhatsApp message from my ex-secondary school classmate, Megan (name changed).

Her message read this way:

Hihi Jacq, any good condo lobang or HDB resale to recommend ?

Instantaneously, I was very heartened that Megan, my classmate of 27 years ago, sought me out. All the good old memories of studying in St Hilda's Secondary School came flooding in. After all, we belonged to the same "gang" in class. I recalled fond times of us hanging out together before the bell rang for assembly, and rushing to the canteen during recess to queue up for our favourite chicken rice.

In fact, due to our similar height, we were often made to partner up with each other during PE lessons. Looking back, it's been very long since we last met.

Hence, we made an appointment to meet over dinner, so that I could find out more about her goals and have an in-depth discussion in order to assess her eligibility to own a Condo VS a HDB resale unit.

An old class photo

The following was her plan: - Buy a property within her means. - Lease it out first for rental income, with the possibility of her own stay in future.

At first, this seemed like a straight-forward case. But, there is more to this than meets the eye.

Let's portion out this case study into 4 sections, mainly:

1. Financial Calculation

2. HDB or Private

3. Resale or New Launch

4. Choice of Project


Megan believed that since she is a first time property buyer, she will be eligible to borrow up to 75% Loan-To-Value (LTV) which also means 75% of the property price.

After my further assessment, she revealed that her aged parents had previously utilised her name to be the guarantor for financing the current property that they are staying in.

This was done to stretch the loan tenure for a more affordable monthly loan repayment. Back then, this was a brilliant idea, so creative that the government decided to close this loop-hole for good. This meant that instead of 75%, she is now only eligible for 45% LTV. The important point to note here for property buyers is:

No Property ≠ No Property Loan

Loan-To-Value (LTV) Limits (From 6th June 2018)

A decrease in borrowing percentage simply meant an increase in the amount of cash she needed to come out with for her downpayment.

So in order to proceed with the purchase, Megan had 2 options on how to pay for the down payment.

Option 1 was to use CPF and cash.

Option 2 was if there was not enough cash, Megan could apply a creative financing strategy which I shared further with her.

Next was to calculated the property price she can afford. Based on her salary and current obligations such as existing home loan and car loan, she is able to afford a property up to 750K.

I also help her to source for the best home loan interest rate which significantly help her with much savings on her monthly repayment.


Next, to buy a resale HDB or a Condo? If she bought a resale HDB, she would be able to enjoy a more affordable price tag and a larger space, however, she will not be able to rent out her unit for the first 5 years after her purchase.

I shared with her that despite HDB coming with a more affordable price tag, it no longer has intrinsic value from an investor’s point of view.

HDB no longer has intrinsic value from an investor's point of view.

In order to know why this is so, it is important to take a look at the HDB resale price index extracted from SRX below.

Due to MSR effects, HDB prices has corrected and has not seen capital appreciation eversince Year 2013

As you can clearly see from the price index above, the HDB price index has corrected ever since year 2013.

This is due to the introduction of Mortgage Servicing Ratio (MSR) which was introduced to peg HDB prices to the income levels of the average Singaporean worker.