I’ve been hearing quite a number of arguments about Mah Bow Tan’s following statement:
Mr. Mah cited an example of how a young couple below 30 and earning a combined income of S$4,000 can pay the 5 per cent downpayment for a new four-room HDB flat with no cash after working for half a year to build up their CPF, and pay less than S$50 for their monthly mortgage payment.
He told reporters: “You would get a flat with zero deposit. Now, how many countries in the world can say that? How many housing ministers in the world can say what I have just said?”
Various people are calculating here n there and concluding that this means MBT is saying that new four-room flats cost around $110,000. Their calculations mostly go like this:
Ok, MBT comes out to say a couple with $4k salary combined can pay 5% HDB new flat deposit with 6mths CPF. So,
- $4k x total CPF contribution rate 0.355 = $1420,
– of which about 64.8% goes into Ordinary Acct = $920.20
– So at the end of 6 months, there’s $920.20 x 6 = $5521
– If this is 5% of the HDB flat price, that means HDB flat costs $110,419. (Apparently, the couple doesn’t need to pay stamp duty)
Erm, tell me where in Singapore is a NEW flat so cheap? Granny flat ah? WTF is he talking about? Is my FLATematics wrong?
As someone who has been looking at HDB flats for about a year now, and very into excel spreadsheets, I would like to clarify that the above calculation is not correct.
This does not imply that I support or do not support PAP, or MBT’s claims that HDB flats are affordable. I simply cannot stand it when calculations are wrong. Hehe OCD sorry.
There are 2 parts to MBT’s statement:
1) CPF after 6 months is sufficient for the couple not to fork out cash during the downpayment.
2) They can pay less than $50 in cash for their monthly mortgage payment.
Both of these are true. Please read on.
Part 1: Downpayment – Edited
As long as the HDB flat costs $300,000 and below, this couple will not need to fork out any cash for their downpayment.
- This couple is below 30,
- First time buyers, and
- Utilizing the Staggered Downpayment Scheme
Now for the mathematics…
The downpayment required for a $300,000 HDB flat is as follows:
5% of flat price: $15,000
Stamp duty: $4,200
Legal fees: $193
Total Downpayment Required: $19,393
Their CPF available is as follows:
Additional Housing Grant (AHG): $15,000
CPF in Ordinary Account after working for 6 months: $5,560
Total CPF Available: $20,560
Part 2: Mortgage Payment
As for the “less than $50 mortgage payment per month” part, the flat needs to cost below $273,000 for this to be true. ($50 refers to cash top up, not total mortgage payment.)
So is this true?
Well, in the April 2011 BTO just launched, the Hougang four-room flats range from $248,000-$324,000. The Sembawang four-room flats cost $255,000-$310,000.
Therefore, again, yes it is possible for the couple to pay only $50 a month for their mortgage payment, for a new four-room flat.
If I made any error above, please do correct me in the comments below and I will amend accordingly. :)
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