14 August 2010

The first property - housing loan, parents and CPF

[Continuation of Misadventures of a 27 year old ...]

And that, was how I ended up with my first piece of property.  But being a 27 year old with barely 3 years on the job, it was a difficult challenge.  We found a 5-room HDB on the resale market going for $230,000 at Yishun.  While an 80% loan could be taken, the fact was, we still needed the 20% down-payment.  We didn't have enough in our CPF-OA accounts to fully fund it and had to top up with substantive cash to make up the shortfall.  That decision had to be backed by a further loan of $30,000 from my parents. 

The monthly installment payment for the 80% part of the loan from HDB was manageable.  We could foot that, deducting from our combined CPF-OA account.  Our combined salaries then were in the region of ~$4,000. 

But the loan from the parents was a long journey to pay off.  My parents only expected me to repay without interest.  At $500 a month, it took me 5 years to do so.  This was on top of a monthly allowance which I had pegged to 10% of my take-home pay.

Actually, it took longer!  If you recall, buying the house was an excuse for getting married?  We were of course dead broke after buying the house, let alone doing the renovation, equipping the house to a livable condition, holding a wedding, and funding a honeymoon (no delayed gratification here!).  That involved a further loan from my wonderful parents, on top of the $30,000 that I had already borrowed.

Eventually, I took almost 8 years to fully pay back my parents.  But it was such a joy when I eventually did.  Finally, debt free.  Almost.

My Retirement Planning Project - My Retirement Home [LadyYouCanBeFree]

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