Asset Progression Roadmap

What is asset progression? This is popular among many HDB BTO owners especially in their early thirties to late forties who desire to upgrade their lifestyle or even become owners of multiple properties. 

When BTOs reach their 5-year MOP, it is usually the same period when they achieve the optimum price as the flats are in good condition and there is still a good 95 years lease remaining. Such flats appeal to young couples who have not accumulated sufficient cash ($30,000 to $60,000) for renovations. At this point, these BTO owners who have started their families would have 1 to 2 children and they want to unlock the paper profits to upgrade to a condominium. This way, their children can get to enjoy the full facilities such as a gated compound with 24/7 security, swimming pool, function rooms and sports facilities. 

Savings and Growth

First Phase: When we graduate from school, we tend to save up for bigger purchases such as a car, a house and for rainy days. 

Second Phase: After those big ticket purchases, we find ourselves with some debt and after paying the monthly instalments, travel, and kids’ education, there is little left to set aside for savings. This is when most of us think of having side incomes, passive incomes and other ways to generate more money while holding on to our jobs. Not many of us will look close enough at the biggest asset we have – our property. Will there be new and exciting developments coming up in the vicinity for the price to appreciate and if so, over what timeframe, or has the price stagnated or even entered into a decline? How can we optimise our funds and allocate it to properties with better capital appreciation potential?

Third Phase: Is this when we should look into restructuring our property portfolio for perhaps, the final time? Should we right-size to a smaller apartment in order to unlock funds for our golden years? Should we sell off our investment properties and free ourselves from the hassles of tenancy related issues

can your HDB help you in your retirement?

CPF Usage limit For Properties with less than 60 years lease remaining

For HDB flats/ private properties with leases of less than 60 years, the following rules apply:

(1) No CPF can be used if the remaining lease of a property is less than 30 years.

(2) A property owner is eligible to use his CPF for the property if his age plus the remaining lease of the property is at least 80 years.

(3) The maximum amount of CPF that can be used is capped at a percentage of the lower of the purchase price and the value of the property at the time of purchase.

The percentage is computed based on the remaining lease of the property when the youngest eligible member using CPF reaches age 55, as shown below: 

Is your CPF hindering your retirement plans?

If you used $250K of your CPF for your home, after 25 years you would need to refund a total of $463,486 including accrued interest to your Ordinary Account.

How many times can you restructure your portfolio?

The benefits of starting early are the ability to secure a longer loan tenure in order to lower the minimum income criteria and lower the monthly instalments. Can your income increase by $12,000 per annum to meet the higher minimum income requirement in 5 years?

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