Think Twice About Taking on a Bigger Property Loan — My Personal Experience

My wife and I married in year 2000, and since then, we have been living in a 5-room HDB flat in Sembawang.

We bought our flat directly from HDB, and I recall that on the HDB prospectus. the value of our flat was listed as $265,000 (before interest).

We signed up for a 3o-year HDB (government) loan, which was to be paid by monthly withdrawals from our CPF accounts.

I guess with our combined incomes, we could afford buying a condominium, but I guess my wife and I are simple people, and it never crossed our minds to buy a condominium, even though both our parents live in a landed property.

In year 2007, I got retrenched. I had been working in an MNC for about 6 years, and the operations in Singapore was like a regional headquarters, until the big bosses decided to shift this regional headquarter to Beijing.

I (as well as my other colleagues) was offered a similar position in China, but decided not to make the move, because I valued my daughter being able to study in Singapore more.

My company was doing very well, and because our local HR director fought very hard for us, those of us who decided not to move to China, received a very generous severance package.

I decided to use part of my severance package to pay off part of my housing loan. My wife, also decided to do her part, by using money she had saved up in her bank account.

In total, the amount of money we decided to set aside to offset our HDB loan was about $50,000.

So, one Saturday, we visited our HDB branch office, and when it came to our turn to sit down with the HDB officer, we told her our intentions.

I remember both of us writing our cheques, as the HDB officer re-calculated our loan balance and printed it out.

I recall vividly how my eyes widened on seeing how much interest payments we had saved by paying forward our loan, and the substantial shortening of time to pay off our entire loan.

Within a year or so later, we received a letter from HDB to inform us that we have completed the payment of our entire HDB loan. Since then, we have been debt free! (I do not own a car, and I did not have any university tuition debt to pay off, as my Dad paid all my heavily government-subsidised university education.)

I don’t think a lot of young Singapore couples realise how much interest they pay on their property loan.

Because of my personal experience, a few years ago, I tried to talk out a young Christian couple, who were getting married, from buying a million dollar condominium. I was not successful. The brother, who was working in the bank, felt that he could afford it, and I guess being a banker, there was a certain image he had to maintain.

I value being debt-free, and as I mention above, it was a great shock to me as to how much interest I was paying (and to the government, mind you; if we had taken a bank loan, we would have ended up paying a whole lot more interest).

The bible says that “the rich rule over the poor, and the borrower is slave to the lender” (Proverbs 22:7, NIV).

The world’s system is designed to enslave people through debt. Interest rates have been at its lowest for years, but are slowly creeping up, causing debtors to have any even higher debt to pay. Indeed, debtors can do absolutely nothing but to cough off the money, which reflects their total slavitude to the system.

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