Today is 26th May 2021, It's a Singapore public holiday, Vesak Day (Buddha Day)
More than a year since the Circuit breakers take place in Singapore due to COVID-19, everything look good till recently there is a second outbreak of the virus around the world.
Singapore is now going into decon Orange (Back to stage 2 of the circuit breaker) from 16th May 2021.
Sadly, COVID-19 has taken many lives globally, and many people's livelihood is affected.
Nobody knows how long will this last, hopes that everyone is safe and healthy and the storm will finally end.
Recently, most of the media is reporting and updating news all over the world related to COVID-19.
The disputes between countries, and political issues within the nations, all are taken back.
The world now is united into one to beat the pandemic.
All operation ceases except those on essential services.
All schools close and students have to stay home for online lessons.
Strictly regulations have been imposed over the days from the start of the CB.
This, directly and indirectly, affected a lot of people's normal activities, cause jobs losses in many sectors and also had a huge impact on the livelihoods of our community.
Through this article, I would like to share some possible methods for house owners that will be helpful for you to cope with the storm ahead.
I will touch on the various tips below:
1. Equity loan
2. Refinancing and/or stretching your loan tenure
3. Mortgage deferment schemes
4. TDSR wavier for properties with <50% loans
5. Sell and downgrade
6. Rent temporary
Please read on for me to explain and elaborate on each possible solution.
6 Tips for property owners to tide through the crisis
First Tip : Using Equity Loan to gather cash for your emergency need.
This method is nothing new to some investors in properties.
Nevertheless, is one of the tips that can assist you to tie through this difficult period.
Unfortunately for HDB owners, this method is not applicable to you due to HDB regulations.
For privates and commercial property owners, if you need immediate cash flow to sort out your need, you can take up an equity loan. As long as you have an income or can use your assets to pledge.
The equity loan is especially suitable for business owners who need immediate cash, like those in retail or F&B business, those who need to standby funds for their operation needs.
What is Equity loan?
An equity loan is a type of consumer debt. It allows homeowners to borrow against the equity in their residence. The loan amount is based on the difference between the home's current market value and the homeowner's mortgage balance due.
Will you be paying interest rates higher than the normal mortgages loan?
No worries, at the point of writing this article,
The Equity loan interest rate range from 1.3% to 1.7%, which is as low as a mortgage loan.
As mentioned, the equity loan amount is based on the difference between the home's current market value and the homeowner's mortgage balance due.
Hence this will increase your outstanding loan, and directly will also increase your monthly instalment, but the cash lump sum you cash out can solve many of your pressures instantly.
You can use it to pay off loans with higher interest rates to save money.
I will higher recommend you to do so if you have not already done so.
One important point to add, you are not allowed to use CPF funds to pay for your equity loan. Only cash is allowed.
During the past crisis, historical records show that there is a margin call on properties ( during the Asia Financial Crisis in 1997), this is unlikely to happen now, as our government have put in place a good TDSR system in which if property prices depreciate, the probability of property fall below the loan amount is likely to happen.