Case Study #1 (Negative Sale of $71,000)
I had a client by the name of Mr and Mrs Ho, who had purchased an Executive Maisonette around 11 years ago, both were 45 years old at that time.
They had brought an Executive Maisonette for $650k, sized at 147sqm in Serangoon North to have a larger space to accommodate their growing family.
They had used up all of their available CPF funds for the purchase of the Executive Maisonette (Total amounting to $300k) along with their initial deposit to reduce their loan.
They had also taken a HDB Loan of $350k for 20 years with the monthly instalment at $1850/month.
Today (at 55 years old) when they want to sell their property at $780k to cash-out and downgrade to a smaller house for their retirement, they realised they couldn't get back any cash for their retirement even though they had purchased it at $650k previously.
Why?
Because:
Their outstanding loan is $210,000.
The CPF Principle they had used was $522.000.
And the interest payable to CPF was $119.152.
In order for them to breakeven they would need to sell at $851,152, even whey they sell at higher price in today's market value of $780,000.
They still fall into a negative sale of $71,000.