#6: Advice for Loans, Credit Scoring, Property Purchasing and more! | ft. Jo’An & Clive | SFSG S2 E6

1 (Jo’An)
00:00:00,000 –> 00:00:02,759
Okay, I’m not very old.

2 ( Melvin Lim )
00:00:02,759 –> 00:00:04,299
– We can tell our audience how old you are.

3 ( Melvin Lim )
00:00:12,880 –> 00:00:16,039
– All right, so welcome back to our Sofa So Good.

4 ( Melvin Lim )
00:00:16,039 –> 00:00:16,879
In this episode,

5 ( Melvin Lim )
00:00:16,879 –> 00:00:19,679
we’ll be talking everything about mortgage loans,

6 ( Melvin Lim )
00:00:19,679 –> 00:00:21,699
as well as some of the latest cooling measures

7 ( Melvin Lim )
00:00:21,699 –> 00:00:23,500
that just popped up last week

8 ( Melvin Lim )
00:00:23,500 –> 00:00:25,600
and we’re also gonna chat with Redbrick

9 ( Melvin Lim )
00:00:25,600 –> 00:00:29,640
on the interest rates forecast for the year 2022 onwards.

10 ( Melvin Lim )
00:00:29,640 –> 00:00:31,879
So thank you, Jo’An as well as Clive

11 ( Melvin Lim )
00:00:31,879 –> 00:00:33,299
for coming onto Sofa So Good,

12 ( Melvin Lim )
00:00:33,299 –> 00:00:34,899
we’re very happy to have Redbrick with us.

13 ( Melvin Lim )
00:00:34,899 –> 00:00:36,060
For the context of our audience,

14 ( Melvin Lim )
00:00:36,060 –> 00:00:37,700
maybe just give us a little bit of introduction

15 ( Melvin Lim )
00:00:37,700 –> 00:00:40,200
about yourself, maybe we start with Jo’An first.

16 ( Jo’An )
00:00:40,200 –> 00:00:43,140
– Sure, okay, prior to joining Redbrick

17 ( Jo’An )
00:00:43,140 –> 00:00:45,759
I was (working) in a bank, a local bank,

18 ( Jo’An )
00:00:45,759 –> 00:00:50,460
so I was handling more SME clients, SME towkays,

19 ( Jo’An )
00:00:50,460 –> 00:00:52,579
assisting them to grow their businesses

20 ( Jo’An )
00:00:52,579 –> 00:00:54,719
and expand their businesses through banks financing.

21 ( Melvin Lim )
00:00:54,719 –> 00:00:55,560
– Right.

22 ( Jo’An )
00:00:55,560 –> 00:00:58,280
– So that was me prior to joining Redbrick.

23 ( Melvin Lim )
00:00:58,280 –> 00:00:59,219
– Right, great.

24 ( Melvin Lim )
00:00:59,219 –> 00:01:01,100
And I heard from Clive

25 ( Melvin Lim )
00:01:01,100 –> 00:01:04,420
that you are (one of the) old birds in Redbrick.

26 ( Melvin Lim )
00:01:04,420 –> 00:01:06,640
How many years have you been in Redbrick?

27 (Jo’An )
00:01:06,640 –> 00:01:07,680
– Six years.

28 ( Melvin Lim )
00:01:07,680 –> 00:01:08,920
– Six years yes. – Six years okay.

29 ( Melvin Lim )
00:01:08,920 –> 00:01:10,680
– Okay, okay, great and how about Clive?

30 ( Clive )
00:01:10,680 –> 00:01:13,000
– So yeah, I’ve been with Redbrick for four years already,

31 ( Clive )
00:01:13,000 –> 00:01:14,900
previously, I was actually a project manager

32 ( Clive )
00:01:14,900 –> 00:01:16,239
in an oil and gas firm,

33 ( Clive )
00:01:16,239 –> 00:01:18,500
I was there for about seven years

34 ( Clive )
00:01:18,500 –> 00:01:22,140
and then I think what motivated me to come out

35 ( Clive )
00:01:22,140 –> 00:01:24,299
and look into property investments

36 ( Clive )
00:01:24,299 –> 00:01:25,819
is (because) I wanted to be a property investor too.

37 ( Melvin Lim )
00:01:25,819 –> 00:01:26,659
– Right.

38 ( Clive )
00:01:26,659 –> 00:01:28,939
– Because we all wanted to learn how to grow our money

39 ( Clive )
00:01:28,939 –> 00:01:31,120
so that motivated me to come out

40 ( Clive )
00:01:31,120 –> 00:01:33,680
and yeah in a blink of an eye it’s been four years.

41 ( Melvin Lim / Clive )
00:01:33,680 –> 00:01:35,519
– Right. – Very exciting,

42 ( Clive )
00:01:35,519 –> 00:01:36,739
very exciting.

43 ( Melvin Lim )
00:01:36,739 –> 00:01:37,579
– Great.

44 ( Melvin Lim )
00:01:37,579 –> 00:01:40,239
Later, we’ll be asking you a lot more about

45 ( Melvin Lim )
00:01:40,239 –> 00:01:41,500
what Redbrick does-

46 ( Clive / Melvin Lim )
00:01:41,500 –> 00:01:43,120
– Sure. – And I believe that Redbrick

47 ( Melvin Lim )
00:01:43,120 –> 00:01:47,359
has been one of the key players in Singapore

48 ( Melvin Lim )
00:01:47,359 –> 00:01:51,379
in terms of supporting clients for mortgage loan needs,

49 ( Melvin Lim )
00:01:51,379 –> 00:01:52,599
as well as advisory.

50 ( Melvin Lim )
00:01:52,599 –> 00:01:54,280
What do you think of the latest cooling measure

51 ( Melvin Lim )
00:01:54,280 –> 00:01:57,879
in terms of the drop in 5% of TDSR from 60% to 55%,

52 ( Melvin Lim )
00:01:57,879 –> 00:02:00,000
what do you think will be the impact in the next few months?

53 ( Clive )
00:02:00,000 –> 00:02:02,019
– I feel in my own personal opinion,

54 ( Clive )
00:02:02,019 –> 00:02:06,159
it wouldn’t be a very significant impact,

55 ( Clive )
00:02:06,159 –> 00:02:08,300
it will impact, in my opinion,

56 ( Clive )
00:02:08,300 –> 00:02:10,479
the people who are really looking to…

57 ( Clive )
00:02:10,479 –> 00:02:12,439
For example, if you are talking about HDB-goers,

58 ( Clive )
00:02:12,439 –> 00:02:14,199
maybe the people who are buying $1 mil

59 ( Clive )
00:02:14,199 –> 00:02:16,800
and above HDB, where they really want to stretch

60 ( Clive )
00:02:16,800 –> 00:02:18,080
their loan eligibility.

61 ( Clive )
00:02:18,080 –> 00:02:20,639
But otherwise, traditionally when we look at clients

62 ( Clive )
00:02:20,639 –> 00:02:22,199
and they take up a mortgage loan,

63 ( Clive )
00:02:22,199 –> 00:02:24,539
they wouldn’t stretch their eligibility

64 ( Clive )
00:02:24,539 –> 00:02:26,680
all the way to 60% limit.

65 ( Clive )
00:02:26,680 –> 00:02:30,020
Generally what we see is like the 40%, maybe 50%,

66 ( Clive )
00:02:30,020 –> 00:02:33,259
so even if it comes down to 55%, to them it’s still…

67 ( Clive )
00:02:33,259 –> 00:02:37,400
Actually there’s no requirement for me to leverage so much.

68 ( Clive )
00:02:37,400 –> 00:02:42,240
So in that sense, yes, it will hit a fair bit of people,

69 ( Clive )
00:02:42,240 –> 00:02:44,419
a handful of people who are looking to really stretch

70 ( Clive )
00:02:44,419 –> 00:02:44,919
and leverage-

71 ( Melvin Lim / Clive )
00:02:44,919 –> 00:02:48,620
-Right – But generally I think it’s still okay for most people.

72 ( Melvin Lim )
00:02:48,620 –> 00:02:50,860
– How about Joanne, what did the TDSR impact?

73 ( Jo’An )
00:02:50,860 –> 00:02:54,979
– I don’t think it will slow the market down, in my opinion,

74 ( Jo’An )
00:02:54,979 –> 00:02:56,159
echoing what Clive said,

75 ( Jo’An )
00:02:56,159 –> 00:03:00,060
probably what will impact is the borrowing ability,

76 ( Jo’An )
00:03:00,060 –> 00:03:02,479
so instead of maybe looking at a $1 mil property

77 ( Jo’An )
00:03:02,479 –> 00:03:07,479
maybe they will just look at a $900K worth kind of property.

78 ( Jo’An )
00:03:07,479 –> 00:03:09,860
So I believe that there still be activity in the market,

79 ( Jo’An )
00:03:09,860 –> 00:03:11,740
people are still looking to buy,

80 ( Jo’An )
00:03:11,740 –> 00:03:13,259
just in terms of purchasing power

81 ( Jo’An )
00:03:13,259 –> 00:03:15,460
it might be a little bit, I don’t know, lower?

82 ( Melvin Lim )
00:03:15,460 –> 00:03:16,639
– Right, right.

83 ( Melvin Lim )
00:03:16,639 –> 00:03:22,139
And on average, how many loans does Redbrick process a month

84 ( Melvin Lim )
00:03:22,139 –> 00:03:23,939
just to have a gauge like in terms

85 ( Melvin Lim )
00:03:23,939 –> 00:03:25,259
of the amount of demand-

86 ( Clive / Melvin Lim )
00:03:25,259 –> 00:03:26,560
– Yeah – For mortgage loans.

87 ( Clive )
00:03:26,560 –> 00:03:30,699
– Probably when you combine like refinancing

88 ( Clive )
00:03:30,699 –> 00:03:32,159
and new purchases,

89 ( Clive )
00:03:32,159 –> 00:03:34,620
probably be 400 or 500 cases in a month.

90 ( Melvin Lim / Clive )
00:03:34,620 –> 00:03:35,659
– Right. – Yeah.

91 ( Melvin Lim )
00:03:35,659 –> 00:03:36,960
– For application of-

92 ( Clive )
00:03:36,960 –> 00:03:38,319
– For actual cases-

93 ( Melvin Lim )
00:03:38,319 –> 00:03:39,639
– Actual successful? – Done deals.

94 ( Melvin Lim / Clive )
00:03:39,639 –> 00:03:40,479
– Right, wow! – Yeah.

95 ( Melvin Lim )
00:03:40,479 –> 00:03:41,300
– Okay.

96 ( Clive )
00:03:41,300 –> 00:03:45,819
– So then we’re probably looking at a range of $500 mil

97 ( Clive )
00:03:45,819 –> 00:03:47,180
about there per month-

98 ( Melvin Lim )
00:03:47,180 –> 00:03:48,080
– The volume, yeah.

99 ( Melvin Lim )
00:03:48,080 –> 00:03:49,199
– This is the volume of loans-

100 ( Clive )
00:03:49,199 –> 00:03:50,039
– Yeah.

101 ( Melvin Lim )
00:03:50,039 –> 00:03:51,039
– That’s being dished out?

102 ( Clive / Melvin Lim )
00:03:51,039 –> 00:03:52,060
– Yeah. – Okay.

103 ( Melvin Lim )
00:03:52,060 –> 00:03:55,879
– Okay and we were trying to tabulate,

104 ( Melvin Lim )
00:03:55,879 –> 00:04:00,419
what will be the key impact in terms of before,

105 ( Melvin Lim )
00:04:00,419 –> 00:04:01,819
and after this route of TDSR.

106 ( Clive )
00:04:01,819 –> 00:04:03,020
– Yeah.

107 ( Melvin Lim )
00:04:03,020 –> 00:04:06,060
– And then we were looking at the amount of eligibility

108 ( Melvin Lim )
00:04:06,060 –> 00:04:09,259
in terms of loan that might be affected.

109 ( Melvin Lim )
00:04:09,259 –> 00:04:12,520
So before 16 December 2021

110 ( Melvin Lim )
00:04:12,520 –> 00:04:15,800
and then after 16 December, 2021

111 ( Melvin Lim )
00:04:15,800 –> 00:04:20,920
basically for somebody that is about 40 years old

112 ( Melvin Lim )
00:04:20,920 –> 00:04:25,759
loaning 75% from the bank, we see this slight drop,

113 ( Melvin Lim )
00:04:25,759 –> 00:04:27,660
so basically somebody that was earning $10K,

114 ( Melvin Lim )
00:04:27,660 –> 00:04:30,040
they can loan about $1,198 mil-

115 ( Clive )
00:04:30,040 –> 00:04:30,620
– Yeah.

116 ( Melvin Lim )
00:04:30,620 –> 00:04:33,759
– Now it will become $1.098 mil-

117 ( Clive )
00:04:33,759 –> 00:04:34,199
– Yeah.

118 ( Melvin Lim )
00:04:34,199 –> 00:04:36,680
– Which resonates with what Jo’An just mentioned,

119 ( Melvin Lim )
00:04:36,680 –> 00:04:39,860
meaning that people might start to look at a tier

120 ( Melvin Lim )
00:04:39,860 –> 00:04:43,279
in terms of the overall quantum, slightly lower tier.

121 ( Melvin Lim )
00:04:43,279 –> 00:04:45,899
But the next question is that,

122 ( Melvin Lim )
00:04:45,899 –> 00:04:48,620
usually when we see such trends

123 ( Melvin Lim )
00:04:48,620 –> 00:04:52,959
back in the days like 2011, 2012, 2013,

124 ( Melvin Lim )
00:04:52,959 –> 00:04:57,800
do you think that this is like a prelude or a hint

125 ( Melvin Lim )
00:04:57,800 –> 00:05:00,319
that there might be more cooling measures coming soon?

126 ( Melvin Lim )
00:05:00,319 –> 00:05:02,759
Like what do you think is the ground view?

127 ( Clive )
00:05:02,759 –> 00:05:05,139
– I personally feel that the government,

128 ( Clive )
00:05:05,139 –> 00:05:08,079
after the few lessons in the last few rounds

129 ( Clive )
00:05:08,079 –> 00:05:10,720
have taken a more preemptive kind of approach

130 ( Clive )
00:05:10,720 –> 00:05:13,180
in controlling prices in the market.

131 ( Clive )
00:05:13,180 –> 00:05:15,819
I think these cooling measures were sort of expected

132 ( Clive )
00:05:15,819 –> 00:05:17,879
and then it finally came out at the end of the year,

133 ( Clive )
00:05:17,879 –> 00:05:19,939
I think many people were expecting it to come earlier,

134 ( Clive )
00:05:19,939 –> 00:05:21,699
we were also pleasantly surprised that,

135 ( Clive )
00:05:21,699 –> 00:05:24,019
oh, okay, it finally came out.

136 ( Clive )
00:05:24,019 –> 00:05:27,040
But I think it’s a very preemptive approach, right?

137 ( Clive )
00:05:27,040 –> 00:05:29,879
I believe the government has already given some leeway-

138 ( Melvin Lim )
00:05:29,879 –> 00:05:30,720
– Yeah.

139 ( Clive )
00:05:30,720 –> 00:05:32,740
– In terms of letting the property prices climb,

140 ( Clive )
00:05:32,740 –> 00:05:36,360
because we also know in terms of supply chain disruptions

141 ( Clive )
00:05:36,360 –> 00:05:38,819
has slowed down the construction industry.

142 ( Clive )
00:05:38,819 –> 00:05:40,959
And that’s why we also see some people moving

143 ( Clive )
00:05:40,959 –> 00:05:41,980
to the resale market

144 ( Clive )
00:05:41,980 –> 00:05:44,519
because you don’t have to wait for six, seven years

145 ( Clive )
00:05:44,519 –> 00:05:47,519
for your BTO to complete for example.

146 ( Clive )
00:05:47,519 –> 00:05:50,420
So yeah, I think they take a very preemptive approach,

147 ( Clive )
00:05:50,420 –> 00:05:53,459
I don’t think they would…

148 ( Clive )
00:05:53,459 –> 00:05:54,819
I would not like to assume

149 ( Clive )
00:05:54,819 –> 00:05:57,480
that this is a prelude to something bigger-

150 ( Clive )
00:05:57,480 –> 00:05:59,220
Right, I always like to treat it like,

151 ( Clive )
00:05:59,220 –> 00:06:00,980
okay, they have these measures here

152 ( Clive )
00:06:00,980 –> 00:06:03,000
then they will stabilise the market

153 ( Clive )
00:06:03,000 –> 00:06:05,199
and then we will see in future what happens

154 ( Clive )
00:06:05,199 –> 00:06:07,319
and they’ll probably react to that again, yeah.

155 ( Clive )
00:06:07,319 –> 00:06:08,459
– Yeah.

156 ( Melvin Lim )
00:06:08,459 –> 00:06:11,300
– And I think that they sort of like warned

157 ( Melvin Lim )
00:06:11,300 –> 00:06:12,819
about two weeks back when they released an article

158 ( Melvin Lim )
00:06:12,819 –> 00:06:14,660
about MAS being worried about household debt.

159 ( Clive / Melvin Lim )
00:06:14,660 –> 00:06:15,480
– Yes. – Yeah.

160 ( Melvin Lim )
00:06:15,480 –> 00:06:17,160
– What is your personal view Jo’An,

161 ( Melvin Lim )
00:06:17,160 –> 00:06:19,720
about the household debt level in Singapore

162 ( Melvin Lim )
00:06:19,720 –> 00:06:21,879
like based on the loans that you process

163 ( Melvin Lim )
00:06:21,879 –> 00:06:24,980
on a daily basis with your team?

164 ( Melvin Lim )
00:06:24,980 –> 00:06:29,199
Are most people going for the full 75% loan, full leverage?

165 ( Melvin Lim )
00:06:29,199 –> 00:06:31,779
Although our leveraging is already quite low

166 ( Melvin Lim )
00:06:31,779 –> 00:06:35,319
because we have to come up with 25% plus stamp duty and stuff

167 ( Melvin Lim )
00:06:35,319 –> 00:06:36,220
it’s already very protected, right?

168 ( Clive )
00:06:36,220 –> 00:06:37,259
– Yeah.

169 ( Melvin Lim )
00:06:37,259 –> 00:06:39,699
– So, but are there a lot of buyers

170 ( Melvin Lim )
00:06:39,699 –> 00:06:42,420
actually going for lesser amount of percentages,

171 ( Melvin Lim )
00:06:42,420 –> 00:06:45,439
what do you think or what have you seen?

172 ( Jo’An )
00:06:45,439 –> 00:06:47,259
– I think for the last three to four months,

173 ( Jo’An )
00:06:47,259 –> 00:06:49,579
we do see buyers buying

174 ( Jo’An )
00:06:49,579 –> 00:06:52,839
and then they are taking a full leverage.

175 ( Jo’An )
00:06:52,839 –> 00:06:53,899
So going for-

176 ( Melvin Lim )
00:06:53,899 –> 00:06:54,680
– Which is quite the norm.

177 ( Jo’An )
00:06:54,680 –> 00:06:57,759
– Yeah, going for the maximum of 75% whenever they purchase.

178 ( Melvin Lim )
00:06:57,759 –> 00:06:58,899
– Right because interest rates are-

179 ( Clive )
00:06:58,899 –> 00:06:59,740
– Low.

180 ( Melvin Lim / Jo’An )
00:06:59,740 –> 00:07:01,959
– Fantastically attractive. – Correct.

181 ( Melvin Lim )
00:07:01,959 –> 00:07:04,980
– What is the lowest interest rate right now

182 ( Melvin Lim )
00:07:04,980 –> 00:07:06,720
in the month of December 2021

183 ( Melvin Lim )
00:07:06,720 –> 00:07:10,100
from various different banks based on what you’ve seen?

184 ( Jo’An )
00:07:10,100 –> 00:07:13,839
– Generally, the lowest is about 0.86%-

185 ( Jo’An )
00:07:13,839 –> 00:07:15,160
– Thereabout.

186 ( Melvin Lim / Jo’An )
00:07:15,160 –> 00:07:16,100
– Okay. – For floating rate.

187 ( Melvin Lim )
00:07:16,100 –> 00:07:17,879
– Floating rate, okay. – Yeah, variable.

188 ( Melvin Lim )
00:07:17,879 –> 00:07:21,180
– And coming to variable and fixed rate,

189 ( Melvin Lim )
00:07:21,180 –> 00:07:24,519
what is your usual advice to customers right now?

190 ( Melvin Lim )
00:07:24,519 –> 00:07:27,860
Would you advise them to go for fixed or variable?

191 ( Jo’An )
00:07:27,860 –> 00:07:31,899
– I think right now given the market conditions, right?

192 ( Jo’An )
00:07:31,899 –> 00:07:34,459
Given the latest US Fed meeting, right?

193 ( Jo’An )
00:07:34,459 –> 00:07:36,540
They said they’re gonna have two hikes next year

194 ( Jo’An )
00:07:36,540 –> 00:07:39,100
and three more hikes right, for the year,

195 ( Jo’An )
00:07:39,100 –> 00:07:40,279
the next year-

196 ( Jo’An )
00:07:40,279 –> 00:07:41,160
The following year.

197 ( Jo’An )
00:07:41,160 –> 00:07:43,899
So very likely for me, I’ll be advising my clients

198 ( Jo’An )
00:07:43,899 –> 00:07:45,199
to take on a fixed rate.

199 ( Melvin Lim )
00:07:45,199 –> 00:07:46,040
– Okay. – Yeah.

200 ( Melvin Lim )
00:07:46,040 –> 00:07:47,699
– What is the fixed rate right now?

201 ( Jo’ An )
00:07:47,699 –> 00:07:49,660
– Generally we’re looking at about…

202 ( Jo’An )
00:07:49,660 –> 00:07:51,220
The rates have gone up quite a bit-

203 ( Melvin Lim )
00:07:51,220 –> 00:07:51,740
– Okay.

204 ( Jo’An )
00:07:51,740 –> 00:07:54,500
– So right now at this moment, it’s about 1.3%.

205 ( Melvin Lim )
00:07:54,500 –> 00:07:55,800
– Okay.

206 ( Melvin Lim )
00:07:55,800 –> 00:07:57,779
And maximum for some of the banks,

207 ( Melvin Lim )
00:07:57,779 –> 00:08:01,699
what is the maximum period to lock in a fixed rate?

208 ( Jo’An )
00:08:01,699 –> 00:08:04,379
– There is fixed rates from minimum of two years,

209 ( Jo’An )
00:08:04,379 –> 00:08:05,500
all the way up to five years,

210 ( Jo’An )
00:08:05,500 –> 00:08:07,000
those are the common ones.

211 ( Jo’An )
00:08:07,000 –> 00:08:10,500
So I think for two years, somewhere around 1.3%,

212 ( Jo’An )
00:08:10,500 –> 00:08:15,459
five years right now, about 1.95% thereabout.

213 ( Melvin Lim )
00:08:15,459 –> 00:08:16,339
– Okay.

214 ( Melvin Lim )
00:08:16,339 –> 00:08:17,319
– So your personal opinion

215 ( Melvin Lim )
00:08:17,319 –> 00:08:19,379
is that you’ll usually advise to lock in right now

216 ( Melvin Lim )
00:08:19,379 –> 00:08:23,180
because of the latest meeting, just a couple of days back.

217 ( Jo’An )
00:08:23,180 –> 00:08:24,339
– Two days back, yeah.

218 ( Melvin Lim )
00:08:24,339 –> 00:08:25,180
– Okay. – Correct.

219 ( Melvin Lim / Jo’An )
00:08:25,180 –> 00:08:26,879
– Right. – I think right now for me,

220 ( Jo’An )
00:08:26,879 –> 00:08:28,379
if I’m the one taking the housing loan,

221 ( Jo’An )
00:08:28,379 –> 00:08:31,019
I also want to hedge for the future in case-

222 ( Jo’An )
00:08:31,019 –> 00:08:34,779
Because I’ve seen how the interest rate has increased,

223 ( Jo’An )
00:08:34,779 –> 00:08:36,720
I think about two years ago,

224 ( Jo’An )
00:08:36,720 –> 00:08:39,220
so I would want to protect myself

225 ( Jo’An )
00:08:39,220 –> 00:08:40,720
and I would share the same to my clients.

226 ( Melvin Lim / Clive )
00:08:40,720 –> 00:08:41,559
– Right. – Yeah.

227 ( Melvin Lim )
00:08:41,559 –> 00:08:42,379
– So two years back,

228 ( Melvin Lim )
00:08:42,379 –> 00:08:43,840
what was the highest you have seen?

229 ( Clive )
00:08:43,840 –> 00:08:44,799
– Wow!

230 ( Jo’An )
00:08:44,799 –> 00:08:45,940
– Two years back, yeah, wow!

231 ( Clive )
00:08:45,940 –> 00:08:47,720
– Well, for a very short period of time

232 ( Clive )
00:08:47,720 –> 00:08:50,360
it was at 2.88% fixed rate

233 ( Clive )
00:08:50,360 –> 00:08:52,620
it hit and came down.

234 ( Clive )
00:08:52,620 –> 00:08:54,860
But generally within that period of time,

235 ( Clive )
00:08:54,860 –> 00:08:58,139
a month or two we were seeing a 2.48%, 2.68%-

236 ( Clive )
00:08:58,139 –> 00:08:59,159
– About there. – Yeah.

237 ( Melvin )
00:08:59,159 –> 00:09:00,200
– Okay.

238 ( Melvin Lim )
00:09:00,200 –> 00:09:03,879
So, Jo’An was from the bank before, right?

239 ( Melvin Lim )
00:09:03,879 –> 00:09:05,679
In your career history,

240 ( Melvin Lim )
00:09:05,679 –> 00:09:08,620
what was the highest you have ever seen?

241 ( Jo’An )
00:09:08,620 –> 00:09:11,240
– Career history, okay.

242 ( Jo’An )
00:09:11,240 –> 00:09:12,500
I have ever seen…

243 ( Jo’An )
00:09:12,500 –> 00:09:14,759
Because I was dealing more commercial properties,

244 ( Jo’An )
00:09:14,759 –> 00:09:18,220
I think the highest I’ve seen was…

245 ( Jo’An )
00:09:18,220 –> 00:09:20,179
I think…

246 ( Jo’An )
00:09:20,179 –> 00:09:23,840
Okay, I’m not very old.

247 ( Melvin Lim )
00:09:23,840 –> 00:09:25,460
– We can tell our audience how old you are.

248 ( Jo’An )
00:09:25,460 –> 00:09:28,500
– Based on my short stint in the bank for about

249 ( Jo’An )
00:09:28,500 –> 00:09:30,440
a good four years thereabout.

250 ( Jo’An )
00:09:30,440 –> 00:09:32,539
I think the interest rate I ever seen highest

251 ( Jo’An )
00:09:32,539 –> 00:09:34,100
was close to 3%

252 ( Melvin Lim / Jo’An )
00:09:34,100 –> 00:09:35,600
– 3%, okay. – Close to 3%.

253 ( Melvin Lim / Jo’An )
00:09:35,600 –> 00:09:36,559
– Okay. – Yeah.

254 ( Melvin Lim )
00:09:36,559 –> 00:09:40,759
– Okay, in fact, during our internal meetings,

255 ( Melvin Lim )
00:09:40,759 –> 00:09:43,679
we always like to refer back to this Morgan Stanley report

256 ( Melvin Lim )
00:09:43,679 –> 00:09:47,259
because a lot of our clients will ask like,

257 ( Melvin Lim )
00:09:47,259 –> 00:09:49,139
what happens when interest rates increase?

258 ( Clive )
00:09:49,139 –> 00:09:49,980
– Yeah.

259 ( Melvin Lim )
00:09:49,980 –> 00:09:51,799
– I mean, globally, the phenomenon is that,

260 ( Melvin Lim )
00:09:51,799 –> 00:09:52,919
when interest rate increase,

261 ( Melvin Lim )
00:09:52,919 –> 00:09:54,799
the usual behaviour is that price will be affected.

262 ( Clive )
00:09:54,799 –> 00:09:55,639
– Yeah. – Correct.

263 ( Melvin Lim )
00:09:55,639 –> 00:09:57,720
– So interest rates increase,

264 ( Melvin Lim )
00:09:57,720 –> 00:10:00,120
would then relate to a lower purchasing power

265 ( Melvin Lim )
00:10:00,120 –> 00:10:03,279
from consumers, it has effects (on the) demand

266( Melvin Lim )
00:10:03,279 –> 00:10:08,200
and it might cause a drop in terms of property prices.

267 ( Melvin Lim )
00:10:08,200 –> 00:10:10,960
But strangely in Singapore, it sounds a little bit different

268 ( Melvin Lim )
00:10:10,960 –> 00:10:13,299
because out of like the five rounds

269 ( Melvin Lim )
00:10:13,299 –> 00:10:16,559
of interest rates increment,

270 ( Melvin Lim )
00:10:16,559 –> 00:10:19,440
basically the property prices increase

271 ( Melvin Lim )
00:10:19,440 –> 00:10:22,139
along with the interest rate pricing, right?

272 ( Melvin Lim )
00:10:22,139 –> 00:10:25,840
Only one round, which was in 1996, 1997,

273 ( Melvin Lim )
00:10:25,840 –> 00:10:29,519
there was a drop because of the Asian Financial Crisis.

274 ( Melvin Lim )
00:10:29,519 –> 00:10:33,279
Like in your opinion or maybe not why- Or maybe not why

275 ( Melvin Lim )
00:10:33,279 –> 00:10:37,080
I would say like, do you think Singapore is different?

276 ( Melvin Lim )
00:10:37,080 –> 00:10:39,820
Like in terms of our property markets scene like,

277 ( Melvin Lim )
00:10:39,820 –> 00:10:42,039
because out of five rounds,

278 ( Melvin Lim )
00:10:42,039 –> 00:10:44,299
four rounds actually increased in price,

279 ( Melvin Lim )
00:10:44,299 –> 00:10:45,940
when interest rate increased.

280 ( Melvin Lim )
00:10:45,940 –> 00:10:50,320
So in your own context,

281 ( Melvin Lim )
00:10:50,320 –> 00:10:53,940
in terms of the real estate landscape here,

282 ( Melvin Lim )
00:10:53,940 –> 00:10:57,500
what are some of your thoughts about our landscape in Singapore?

283 ( Clive )
00:10:57,500 –> 00:10:59,059
– A few thoughts actually for me,

284 ( Clive )
00:10:59,059 –> 00:11:00,500
first thought is that,

285 ( Clive )
00:11:00,500 –> 00:11:02,139
because we’re Asians, right?

286 ( Clive )
00:11:02,139 –> 00:11:04,919
We typically tend to view properties

287 ( Clive )
00:11:04,919 –> 00:11:07,820
as something that we have to buy, that’s Asians,

288 ( Clive )
00:11:07,820 –> 00:11:09,919
not so sure about the Western folks,

289 ( Clive )
00:11:09,919 –> 00:11:12,220
but generally, yeah.

290 ( Clive )
00:11:12,220 –> 00:11:14,399
– So that’s number one

291 ( Clive )
00:11:14,399 –> 00:11:16,100
And when interest rates go up,

292 ( Clive )
00:11:16,100 –> 00:11:19,500
it also just means that the economy is getting better,

293 ( Clive )
00:11:19,500 –> 00:11:22,799
And if the economy is getting better, like in 2020 and 2021,

294 ( Clive )
00:11:22,799 –> 00:11:24,700
amidst the recessionary environment,

295 ( Clive )
00:11:24,700 –> 00:11:27,799
we see a lot of people in the tech space

296 ( Clive )
00:11:27,799 –> 00:11:28,899
buying properties like crazy.

297 ( Clive )
00:11:28,899 –> 00:11:30,340
Right?

298 ( Clive )
00:11:30,340 –> 00:11:34,240
And these are the people whose incomes have grown largely.

299 ( Clive )
00:11:34,240 –> 00:11:36,639
And as the economy gets better,

300 ( Clive )
00:11:36,639 –> 00:11:38,159
so people still continue to buy

301 ( Clive )
00:11:38,159 –> 00:11:40,179
and generally when you talk about interest rates

302 ( Clive )
00:11:40,179 –> 00:11:43,480
in Singapore, amongst other countries,

303 ( Clive )
00:11:43,480 –> 00:11:45,340
they are relatively low.

304 ( Clive )
00:11:45,340 –> 00:11:47,220
– You’re talking about the 1-ish%, 2%

305 ( Clive )
00:11:47,220 –> 00:11:49,720
and then you go into like Australia and other countries,

306 ( Clive )
00:11:49,720 –> 00:11:52,360
then you start seeing the 4%, 5%, 6%, right?

307 ( Clive )
00:11:52,360 –> 00:11:56,059
So when you look at it in that way as an investor,

308 ( Clive )
00:11:56,059 –> 00:11:57,460
if I want to buy a property

309 ( Clive )
00:11:57,460 –> 00:11:59,980
and today I can finance my property

310 ( Clive )
00:11:59,980 –> 00:12:02,559
at a cost of let’s say 2%, for example,

311 ( Clive )
00:12:02,559 –> 00:12:04,200
as an investor, 2% it’s like…

312 ( Clive )
00:12:04,200 –> 00:12:06,940
After inflation is close to zero, right?

313 ( Clive )
00:12:06,940 –> 00:12:11,500
So, I think generally that’s the mood in Singapore at least

314 ( Clive )
00:12:11,500 –> 00:12:13,799
and also a variety of factors

315 ( Clive )
00:12:13,799 –> 00:12:16,620
because interest rate is just probably only one factor

316 ( Clive )
00:12:16,620 –> 00:12:20,460
that may have a smaller weightage I would say,

317 ( Clive )
00:12:20,460 –> 00:12:22,700
in terms of (contributing) towards the decision

318 ( Clive )
00:12:22,700 –> 00:12:24,399
whether to buy a property or not.

319 ( Clive )
00:12:24,399 –> 00:12:27,320
So if I really want to buy a property for investment,

320 ( Clive )
00:12:27,320 –> 00:12:29,100
yes, interest rate is one factor,

321 ( Clive )
00:12:29,100 –> 00:12:30,899
but it’s not going to be a large weightage

322 ( Clive )
00:12:30,899 –> 00:12:33,159
of whether I should buy or not.

323 ( Clive )
00:12:33,159 –> 00:12:35,080
Whether I should buy or not will then determine

324 ( Clive )
00:12:35,080 –> 00:12:37,080
on whether there’s potential.

325 ( Clive )
00:12:37,080 –> 00:12:40,519
Yeah, so it’s a part to play, but not a very huge part

326 ( Clive )
00:12:40,519 –> 00:12:42,539
if you’re talking about lower interest rates,

327 ( Clive )
00:12:42,539 –> 00:12:43,539
– It’s just one of the factors.

328 ( Melvin Lim )
00:12:43,539 –> 00:12:44,379
– Yeah.

329 ( Clive )
00:12:44,379 –> 00:12:46,100
– One of the factors.

330 ( Jo’An )
00:12:46,100 –> 00:12:48,919
– And Singapore is one of the countries

331 ( Jo’An )
00:12:48,919 –> 00:12:51,460
that give such a very high loan-

332 ( Melvin Lim )
00:12:51,460 –> 00:12:52,279
– Yeah.

333 ( Jo’An )
00:12:52,279 –> 00:12:55,059
– So compared to Australia or even US, right?

334 ( Jo’An )
00:12:55,059 –> 00:12:56,320
The loan-to-value,

335 ( Jo’An )
00:12:56,320 –> 00:12:58,860
right now in Singapore we can go up to 75%.

336 ( Jo’An )
00:12:58,860 –> 00:13:04,080
I think back in UK or even Australia, 50%,60% is the norm.

337 ( Jo’An )
00:13:04,080 –> 00:13:07,159
So I think for Singapore, like what Clive shared,

338 ( Jo’An )
00:13:07,159 –> 00:13:10,159
I think most Singaporeans with a minimum down payment,

339 ( Jo’An )
00:13:10,159 –> 00:13:14,779
you will be able to own a safe haven, right?

340 ( Melvin Lim )
00:13:14,779 –> 00:13:17,559
And I think Singapore is very different because our landscape

341 ( Melvin Lim )
00:13:17,559 –> 00:13:20,080
in terms of land supply is small.

342 ( Melvin Lim )
00:13:20,080 –> 00:13:23,039
And then population is still gradually increasing

343 ( Melvin Lim )
00:13:23,039 –> 00:13:24,360
I think there’s a lot of different factors

344 ( Melvin Lim )
00:13:24,360 –> 00:13:25,580
that comes into play.

345 ( Melvin Lim )
00:13:25,580 –> 00:13:28,320
based on studies, I think one most important factors

346 ( Melvin Lim )
00:13:28,320 –> 00:13:32,419
is that our BTO market is sort of like the invisible support

347 ( Melvin Lim )
00:13:32,419 –> 00:13:34,059
for the property prices,

348 ( Melvin Lim )
00:13:34,059 –> 00:13:36,399
because usually when somebody moves from BTO

349 ( Melvin Lim )
00:13:36,399 –> 00:13:38,480
to sell off in the resale market

350 ( Melvin Lim )
00:13:38,480 –> 00:13:40,980
and they move up to the condo market and landed market,

351 ( Melvin Lim )
00:13:40,980 –> 00:13:43,820
it’s often like, it’s a self-fulfilling prophecy,

352 ( Melvin Lim )
00:13:43,820 –> 00:13:45,480
in terms of the support level.

353 ( Melvin Lim )
00:13:45,480 –> 00:13:48,080
Have you seen a lot of HDB upgraders

354 ( Melvin )
00:13:48,080 –> 00:13:49,960
recently in the past two years

355 ( Melvin )
00:13:49,960 –> 00:13:51,679
when you are processing loans?

356 ( Clive )
00:13:51,679 –> 00:13:52,639
– I have, yeah.

357 ( Jo’An )
00:13:52,639 –> 00:13:54,080
– I think back in the days

358 ( Jo’An )
00:13:54,080 –> 00:13:57,240
where decoupling was- as in HBD still approve,

359 ( Jo’An )
00:13:57,240 –> 00:13:58,940
for the husband to sell, yeah.

360 ( Melvin Lim / Jo’An )
00:13:58,940 –> 00:14:00,360
– Five years back, yeah. – Correct.

361 ( Jo’An )
00:14:00,360 –> 00:14:01,899
We see more people keeping HDB

362 ( Jo’An )
00:14:01,899 –> 00:14:04,259
and then the other owner would just exit

363 ( Jo’An )
00:14:04,259 –> 00:14:06,100
to buy a private property.

364 ( Jo’An )
00:14:06,100 –> 00:14:08,899
But I remember the news it came out on 1st April,

365 ( Jo’An )
00:14:08,899 –> 00:14:09,960
I can’t remember, she was like,

366 ( Jo’An )
00:14:09,960 –> 00:14:12,639
all of us thought it was an April Fool’s joke but it wasn’t, right?

367 ( Jo’An )
00:14:12,639 –> 00:14:16,419
So HDB put a stop to such a transfer.

368 ( Jo’An )
00:14:16,419 –> 00:14:19,019
And then now we are seeing more people selling their HDB

369 ( Jo’An )
00:14:19,019 –> 00:14:22,700
and each husband and wife will buy a private each.

370 ( Clive )
00:14:22,700 –> 00:14:23,399
– Yeah.

371 ( Jo’An )
00:14:23,399 –> 00:14:26,220
– I saw more of that for me.

372 ( Clive )
00:14:26,220 –> 00:14:28,360
– A lot more HDB upgraders.

373 ( Clive )
00:14:28,360 –> 00:14:30,480
Generally when I speak to clients

374 ( Clive )
00:14:30,480 –> 00:14:32,100
who are looking to buy properties,

375 ( Clive )
00:14:32,100 –> 00:14:33,940
they’re also selling their HDB at the same time,

376 ( Clive )
00:14:33,940 –> 00:14:36,259
so a lot more this year, actually.

377 ( Melvin )
00:14:36,259 –> 00:14:38,379
– Right, are you seeing like a lot as well?

378 ( Melvin )
00:14:38,379 –> 00:14:39,480
Like what Jo’An mentioned,

379 ( Melvin )
00:14:39,480 –> 00:14:41,580
like buying two properties one under each name?

380 ( Clive )
00:14:41,580 –> 00:14:42,659
– If they can they would.

381 ( Clive )
00:14:42,659 –> 00:14:43,980
So for the clients when we talk to them

382 ( Clive )
00:14:43,980 –> 00:14:46,100
and we work out the loan eligibility

383 ( Clive )
00:14:46,100 –> 00:14:46,940
and they find out that,

384 ( Clive )
00:14:46,940 –> 00:14:50,080
oh, you mean I can get this amount of loan and my wife can?

385 ( Clive )
00:14:50,080 –> 00:14:53,059
Then they will start to think, maybe we should buy one each.

386 ( Melvin )
00:14:53,059 –> 00:14:54,340
– Buy under one name?

387 ( Clive )
00:14:54,340 –> 00:14:55,480
– Yeah.

388 ( Jo’An )
00:14:55,480 –> 00:14:57,700
– And I think because over the years

389 ( Jo’An )
00:14:57,700 –> 00:14:59,740
after accumulating so much in your CPF, right?

390 ( Jo’An )
00:14:59,740 –> 00:15:02,379
When you sell, the CPF proceeds go back

391 ( Jo’An )
00:15:02,379 –> 00:15:05,100
and you’d be surprised that each husband and wife,

392 ( Jo’An )
00:15:05,100 –> 00:15:08,139
they can qualify for a decent amount (for a) condo.

393 ( Jo’An )
00:15:08,139 –> 00:15:09,919
Yeah, so I think that’s one of the strategies

394 ( Jo’An )
00:15:09,919 –> 00:15:14,379
that I think most Singaporeans are aware and are trying to-

395 ( Melvin )
00:15:14,379 –> 00:15:15,399
– So talking about strategy,

396 ( Melvin )
00:15:15,399 –> 00:15:16,600
I think our audience would be very interested

397 ( Melvin )
00:15:16,600 –> 00:15:20,320
to hear about some of the strategies to plan forward,

398 ( Melvin )
00:15:20,320 –> 00:15:23,440
especially if they are upgrading from their HDB apartment

399 ( Melvin )
00:15:23,440 –> 00:15:26,120
and now the only way is to sell off

400 ( Melvin )
00:15:26,120 –> 00:15:29,460
if you don’t wanna pay ABSD for the next property.

401 ( Melvin )
00:15:29,460 –> 00:15:32,840
So, what are some pre-planning that can be done?

402 ( Melvin )
00:15:32,840 –> 00:15:35,559
And I think our audience would be very interested to know

403 ( Melvin )
00:15:35,559 –> 00:15:38,440
about some of the factors to ensure that

404 ( Melvin )
00:15:38,440 –> 00:15:40,600
when you are ready to take up a loan,

405 ( Melvin )
00:15:40,600 –> 00:15:43,340
you are not affected by some of your habits

406 ( Melvin )
00:15:43,340 –> 00:15:45,580
over the past year

407 ( Melvin )
00:15:45,580 –> 00:15:47,500
to affect your loan eligibility.

408 ( Melvin )
00:15:47,500 –> 00:15:49,840
So maybe Clive can share a little bit about some of the…

409 ( Melvin )
00:15:49,840 –> 00:15:52,860
Maybe we’ll call hygiene factors,

410 ( Melvin )
00:15:52,860 –> 00:15:56,139
to make sure that you have a very solid foundation

411 ( Melvin )
00:15:56,139 –> 00:15:57,559
for a loan qualification.

412 ( Clive )
00:15:57,559 –> 00:15:58,580
– Sure, sure, no problem.

413 ( Clive )
00:15:58,580 –> 00:16:00,139
Let’s talk about that and then later on,

414 ( Clive )
00:16:00,139 –> 00:16:01,559
I want to rewind a bit, right?

415 ( Clive )
00:16:01,559 –> 00:16:03,259
And then I want to go back to the point

416 ( Clive )
00:16:03,259 –> 00:16:06,200
where you mentioned about pre-planning right?

417 ( Clive )
00:16:06,200 –> 00:16:07,340
To own another property

418 ( Clive )
00:16:07,340 –> 00:16:09,919
and maybe sometimes even keeping the HDB, right?

419
00:16:09,919 –> 00:16:13,340
So some of the hygiene factors is definitely commitments,

420 ( Clive )
00:16:13,340 –> 00:16:16,179
so if you want to buy a property,

421 ( Clive )
00:16:16,179 –> 00:16:18,139
you just wanna make sure that you don’t go

422 ( Clive )
00:16:18,139 –> 00:16:20,460
and buy a car before that, you know what I mean?

423 ( Clive )
00:16:20,460 –> 00:16:23,240
So, make sure you take care of the large ticket items first,

424 ( Clive )
00:16:23,240 –> 00:16:25,159
in terms of commitments,

425 ( Clive )
00:16:25,159 –> 00:16:28,519
the banks will look at the amount of credit card loans

426 ( Clive )
00:16:28,519 –> 00:16:32,320
you have, tuition loans, car loans for example.

427 ( Clive )
00:16:32,320 –> 00:16:35,799
So if you are prepared to buy a property in the near future,

428 ( Clive )
00:16:35,799 –> 00:16:38,240
you probably wanna hold back on those spendings

429 ( Clive )
00:16:38,240 –> 00:16:40,919
and just make sure that it’s all prompt payments, right?

430 ( Clive )
00:16:40,919 –> 00:16:43,039
So the important thing about the banks is that,

431 ( Clive )
00:16:43,039 –> 00:16:46,720
one thing is commitments, the other one is repayment history.

432 ( Clive )
00:16:46,720 –> 00:16:48,059
What is your habit like?

433 ( Clive )
00:16:48,059 –> 00:16:50,200
If you have a habit of defaulting on payments,

434 ( Clive )
00:16:50,200 –> 00:16:51,820
then the chances of getting your loan approved

435 ( Clive )
00:16:51,820 –> 00:16:53,679
is also significantly reduced,

436 ( Clive )
00:16:53,679 –> 00:16:56,360
so that is definitely the main factor, right?

437 ( Clive )
00:16:56,360 –> 00:16:58,600
Then of course you have the other factors like age,

438 ( Clive )
00:16:58,600 –> 00:17:00,120
some people would…

439 ( Clive )
00:17:00,120 –> 00:17:01,100
And when I talk about age,

440 ( Clive )
00:17:01,100 –> 00:17:02,600
some people at the end of the year,

441 ( Clive )
00:17:02,600 –> 00:17:03,879
they’ll be like, hey, you know what Clive?

442 ( Clive )
00:17:03,879 –> 00:17:05,000
I want to buy a property,

443 ( Clive )
00:17:05,000 –> 00:17:06,799
but maybe I should buy in the new year

444 ( Clive )
00:17:06,799 –> 00:17:10,579
because Chinese New Year coming, auspicious right?

445 ( Clive )
00:17:10,579 –> 00:17:12,980
Then the loan tenure drops by one year,

446 ( Clive )
00:17:12,980 –> 00:17:14,900
depending on which bank you go to.

447 ( Clive )
00:17:14,900 –> 00:17:16,700
Certain banks will recognise your age

448 ( Clive )
00:17:16,700 –> 00:17:18,400
based on the year of birth,

449 ( Clive )
00:17:18,400 –> 00:17:19,740
other banks would recognise your age

450 ( Clive )
00:17:19,740 –> 00:17:23,619
based on the month of birth, even up to the day of birth.

451 ( Clive )
00:17:23,619 –> 00:17:25,240
So it depends. It affects your loan eligibility

452 ( Clive )
00:17:25,240 –> 00:17:27,819
if it’s longer or shorter by one year as well.

453 ( Clive )
00:17:27,819 –> 00:17:29,099
So those are the factors to consider

454 ( Clive )
00:17:29,099 –> 00:17:30,299
if you are slightly older

455 ( Clive )
00:17:30,299 –> 00:17:33,799
but if you’re younger like our colleague over here, right?

456 ( Clive )
00:17:33,799 –> 00:17:34,680
Then no worries,

457 ( Clive )
00:17:34,680 –> 00:17:36,500
you can get the maximum loan tenure, right?

458 ( Clive )
00:17:36,500 –> 00:17:37,740
At the end of the day.

459 ( Clive )
00:17:37,740 –> 00:17:42,240
So besides commitments, loan tenure, repayment history,

460 ( Clive )
00:17:42,240 –> 00:17:47,400
yeah, if you had any other history of bad debts before, right?

461 ( Clive )
00:17:47,400 –> 00:17:50,160
You might want to even go to the extent

462 ( Clive )
00:17:50,160 –> 00:17:53,079
of buying your own Credit Bureau Report to see what shows up

463 ( Clive )
00:17:53,079 –> 00:17:54,640
and not wait till the last minute.

464 ( Clive )
00:17:54,640 –> 00:17:56,759
And I cite the case for example,

465 ( Clive )
00:17:56,759 –> 00:17:59,660
a couple comes to me and say, Clive you know what?

466 ( Clive )
00:17:59,660 –> 00:18:01,240
Usually when they wanna buy a property,

467 ( Clive )
00:18:01,240 –> 00:18:02,819
you get an in-principle approval.

468 ( Clive )
00:18:02,819 –> 00:18:05,460
Clive, no need, my income is high and strong,

469 ( Clive )
00:18:05,460 –> 00:18:07,920
I can get the loan, in fact, I only need to borrow

470 ( Clive )
00:18:07,920 –> 00:18:10,140
like based on 30% of my income.

471 ( Clive )
00:18:10,140 –> 00:18:11,880
So don’t need to do in-principle approval,

472 ( Clive )
00:18:11,880 –> 00:18:13,359
we straightaway go and view the unit,

473 ( Clive )
00:18:13,359 –> 00:18:15,299
we like it, we place the option.

474 ( Clive )
00:18:15,299 –> 00:18:17,019
Okay, so they placed the option

475 ( Clive )
00:18:17,019 –> 00:18:18,779
and then we applied for the mortgage loan

476 ( Clive )
00:18:18,779 –> 00:18:19,920
and the banks comes back and say,

477 ( Clive )
00:18:19,920 –> 00:18:21,839
oh sorry, we are not able to grant you a loan

478 ( Clive )
00:18:21,839 –> 00:18:24,019
because three years back, for example,

479 ( Clive )
00:18:24,019 –> 00:18:27,380
in your credit bureau history, there was a record.

480 ( Clive )
00:18:27,380 –> 00:18:30,440
One of the banks, you signed up for a credit card, remember?

481 ( Clive )
00:18:30,440 –> 00:18:32,099
A lot of promotions with credit cards,

482 ( Clive )
00:18:32,099 –> 00:18:33,940
you sign up, you get a luggage, right?

483 ( Clive )
00:18:33,940 –> 00:18:36,579
So you get the luggage and then you don’t use the card,

484 ( Clive )
00:18:36,579 –> 00:18:38,599
the bank charges you an annual fee

485 ( Clive )
00:18:38,599 –> 00:18:40,140
and then you don’t wanna pay for it, right?

486 ( Clive )
00:18:40,140 –> 00:18:42,339
You call the banks and you say, I want to waive it off,

487 ( Clive )
00:18:42,339 –> 00:18:43,200
then the banks will be like,

488 ( Clive )
00:18:43,200 –> 00:18:45,519
no, we’re not gonna waive it off for you,

489 ( Clive )
00:18:45,519 –> 00:18:47,319
they you say okay, I wanna cancel the card.

490 ( Clive )
00:18:47,319 –> 00:18:48,160
They cancelled the card

491 ( Clive )
00:18:48,160 –> 00:18:50,420
but they didn’t waive off the fees for you,

492 ( Clive )
00:18:50,420 –> 00:18:51,599
then that will be a record

493 ( Clive )
00:18:51,599 –> 00:18:52,980
and you don’t know about it.

494 ( Clive )
00:18:52,980 –> 00:18:54,240
So until you apply for a loan,

495 ( Clive )
00:18:54,240 –> 00:18:57,200
then you oh, no, there was a record there.

496 ( Clive )
00:18:57,200 –> 00:18:59,180
Then in order to clear it, and if it’s three years ago,

497 ( Clive )
00:18:59,180 –> 00:19:01,799
the banks won’t have your records three years ago.

498 ( Clive )
00:19:01,799 –> 00:19:03,599
But the record is still in the Credit Bureau,

499. ( Clive )
00:19:03,599 –> 00:19:04,500
so that affects you.

500 ( Clive )
00:19:04,500 –> 00:19:08,200
So these are the hidden stuff that people don’t usually see,

501 ( Clive )
00:19:08,200 –> 00:19:10,859
so we always encourage them to get an in-principle approval

502 ( Clive )
00:19:10,859 –> 00:19:12,000
before they even make a purchase.

503 ( Melvin )
00:19:12,000 –> 00:19:13,460
– Right, what happened with that case?

504 ( Melvin )
00:19:13,460 –> 00:19:15,920
Like they needed a longer time to clear it

505 ( Melvin )
00:19:15,920 –> 00:19:17,859
and by that time the option is affected.

506 ( Clive )
00:19:17,859 –> 00:19:19,539
– Yes, so if they have already placed the option

507 ( Clive )
00:19:19,539 –> 00:19:20,900
to purchase, that’s a risk

508 ( Clive )
00:19:20,900 –> 00:19:24,099
and then they’re at the mercy of the banks in a way,

509 ( Clive )
00:19:24,099 –> 00:19:26,079
so the banks will impose conditions.

510 ( Clive )
00:19:26,079 –> 00:19:29,779
Okay, we’re able to grant you a loan. Instead of 75%,

511 ( Clive )
00:19:29,779 –> 00:19:32,299
maybe I grant you a 70% loan, do you want it?

512 ( Clive )
00:19:32,299 –> 00:19:34,400
They’d be like, I don’t have a choice sometimes

513 ( Clive )
00:19:34,400 –> 00:19:37,019
and sometimes they will grant you a 75% loan,

514 ( Clive )
00:19:37,019 –> 00:19:39,140
but they will impose additional conditions like,

515 ( Clive )
00:19:39,140 –> 00:19:42,960
I want you to place 24 months of instalments with me

516 ( Clive )
00:19:42,960 –> 00:19:45,079
or one year’s worth of instalments in the bank,

517 ( Clive )
00:19:45,079 –> 00:19:47,200
then we will draw it down from there.

518 ( Clive )
00:19:47,200 –> 00:19:48,619
So it’s an additional cash out,

519 ( Clive )
00:19:48,619 –> 00:19:50,259
especially if you’re buying a huge property

520 ( Clive )
00:19:50,259 –> 00:19:51,579
with a large quantum,

521 ( Clive )
00:19:51,579 –> 00:19:54,700
one year’s worth of money instalments is $70K, $80K

522 ( Clive )
00:19:54,700 –> 00:19:56,940
just sitting there and deducting it every month,

523 ( Clive )
00:19:56,940 –> 00:19:59,619
I mean, it doesn’t make sense to especially investors

524 ( Clive )
00:19:59,619 –> 00:20:00,720
who roll money

525 ( Clive )
00:20:00,720 –> 00:20:02,220
– Yeah, so these are the things to think of.

526 ( Melvin )
00:20:02,220 –> 00:20:05,480
– Right, how about your advice for like people

527 ( Melvin )
00:20:05,480 –> 00:20:07,960
that are switching jobs, right?

528 ( Melvin )
00:20:07,960 –> 00:20:09,819
Usually when they are planning to buy a property,

529 ( Melvin )
00:20:09,819 –> 00:20:12,839
but they want to switch jobs,

530 ( Melvin )
00:20:12,839 –> 00:20:16,019
minimum how many months of like salary slips

531 ( Melvin )
00:20:16,019 –> 00:20:18,960
nowadays do banks look at?

532 ( Jo’An )
00:20:18,960 –> 00:20:21,059
– I think the general one the banks will need

533 ( Jo’An )
00:20:21,059 –> 00:20:22,839
a minimum three months,

534 ( Jo’An )
00:20:22,839 –> 00:20:25,380
but I think if you are one month into the job,

535 ( Jo’An )
00:20:25,380 –> 00:20:29,319
you’re able to show a documentary proof, right?

536 ( Jo’An )
00:20:29,319 –> 00:20:31,960
I think the banks are still willing to take in

537 ( Jo’An )
00:20:31,960 –> 00:20:33,039
and like what Clive said,

538 ( Jo’An )
00:20:33,039 –> 00:20:34,880
they could potentially set a conditional approval

539 ( Jo’An )
00:20:34,880 –> 00:20:38,220
like, when completion comes let’s say in two months time

540 ( Jo’An )
00:20:38,220 –> 00:20:42,619
and I wanna see another two months’ of payslips.

541 ( Jo’An )
00:20:42,619 –> 00:20:47,559
Yeah, so I think usually for job switch for employed staff

542 ( Jo’An )
00:20:47,559 –> 00:20:49,640
usually it’s fine.

543 ( Melvin )
00:20:49,640 –> 00:20:52,640
– And maybe share a little bit about your process

544 ( Melvin )
00:20:52,640 –> 00:20:55,200
of helping your clients to do in-principle approval,

545 ( Melvin )
00:20:55,200 –> 00:20:56,700
how fast does it take?

546 ( Melvin )
00:20:56,700 –> 00:20:59,559
Usually what does it entail and things like that?

547 ( Jo’An )
00:20:59,559 –> 00:21:01,259
– So I think for in-principle approval,

548 ( Jo’An )
00:21:01,259 –> 00:21:05,339
generally, the banks can come back to us as quick as…

549 ( Jo’An )
00:21:05,339 –> 00:21:06,319
I mean, depending on the banks,

550 ( Jo’An )
00:21:06,319 –> 00:21:09,160
it can be as quick as some banks come back within the day,

551 ( Jo’An )
00:21:09,160 –> 00:21:10,380
but typically we’ll share

552 ( Jo’An )
00:21:10,380 –> 00:21:13,480
that probably within three to four working days.

553 ( Melvin )
00:21:13,480 –> 00:21:15,279
– And does your client have to come down to your office

554 ( Melvin )
00:21:15,279 –> 00:21:18,400
or through Zoom or like how is the process like now?

555 ( Jo’An )
00:21:18,400 –> 00:21:20,059
– It depends, I think pre-COVID,

556 ( Jo’An )
00:21:20,059 –> 00:21:22,599
we will always want to meet up with our clients

557 ( Jo’An )
00:21:22,599 –> 00:21:26,599
to share with them what this AIP is about

558 ( Jo’An )
00:21:26,599 –> 00:21:28,119
and then share with them,

559 ( Jo’An )
00:21:28,119 –> 00:21:29,880
if you’re gonna buy a private property,

560 ( Jo’An )
00:21:29,880 –> 00:21:31,700
plan a cashflow with them

561 ( Jo’An )
00:21:31,700 –> 00:21:34,099
and then subsequently help them process the documents

562 ( Jo’An )
00:21:34,099 –> 00:21:35,519
for the approval in-principle.

563 ( Jo’An )
00:21:35,519 –> 00:21:36,920
So it was pre-COVID,

564 ( Jo’An )
00:21:36,920 –> 00:21:39,259
I think now with this new normal,

565 ( Jo’An )
00:21:39,259 –> 00:21:43,019
we are mainly meeting our clients over Zoom.

566 ( Melvin )
00:21:43,019 –> 00:21:44,779
– Okay and back to the strategy part

567 ( Melvin )
00:21:44,779 –> 00:21:46,140
just as Clive was mentioning, like,

568 ( Melvin )
00:21:46,140 –> 00:21:47,420
what are some common strategies

569 ( Melvin )
00:21:47,420 –> 00:21:48,799
that you’ll always share your clients

570 ( Melvin )
00:21:48,799 –> 00:21:51,440
when it comes to upgrading from their HDB apartment

571 ( Melvin )
00:21:51,440 –> 00:21:53,740
and trying to multiply their portfolio?

572 ( Clive )
00:21:53,740 –> 00:21:56,420
– So for clients sometimes, right?

573 ( Clive )
00:21:56,420 –> 00:21:58,880
Depending on their requirements that we will advice,

574 ( Clive )
00:21:58,880 –> 00:22:00,420
but some clients come up to me and say,

575 ( Clive )
00:22:00,420 –> 00:22:01,619
Hey, Clive

576 ( Clive )
00:22:01,619 –> 00:22:03,400
I wanna buy a condo for investment

577 ( Clive )
00:22:03,400 –> 00:22:06,339
but eventually I still want to stay in my HDB, right?

578 ( Clive )
00:22:06,339 –> 00:22:07,880
So how can I do that?

579 ( Clive )
00:22:07,880 –> 00:22:09,940
Especially if I’m married with my wife now,

580 ( Clive )
00:22:09,940 –> 00:22:11,019
then how can I do that?

581 ( Clive )
00:22:11,019 –> 00:22:13,200
Because we don’t wanna sell the HDB.

582 ( Clive )
00:22:13,200 –> 00:22:14,740
So actually they can actually…

583 ( Clive )
00:22:14,740 –> 00:22:17,420
When they buy the HDB, one can be an owner,

584 ( Clive )
00:22:17,420 –> 00:22:19,079
the other one is an essential occupier,

585 ( Clive )
00:22:19,079 –> 00:22:21,480
I think you guys would know as well.

586 ( Clive )
00:22:21,480 –> 00:22:25,240
So when that happens, essentially the essential occupier

587 ( Clive )
00:22:25,240 –> 00:22:27,200
doesn’t have the name in the property, right?

588 ( Clive )
00:22:27,200 –> 00:22:29,740
So they still have to serve the minimum occupation period

589 ( Clive )
00:22:29,740 –> 00:22:32,420
of five years, but five years later,

590 ( Clive )
00:22:32,420 –> 00:22:33,779
because they don’t have any other properties

591 ( Clive )
00:22:33,779 –> 00:22:37,740
under their name, they are able to own a condo

592 ( Clive )
00:22:37,740 –> 00:22:39,960
under a single name.

593 ( Clive )
00:22:39,960 –> 00:22:44,140
Generally I will still tell my clients that the HDB

594 ( Clive )
00:22:44,140 –> 00:22:47,259
is like a stepping stone for you to upgrade,

595 ( Clive )
00:22:47,259 –> 00:22:49,480
because you can do so many different things

596 ( Clive )
00:22:49,480 –> 00:22:53,559
on a private property that you can’t do on HDB.

597 ( Clive )
00:22:53,559 –> 00:22:56,200
So there’s another debate where people always say,

598 ( Clive )
00:22:56,200 –> 00:22:59,900
oh, you don’t really own the HDB, you’re renting a HDB.

599 ( Clive )
00:22:59,900 –> 00:23:01,660
So, there’s other debates like that,

600 ( Clive )
00:23:01,660 –> 00:23:03,599
but yeah, depending on the client’s requirements,

601 ( Clive )
00:23:03,599 –> 00:23:06,799
they may just want to stay in the HDB because of locality.

602 ( Melvin )
00:23:06,799 –> 00:23:08,359
– I agree with the stepping stone part,

603 ( Melvin )
00:23:08,359 –> 00:23:10,680
I mean, some families when they’re starting out,

604 ( Melvin )
00:23:10,680 –> 00:23:12,579
they want to settle their family first

605 ( Melvin )
00:23:12,579 –> 00:23:14,559
and they want a property

606 ( Melvin )
00:23:14,559 –> 00:23:16,880
to kickstart the whole family planning process

607 ( Melvin )
00:23:16,880 –> 00:23:18,880
and HDB is a great stepping stone,

608 ( Melvin )
00:23:18,880 –> 00:23:21,619
especially ’cause now with grants and things like that,

609 ( Melvin )
00:23:21,619 –> 00:23:22,779
it’s great for young couples.

610 ( Melvin )
00:23:22,779 –> 00:23:27,660
But of course, like what you mentioned the key thing

611 ( Melvin )
00:23:27,660 –> 00:23:30,059
about HBD apartment versus private properties

612 ( Melvin )
00:23:30,059 –> 00:23:32,559
is that there’s so many inherent factors

613 ( Melvin )
00:23:32,559 –> 00:23:34,200
that’s not present in HDB

614 ( Melvin )
00:23:34,200 –> 00:23:37,140
and so it’s only subjected to policies.

615 ( Melvin )
00:23:37,140 –> 00:23:40,480
And of course, one principle in real estate investing globally

616 ( Melvin )
00:23:40,480 –> 00:23:42,720
is that a lot of real estate investors,

617 ( Melvin )
00:23:42,720 –> 00:23:46,180
they technically purchase properties and they don’t exit,

618 ( Melvin )
00:23:46,180 –> 00:23:48,400
they always extract equity out of it

619 ( Melvin )
00:23:48,400 –> 00:23:50,839
when property values appreciate

620 ( Melvin )
00:23:50,839 –> 00:23:53,259
and that can only be done with private properties.

621 ( Melvin )
00:23:53,259 –> 00:23:56,859
HBD apartments no matter how much appreciation they enjoy,

622 ( Melvin )
00:23:56,859 –> 00:23:59,339
even if you are staying at certain properties

623 ( Melvin )
00:23:59,339 –> 00:24:00,579
that has appreciated by $1 mil,

624 ( Melvin )
00:24:00,579 –> 00:24:02,400
you can’t extract your gain

625 ( Clive / Jo’An )
00:24:02,400 –> 00:24:04,539
right? – Unless you sell.

626 ( Melvin )
00:24:04,539 –> 00:24:07,180
– And equity term loan is something

627 ( Melvin )
00:24:07,180 –> 00:24:11,940
that’s the inherent factor of a true blue real estate

628 ( Melvin )
00:24:11,940 –> 00:24:13,779
for private properties.

629 ( Melvin )
00:24:13,779 –> 00:24:16,380
So talking about equity loans, right?

630 ( Melvin )
00:24:16,380 –> 00:24:19,319
Usually what are some of the key things to note,

631 ( Melvin )
00:24:19,319 –> 00:24:22,299
if somebody is keen to extract equity

632 ( Melvin )
00:24:22,299 –> 00:24:24,579
from their property that has already appreciated

633 ( Melvin )
00:24:24,579 –> 00:24:27,200
and then how do you all usually go about the advice to clients

634 ( Melvin )
00:24:27,200 –> 00:24:29,059
on the equity term loan?

635 ( Jo’An )
00:24:29,059 –> 00:24:30,980
– I think for equity term loan,

636 ( Jo’An )
00:24:30,980 –> 00:24:32,759
the two main factors we look at

637 ( Jo’An )
00:24:32,759 –> 00:24:34,759
is the current market value of the property,

638 ( Jo’An )
00:24:34,759 –> 00:24:36,960
as well as the CPF used.

639 ( Jo’An )
00:24:36,960 –> 00:24:39,720
So the more CPF you’ve used, right?

640 ( Jo’An )
00:24:39,720 –> 00:24:44,119
Then generally the owner can extract lesser equity loan,

641 ( Jo’An )
00:24:44,119 –> 00:24:48,279
so we’re trying our best to see if we can help them

642 ( Jo’An )
00:24:48,279 –> 00:24:50,579
to get a higher valuation.

643 ( Jo’An )
00:24:50,579 –> 00:24:53,559
So you’ll be surprised that of all the 16 banks, right?

644 ( Jo’An )
00:24:53,559 –> 00:24:56,220
Different banks work with different valuation companies

645 ( Jo’An )
00:24:56,220 –> 00:25:00,920
and some are more conservative, some are more aggressive.

646 ( Jo’An )
00:25:00,920 –> 00:25:03,640
So from there depending on how much our clients…

647 ( Jo’An )
00:25:03,640 –> 00:25:05,720
How much equity loan they’re looking for,

648 ( Jo’An )
00:25:05,720 –> 00:25:08,339
we’ll refer them to the right partners.

649 ( Melvin )
00:25:08,339 –> 00:25:10,740
– Okay, if a client comes to you

650 ( Melvin )
00:25:10,740 –> 00:25:13,680
and then the client said that hey,

651 ( Melvin )
00:25:13,680 –> 00:25:17,359
I found this property that I think is quite undervalued,

652 ( Melvin )
00:25:17,359 –> 00:25:19,920
although in today’s market it’s very difficult to find

653 ( Melvin )
00:25:19,920 –> 00:25:21,519
and the client is quite confident

654 ( Melvin )
00:25:21,519 –> 00:25:24,480
that they want to do equity term loan down the road.

655 ( Melvin )
00:25:24,480 –> 00:25:27,500
What is the fastest period from the day

656 ( Melvin )
00:25:27,500 –> 00:25:29,599
that they purchase this property,

657 ( Melvin )
00:25:29,599 –> 00:25:31,440
let’s say it’s a resale property,

658 ( Melvin )
00:25:31,440 –> 00:25:32,660
to the day that they can refinance,

659 ( Melvin )
00:25:32,660 –> 00:25:34,960
what is the minimum period fulfilment

660 ( Melvin )
00:25:34,960 –> 00:25:36,200
for the first letter of offer?

661 ( Clive )
00:25:36,200 –> 00:25:39,200
– Generally, I would say depending on the bank as well,

662 ( Clive )
00:25:39,200 –> 00:25:41,799
but I would say conservatively nine months.

663 ( Clive )
00:25:41,799 –> 00:25:44,180
Yeah, nine months of repayment history,

664 ( Clive )
00:25:44,180 –> 00:25:46,200
then probably you can start to release equity

665 ( Clive )
00:25:46,200 –> 00:25:47,559
from the property if it’s undervalued.

666 (Melvin )
00:25:47,559 –> 00:25:48,960
– Right and definitely,

667 ( Melvin )
00:25:48,960 –> 00:25:52,180
I think that will be a flexi loan, flexi rates.

668 ( Clive )
00:25:52,180 –> 00:25:55,440
– Generally, if you’re looking at a shorter lock in

669 ( Clive )
00:25:55,440 –> 00:25:57,200
like one year or no lock in,

670 ( Clive )
00:25:57,200 –> 00:26:00,000
then it’s a variable rate already.

671 ( Melvin )
00:26:00,000 –> 00:26:04,380
– And is extracting equity very common nowadays

672 ( Melvin )
00:26:04,380 –> 00:26:07,400
through the process of refinance?

673 ( Melvin )
00:26:07,400 –> 00:26:08,720
– Very common.

674 ( Melvin )
00:26:08,720 –> 00:26:10,859
– And like, how common is it?

675 ( Melvin )
00:26:10,859 –> 00:26:13,839
And then like, usually based on your experience,

676 ( Melvin )
00:26:13,839 –> 00:26:16,180
what are clients planning for,

677 ( Melvin )
00:26:16,180 –> 00:26:19,140
like when they extract equity?

678 ( Jo’An )
00:26:19,140 –> 00:26:20,680
– I think just two hours ago,

679 ( Jo’An )
00:26:20,680 –> 00:26:22,359
I was speaking to one of my clients

680 ( Jo’An )
00:26:22,359 –> 00:26:25,839
who wish to extract equity for their child’s education.

681 ( Jo’An )
00:26:25,839 –> 00:26:29,240
So sending their kid to UK to study next year,

682 ( Jo’An )
00:26:29,240 –> 00:26:31,779
so trying to plan their finances.

683 ( Jo’An )
00:26:31,779 –> 00:26:34,779
So I’m working out to see,

684 ( Jo’An )
00:26:34,779 –> 00:26:36,759
because generally the equity term loan

685 ( Jo’An )
00:26:36,759 –> 00:26:40,180
takes about two to three months for the release.

686 ( Jo’An )
00:26:40,180 –> 00:26:41,279
So they’re trying to find out number one,

687 ( Jo’An )
00:26:41,279 –> 00:26:42,460
how much can they borrow?

688 ( Jo’An )
00:26:42,460 –> 00:26:45,299
And number two, how fast can they get the cash?

689 ( Jo’An )
00:26:45,299 –> 00:26:48,819
Yeah, so I think at least most of my clients,

690 ( Jo’An )
00:26:48,819 –> 00:26:52,019
they are drawing equity out to fund their children’s education

691 ( Jo’An )
00:26:52,019 –> 00:26:54,839
or to buy a new car.

692 ( Jo’An )
00:26:54,839 –> 00:26:57,779
Because car interest rates are so high.

693 ( Melvin )
00:26:57,779 –> 00:27:03,619
– And how about that benefit of concurrently doing refinance

694 ( Melvin )
00:27:03,619 –> 00:27:05,880
or maybe drawing out equity, right?

695 ( Melvin )
00:27:05,880 –> 00:27:07,660
How does that impact the tenure,

696 ( Melvin )
00:27:07,660 –> 00:27:09,920
what kind of other benefits are there?

697 ( Clive )
00:27:09,920 –> 00:27:12,619
– Yeah, so generally the tenure for equity term loan

698 ( Clive )
00:27:12,619 –> 00:27:14,339
is slightly longer, right?

699 ( Clive )
00:27:14,339 –> 00:27:17,799
You can borrow up to the age of 75 or 35, whichever is lower

700 ( Clive )
00:27:17,799 –> 00:27:19,599
and depending on the banks that you go to.

701 ( Clive )
00:27:19,599 –> 00:27:20,839
So when that happens,

702 ( Clive )
00:27:20,839 –> 00:27:22,680
then you’ll realise that if you’re slightly older,

703 ( Clive )
00:27:22,680 –> 00:27:25,019
you can actually release more equity from the property

704 ( Clive )
00:27:25,019 –> 00:27:28,240
because of the loan tenure that can be stretched.

705 ( Clive )
00:27:28,240 –> 00:27:29,279
So, it’s quite flexible

706 ( Clive )
00:27:29,279 –> 00:27:31,220
and the other flexible thing about equity term loan

707 ( Clive )
00:27:31,220 –> 00:27:33,119
is the interest rates too, right?

708 ( Clive )
00:27:33,119 –> 00:27:34,920
Some people have the misconception that,

709 ( Clive )
00:27:34,920 –> 00:27:37,599
oh, wow, the banks give me $400K or $500K in cash,

710 ( Clive )
00:27:37,599 –> 00:27:39,519
I need to end up paying 4% or 5%

711 ( Clive )
00:27:39,519 –> 00:27:41,660
in terms of the servicing of the loan,

712 ( Clive )
00:27:41,660 –> 00:27:44,279
but no, you follow mortgage interest rates

713 ( Clive )
00:27:44,279 –> 00:27:47,420
and that is why to investors,

714 ( Clive )
00:27:47,420 –> 00:27:50,400
an equity term loan is “I surely will do it”

715 ( Clive )
00:27:50,400 –> 00:27:53,460
because one is 1.65%, one is 2%

716 ( Clive )
00:27:53,460 –> 00:27:55,759
when I can get double digit returns

717 ( Clive )
00:27:55,759 –> 00:27:58,079
it’s almost free money to them.

718 ( Clive )
00:27:58,079 –> 00:28:00,440
Right, so whenever we talk to investors, they’ll be like,

719 ( Clive )
00:28:00,440 –> 00:28:02,500
“Okay, Clive, how much more can I extract

720 ( Clive )
00:28:02,500 –> 00:28:03,940
from this private property?

721 ( Clive )
00:28:03,940 –> 00:28:05,759
I’d like to maximise it.”

722 ( Clive )
00:28:05,759 –> 00:28:09,200
So, in order sometimes when we speak to clients

723 ( Clive )
00:28:09,200 –> 00:28:11,039
along the way, maybe at that point of time,

724 ( Clive )
00:28:11,039 –> 00:28:13,420
they wouldn’t have the ability to release equity

725 ( Clive )
00:28:13,420 –> 00:28:16,380
because maybe the property hasn’t appreciated in price

726 ( Clive )
00:28:16,380 –> 00:28:20,440
and they’ve used a larger sum of CPF on the property.

727 ( Clive )
00:28:20,440 –> 00:28:22,259
So when people come to us and say,

728 ( Clive )
00:28:22,259 –> 00:28:24,640
hey, Clive, I want to have the flexibility

729 ( Clive )
00:28:24,640 –> 00:28:26,099
to pay down on my loan,

730. ( Clive )
00:28:26,099 –> 00:28:28,160
I (want to) have a partial prepayment ability,

731 ( Clive )
00:28:28,160 –> 00:28:30,400
I would then always remind them that,

732 ( Clive )
00:28:30,400 –> 00:28:32,119
hey, have you used CPF on the property?

733 ( Clive )
00:28:32,119 –> 00:28:34,279
Because if you have used CPF on the property,

734 ( Clive )
00:28:34,279 –> 00:28:37,279
have you considered paying back CPF

735 ( Clive )
00:28:37,279 –> 00:28:40,839
instead of being in a loan that charges you 1.65%

736 ( Clive )
00:28:40,839 –> 00:28:45,500
for example, when CPF you put it back it earns you 2.5%

737 ( Clive )
00:28:45,500 –> 00:28:49,220
and with lesser CPF usage on the property in future,

738 ( Clive )
00:28:49,220 –> 00:28:50,720
if you want to release equity.

739 ( Melvin / Clive )
00:28:50,720 –> 00:28:54,579
– You can get more. – Then you can get more.

740 ( Melvin )
00:28:54,579 –> 00:28:57,160
– Yeah, in fact, we also share with our clients

741 ( Melvin )
00:28:57,160 –> 00:28:59,059
that just for example,

742 ( Melvin )
00:28:59,059 –> 00:29:01,240
if somebody bought a property at $2 mil,

743 ( Melvin )
00:29:01,240 –> 00:29:02,339
like maybe five years back

744 ( Melvin )
00:29:02,339 –> 00:29:03,900
and then now let’s say if it appreciates

745 ( Melvin )
00:29:03,900 –> 00:29:07,140
to like $2.8 mil and there’s no CPF usage

746 ( Melvin )
00:29:07,140 –> 00:29:10,460
and if they can extract equity out of it,

747 ( Melvin )
00:29:10,460 –> 00:29:13,740
that extraction probably at about $600K

748 ( Melvin )
00:29:13,740 –> 00:29:18,220
can be used as a piggy bank theory,

749 ( Melvin )
00:29:18,220 –> 00:29:19,500
to put it in the bank

750 ( Melvin )
00:29:19,500 –> 00:29:22,559
and use that to slowly pay back the instalment.

751 ( Melvin )
00:29:22,559 –> 00:29:25,039
It can last them for the next eight to nine years.

752 ( Melvin )
00:29:25,039 –> 00:29:27,160
And eight to nine years later, if they want to sell

753 ( Melvin )
00:29:27,160 –> 00:29:31,200
and they would sell back at the same price of $2.8mil,

754 ( Melvin )
00:29:31,200 –> 00:29:34,619
it is still a very good strategy in that sense.

755 ( Melvin )
00:29:34,619 –> 00:29:38,299
And just now, when I was reading both your profiles,

756 ( Melvin )
00:29:38,299 –> 00:29:41,839
I also notice that Clive specialises in residential

757 ( Melvin )
00:29:41,839 –> 00:29:44,339
and then Jo’An specialises in commercial, right?

758 ( Melvin )
00:29:44,339 –> 00:29:47,500
So, maybe we’ll chat a little bit about commercial as well,

759 ( Melvin )
00:29:47,500 –> 00:29:51,559
like what are some of the very important things to note

760 ( Melvin )
00:29:51,559 –> 00:29:55,019
when somebody is keen to invest in a commercial property,

761 ( Melvin )
00:29:55,019 –> 00:29:56,700
whether is it for their own operation needs

762 ( Melvin )
00:29:56,700 –> 00:29:57,740
for their company

763 ( Melvin )
00:29:57,740 –> 00:30:00,660
or whether is it for the purpose of investment,

764 ( Melvin )
00:30:00,660 –> 00:30:04,539
do you usually advise creating an investment holding company

765 ( Melvin )
00:30:04,539 –> 00:30:07,160
to hold it or do you usually advise your clients

766 ( Melvin )
00:30:07,160 –> 00:30:08,839
to buy under their personal name,

767 ( Melvin )
00:30:08,839 –> 00:30:12,119
what are some of the considerations here?

768 ( Jo’An )
00:30:12,119 –> 00:30:14,039
– In my opinion, I think there are more benefits

769 ( Jo’An )
00:30:14,039 –> 00:30:16,859
buying a commercial property through a company,

770 ( Jo’An )
00:30:16,859 –> 00:30:21,400
either if they have an operating business

771 ( Jo’An )
00:30:21,400 –> 00:30:23,220
or if they choose to set up a holding company

772 ( Jo’An )
00:30:23,220 –> 00:30:24,160
to buy the property.

773 ( Jo’An )
00:30:24,160 –> 00:30:27,400
– I think one of the main benefits is that,

774 ( Jo’An )
00:30:27,400 –> 00:30:32,380
someone can seek reimbursement of the GST,

775 ( Jo’An )
00:30:32,380 –> 00:30:36,099
yeah, because I think it’s very common for GST to be charged

776 ( Jo’An )
00:30:36,099 –> 00:30:38,839
when one purchases a commercial or industrial property

777 ( Jo’An )
00:30:38,839 –> 00:30:41,140
and that 7% is gonna increase soon, right?

778 ( Jo’An )
00:30:41,140 –> 00:30:45,119
So one way around it is to set up a company,

779 ( Jo’An )
00:30:45,119 –> 00:30:46,980
I know GST register the company

780 ( Jo’An )
00:30:46,980 –> 00:30:51,160
and then it can be reimbursed later on.

781 ( Jo’An )
00:30:51,160 –> 00:30:53,240
That’s one main benefit.

782 ( Melvin )
00:30:53,240 –> 00:30:57,279
– How about LTV in terms of like the loan-to-value?

783 ( Melvin )
00:30:57,279 –> 00:31:01,799
Things to take note when using a company to buy

784 ( Melvin )
00:31:01,799 –> 00:31:04,720
for own operations versus for investment,

785 ( Melvin )
00:31:04,720 –> 00:31:06,500
what are the key differences?

786 ( Jo’An )
00:31:06,500 –> 00:31:09,019
– I think generally for operating use,

787 ( Jo’An )
00:31:09,019 –> 00:31:14,000
the LTV can go up to 90% if you fulfill certain criteria,

788 ( Jo’An )
00:31:14,000 –> 00:31:16,480
so that’s unheard of in the residential market.

789 ( Melvin )
00:31:16,480 –> 00:31:19,299
– Right, what is the criteria for 90%?

790 ( Jo’An )
00:31:19,299 –> 00:31:21,359
– 90% generally the bank looks at

791 ( Jo’An )
00:31:21,359 –> 00:31:25,079
whether is it an operating business?

792 ( Jo’An )
00:31:25,079 –> 00:31:29,240
So right now, at the banks are dishing out 90% loans

793 ( Jo’An )
00:31:29,240 –> 00:31:33,759
for operating businesses and if the profile is good, right?

794 ( Jo’An )
00:31:33,759 –> 00:31:35,359
And let’s say the property leasehold,

795 ( Jo’An )
00:31:35,359 –> 00:31:36,660
these are some of the hygiene factors

796 ( Jo’An )
00:31:36,660 –> 00:31:37,660
that the bank look at,

797 ( Jo’An )
00:31:37,660 –> 00:31:40,960
the director’s profile, the business nature

798 ( Jo’An )
00:31:40,960 –> 00:31:43,720
as well as the…

799 ( Jo’An )
00:31:43,720 –> 00:31:49,740
Business nature, director’s profile and whether is it for…

800 ( Jo’An )
00:31:49,740 –> 00:31:51,140
And the lease of the property.

801 ( Jo’An / Melvin )
00:31:51,140 –> 00:31:53,279
– The lease of the property, the balance lease

802 ( Jo’An )
00:31:53,279 –> 00:31:55,140
-Correct. So generally industrial and commercial

803 ( Jo’An )
00:31:55,140 –> 00:31:56,359
Generally industrial,

804 ( Jo’An )
00:31:56,359 –> 00:31:58,279
60 years, 60 years lease

805 ( Jo’An )
00:31:58,279 –> 00:32:01,299
and then most of it now is like 30-year leasehold.

806 ( Jo’An )
00:32:01,299 –> 00:32:03,140
So the banks will look at all these factors

807 ( Jo’An )
00:32:03,140 –> 00:32:08,839
before deciding “Should I grant this business owner 90% loan?”

808 ( Melvin )
00:32:08,839 –> 00:32:10,059
– For operating companies,

809 ( Melvin )
00:32:10,059 –> 00:32:13,640
is there like a guideline, like example,

810 ( Melvin )
00:32:13,640 –> 00:32:15,740
a newer company that’s been operating for like two years,

811 ( Melvin )
00:32:15,740 –> 00:32:19,140
is there a guideline, like things

812 ( Melvin )
00:32:19,140 –> 00:32:20,980
that banks would definitely look at

813 ( Melvin )
00:32:20,980 –> 00:32:23,180
in terms of like a minimum amount of revenue

814 ( Melvin )
00:32:23,180 –> 00:32:25,440
or minimum amount of profit or like,

815 ( Melvin )
00:32:25,440 –> 00:32:28,200
what are some of the guidelines?

816 ( Jo’An )
00:32:28,200 –> 00:32:30,220
– So generally the banks will zoom

817 ( Jo’An )
00:32:30,220 –> 00:32:32,660
into the financial standing of the company,

818 ( Jo’An )
00:32:32,660 –> 00:32:34,240
so they will look at things like

819 ( Jo’An )
00:32:34,240 –> 00:32:37,819
your profit and loss statement, the revenue, the EBITDA,

820 ( Jo’An )
00:32:37,819 –> 00:32:41,000
they will look at things like the balance sheet,

821 ( Jo’An )
00:32:41,000 –> 00:32:42,579
they’ll zoom into the assets and find out

822 ( Jo’An )
00:32:42,579 –> 00:32:44,980
whether this company is overly geared.

823 ( Jo’An )
00:32:44,980 –> 00:32:48,680
Then to determine whether this company is good

824 ( Jo’An )
00:32:48,680 –> 00:32:51,779
for 80% loan or 90% loan.

825 ( Melvin )
00:32:51,779 –> 00:32:57,940
– Will they still look at the director’s personal TDSR?

826 ( Jo’An )
00:32:57,940 –> 00:33:04,799
– Actually, they wouldn’t really zoom into it,

827 ( Melvin )
00:33:04,799 –> 00:33:06,400
– But they will still check

828 ( Jo’An )
00:33:06,400 –> 00:33:08,779
the profiles of the directors?

829 ( Jo’An )
00:33:08,779 –> 00:33:10,400
– ‘Cause ultimately the directors and shareholders,

830 ( Jo’An )
00:33:10,400 –> 00:33:12,799
they are the beneficial owners of the company,

831 ( Jo’An )
00:33:12,799 –> 00:33:14,059
so one of the hygiene checks

832 ( Jo’An )
00:33:14,059 –> 00:33:16,460
is they will zoom into the Credit Bureau,

833 ( Jo’An )
00:33:16,460 –> 00:33:17,640
which is what Clive shared.

834 ( Jo’An )
00:33:17,640 –> 00:33:21,180
So they also look at whether on the director’s Credit Bureau Report

835 ( Jo’An )
00:33:21,180 –> 00:33:23,539
whether their credit history,

836 ( Jo’An )
00:33:23,539 –> 00:33:26,119
do they have prompt repayment conduct?

837 ( Jo’An )
00:33:26,119 –> 00:33:29,640
So that is one determining factor on whether this fella

838 ( Jo’An )
00:33:29,640 –> 00:33:32,220
or this company is good for the loan.

839 ( Jo’An )
00:33:32,220 –> 00:33:35,880
So, there’s not much of the income actually,

840 ( Jo’An )
00:33:35,880 –> 00:33:37,500
in my opinion, more on the repayment conduct

841 ( Jo’An )
00:33:37,500 –> 00:33:38,480
of the directors and shareholders.

842 ( Melvin )
00:33:38,480 –> 00:33:41,539
– Right, right, so meaning like if two directors

843 ( Melvin )
00:33:41,539 –> 00:33:43,519
and both of them own multiple properties,

844 ( Melvin )
00:33:43,519 –> 00:33:44,460
residential properties,

845 ( Melvin )
00:33:44,460 –> 00:33:48,019
it doesn’t really affect the company’s ability to loan

846 ( Melvin )
00:33:48,019 –> 00:33:51,880
as long as the revenue and balance sheets are healthy.

847 ( Jo’An )
00:33:51,880 –> 00:33:54,920
– In fact that adds on to the net worth of the director.

848 ( Melvin )
00:33:54,920 –> 00:33:57,579
– Adds on to the net worth as well, right.

849 ( Jo’An )
00:33:57,579 –> 00:33:59,819
– I mean sure there could be leverage,

850 ( Jo’An )
00:33:59,819 –> 00:34:02,500
but I think one way the banker could mitigate this

851 ( Jo’An )
00:34:02,500 –> 00:34:04,279
is you can share that the directors

852 ( Jo’An )
00:34:04,279 –> 00:34:06,779
and the shareholders have this amount of net worth,

853 ( Jo’An )
00:34:06,779 –> 00:34:09,559
this amount of private properties under their name.

854 ( Jo’An )
00:34:09,559 –> 00:34:12,099
Yeah, so this gives the bank additional comfort

855 ( Jo’An )
00:34:12,099 –> 00:34:16,440
to grant this company this X amount of a loan.

856 ( Melvin )
00:34:16,440 –> 00:34:20,780
– Right and coming to Clive,

857 ( Melvin )
00:34:20,780 –> 00:34:23,460
one of the very popular questions is of course,

858 ( Melvin )
00:34:23,460 –> 00:34:26,539
pertaining to foreign buyers buying properties

859 ( Melvin )
00:34:26,539 –> 00:34:27,800
and of course, foreign buyers

860 ( Melvin )
00:34:27,800 –> 00:34:30,880
they don’t have a working employment history in Singapore,

861 ( Melvin )
00:34:30,880 –> 00:34:33,780
so usually how does the pledging and unpledging process work

862 ( Melvin )
00:34:33,780 –> 00:34:35,059
for foreign buyers?

863 ( Clive )
00:34:35,059 –> 00:34:37,019
– So if they’re foreign and if they’re working

864 ( Clive )
00:34:37,019 –> 00:34:38,300
in a different country I suppose,

865 ( Clive )
00:34:38,300 –> 00:34:39,659
so, it really depends on the banks as well.

866 ( Clive )
00:34:39,659 –> 00:34:41,579
Some banks strictly don’t do it,

867 ( Clive )
00:34:41,579 –> 00:34:42,940
because they don’t feel comfortable,

868 ( Clive )
00:34:42,940 –> 00:34:44,800
but there are other banks that do,

869 ( Clive )
00:34:44,800 –> 00:34:48,900
it helps if the customers are working in an MNC, right?

870 ( Clive )
00:34:48,900 –> 00:34:51,500
If they run their own business in the other country,

871 ( Clive )
00:34:51,500 –> 00:34:52,760
it might be a little bit tricky

872 ( Clive )
00:34:52,760 –> 00:34:55,460
because in Singapore, you still can check on ACRA

873 ( Clive )
00:34:55,460 –> 00:34:56,719
whether you’re the business owner,

874 ( Clive )
00:34:56,719 –> 00:34:59,019
but in other countries it’s difficult to check, right?

875 ( Clive )
00:34:59,019 –> 00:35:01,579
So if you’re working in an MNC as an employee,

876 ( Clive )
00:35:01,579 –> 00:35:02,800
offshore foreigner,

877 ( Clive )
00:35:02,800 –> 00:35:05,019
yes, the banks can still grant you a loan.

878 ( Clive )
00:35:05,019 –> 00:35:06,679
There might be certain restrictions,

879 ( Clive )
00:35:06,679 –> 00:35:09,820
depending on the amount of loan that you want to take,

880 ( Clive )
00:35:09,820 –> 00:35:11,219
the larger the loan quantum,

881 ( Clive )
00:35:11,219 –> 00:35:13,500
the banks sometimes might not feel comfortable

882 ( Clive )
00:35:13,500 –> 00:35:17,539
lending you leverage at 75%, it may come down, right?

883 ( Clive )
00:35:17,539 –> 00:35:20,420
And there will be additional conditions imposed as well,

884 ( Clive )
00:35:20,420 –> 00:35:22,260
so the banks might say, okay,

885 ( Clive )
00:35:22,260 –> 00:35:25,000
we will lend you, but you need to pledge two years

886 ( Clive )
00:35:25,000 –> 00:35:28,239
worth of money instalments with the banks, right?

887 ( Clive )
00:35:28,239 –> 00:35:29,460
As assurance.

888 ( Clive )
00:35:29,460 –> 00:35:32,599
So the banks will always want to have comfort

889 ( Clive )
00:35:32,599 –> 00:35:35,219
on loan servicing ability, right?

890 ( Clive )
00:35:35,219 –> 00:35:38,239
As long as you’re able to prove that you have the ability

891 ( Clive )
00:35:38,239 –> 00:35:40,719
to service the loan and the income that you’re getting

892 ( Clive )
00:35:40,719 –> 00:35:44,739
is a legit income, then the banks will still grant you a loan,

893 ( Clive )
00:35:44,739 –> 00:35:46,960
yeah, it really depends on the bank’s credit policies.

894 ( Melvin )
00:35:46,960 –> 00:35:48,099
– Right, right.

895 ( Melvin )
00:35:48,099 –> 00:35:51,900
Is pledging more common or unpledging more common

896 ( Melvin )
00:35:51,900 –> 00:35:53,840
for foreign purchases?

897 ( Clive )
00:35:53,840 –> 00:35:56,300
– The foreigners would always prefer personally

898 ( Clive )
00:35:56,300 –> 00:35:58,820
to show funds, unpledging, right?

899 ( Clive )
00:35:58,820 –> 00:36:00,780
Because it doesn’t tie themselves down,

900 ( Clive )
00:36:00,780 –> 00:36:02,800
but the banks would prefer that they pledge,

901 ( Clive )
00:36:02,800 –> 00:36:04,820
because they have commitment, right?

902 ( Clive )
00:36:04,820 –> 00:36:06,980
Especially for foreign buyers,

903 ( Clive )
00:36:06,980 –> 00:36:07,900
because it’s difficult to tell

904 ( Clive )
00:36:07,900 –> 00:36:09,300
where the funds are coming from

905 ( Clive )
00:36:09,300 –> 00:36:11,860
and it depends on where you are.

906 ( Clive )
00:36:11,860 –> 00:36:14,139
If you are in certain more sensitive countries,

907 ( Clive )
00:36:14,139 –> 00:36:17,960
where there are capital restrictions in terms of capital outflows,

908 ( Clive )
00:36:17,960 –> 00:36:20,219
then that may also further hinder

909 ( Clive )
00:36:20,219 –> 00:36:22,579
the kind of approval process, yeah.

910 ( Melvin )
00:36:22,579 –> 00:36:24,960
– What are some like very simple calculation method

911 ( Melvin )
00:36:24,960 –> 00:36:27,460
to like know how much that you need to pledge

912 ( Melvin )
00:36:27,460 –> 00:36:28,360
and things like that

913 ( Melvin )
00:36:28,360 –> 00:36:29,840
or do you have tools on your website?

914 ( Melvin )
00:36:29,840 –> 00:36:32,840
What do you usually use?

915 ( Clive )
00:36:32,840 –> 00:36:34,039
– In relation to foreign buyers?

916 ( Melvin )
00:36:34,039 –> 00:36:34,880
– Yes.

917 ( Clive )
00:36:34,880 –> 00:36:36,480
– It’s really based on, for example,

918 ( Clive )
00:36:36,480 –> 00:36:38,880
based on the quantum that you’re looking to borrow

919 ( Clive )
00:36:38,880 –> 00:36:41,619
and then we calculate 24 months worth of instalments

920 ( Clive )
00:36:41,619 –> 00:36:43,840
based on an interest rate of 3.5%, for example.

921 ( Clive )
00:36:43,840 –> 00:36:45,679
Yeah, so then they’ll take that amount

922 ( Clive )
00:36:45,679 –> 00:36:47,679
and they’ll request that you pledge.

923 ( Clive )
00:36:47,679 –> 00:36:50,400
Other banks might also on top of pledging of funds

924 ( Clive )
00:36:50,400 –> 00:36:52,079
ask you to earmark…

925 ( Clive )
00:36:52,079 –> 00:36:54,639
Because pledging of funds you can eventually get it back,

926 ( Clive )
00:36:54,639 –> 00:36:57,019
then other banks will ask you to earmark funds

927 ( Clive )
00:36:57,019 –> 00:36:58,659
on top of pledging 24 months,

928 ( Clive )
00:36:58,659 –> 00:37:01,820
you’re gonna earmark 24 months of instalments with me

929 ( Clive )
00:37:01,820 –> 00:37:04,840
and every month, I’ll draw the instalments down from there.

930 ( Clive )
00:37:04,840 –> 00:37:06,360
So at least in the next two years

931 ( Clive )
00:37:06,360 –> 00:37:08,059
I guarantee that you won’t default a loan.

932 ( Melvin )
00:37:08,059 –> 00:37:09,539
– So they want you to pre-deposit first.

933 ( Clive )
00:37:09,539 –> 00:37:11,199
– Yeah, correct.

934 ( Melvin )
00:37:11,199 –> 00:37:15,280
– And maybe we can share with our audience,

935 ( Melvin )
00:37:15,280 –> 00:37:17,880
like what are some of the tools that are available

936 ( Melvin )
00:37:17,880 –> 00:37:20,880
for everybody to use on the Redbrick website?

937 ( Clive )
00:37:20,880 –> 00:37:22,739
– Yeah, I think there are certain calculators

938 ( Clive )
00:37:22,739 –> 00:37:24,440
on the Redbrick website that they can use

939 ( Clive )
00:37:24,440 –> 00:37:26,079
to calculate very simply, right?

940 ( Clive )
00:37:26,079 –> 00:37:28,639
If they want to buy a property according to their income

941 ( Clive )
00:37:28,639 –> 00:37:32,159
and commitment, how much number one they can qualify for?

942 ( Clive )
00:37:32,159 –> 00:37:34,199
And if there is a shortfall,

943 ( Clive )
00:37:34,199 –> 00:37:37,199
what are the amounts that they will need to pledge

944 ( Clive )
00:37:37,199 –> 00:37:39,980
or show to attain the desired loan amount?

945 ( Clive )
00:37:39,980 –> 00:37:42,460
So very simple calculators that are available online,

946 ( Clive )
00:37:42,460 –> 00:37:45,179
calculators that help you with your calculation

947 ( Clive )
00:37:45,179 –> 00:37:48,300
of the Buyer’s Stamp Duty, Additional Buyer’s Stamp Duty,

948 ( Clive )
00:37:48,300 –> 00:37:51,260
Seller’s Stamp Duty even, yeah.

949 ( Clive )
00:37:51,260 –> 00:37:52,980
And sometimes I don’t know whether we’re working on it,

950 ( Clive )
00:37:52,980 –> 00:37:55,519
but ROI as well, sometimes.

951 ( Melvin )
00:37:55,519 –> 00:37:59,940
-Maybe some advice for younger purchasers,

952 ( Melvin )
00:37:59,940 –> 00:38:01,239
if let’s say they are planning to purchase

953 ( Melvin )
00:38:01,239 –> 00:38:03,719
their first private property,

954 ( Melvin )
00:38:03,719 –> 00:38:06,820
what would be maybe the top three advice for them

955 ( Melvin )
00:38:06,820 –> 00:38:09,340
when it comes to relation of loan

956 ( Melvin )
00:38:09,340 –> 00:38:13,300
and planning for the future?

957 ( Jo’An )
00:38:13,300 –> 00:38:16,039
– I think number one, which is what Clive has shared earlier

958 ( Jo’An )
00:38:16,039 –> 00:38:18,219
is really to keep your spending minimal,

959 ( Jo’An )
00:38:18,219 –> 00:38:21,340
the few months prior to buying or just use the debit card

960 ( Jo’An )
00:38:21,340 –> 00:38:24,619
instead of your credit card if possible.

961 ( Jo’An )
00:38:24,619 –> 00:38:27,440
You’ll be surprised how much a credit card

962 ( Jo’An )
00:38:27,440 –> 00:38:32,679
spending has on the impact on your borrowing ability.

963 ( Jo’An )
00:38:32,679 –> 00:38:35,820
Yeah, that’s number one.

964 ( Clive )
00:38:35,820 –> 00:38:37,500
– I think there are other considerations

965 ( Clive )
00:38:37,500 –> 00:38:39,059
for first timers as well,

966 ( Clive )
00:38:39,059 –> 00:38:41,460
the consideration for them usually it’s like,

967 ( Clive )
00:38:41,460 –> 00:38:45,440
hey, should I buy a $1.5 mil condo

968 ( Clive )
00:38:45,440 –> 00:38:47,000
or should I buy a $2 mil condo

969 ( Clive )
00:38:47,000 –> 00:38:48,760
which I need to stretch a bit, right?

970 ( Clive )
00:38:48,760 –> 00:38:49,739
So those are the considerations.

971 ( Clive )
00:38:49,739 –> 00:38:52,219
Then it really boils down to what they wanna do with it for.

972 ( Clive )
00:38:52,219 –> 00:38:53,659
In terms of leveraging,

973 ( Clive )
00:38:53,659 –> 00:38:57,079
I would tell them if you are looking at your TDSR,

974 ( Clive )
00:38:57,079 –> 00:38:59,940
as long as you hover around the range of 50%, 55%,

975 ( Clive )
00:38:59,940 –> 00:39:02,320
which is the current measures, coincidentally,

976 ( Clive )
00:39:02,320 –> 00:39:04,000
then that is still something that’s comfortable

977 ( Clive )
00:39:04,000 –> 00:39:06,000
because in the next five years, 10 years,

978 ( Clive )
00:39:06,000 –> 00:39:07,960
your income would grow, right?

979 ( Clive )
00:39:07,960 –> 00:39:09,539
And when that happens,

980 ( Clive )
00:39:09,539 –> 00:39:11,880
then you might want to think of decoupling

981 ( Clive )
00:39:11,880 –> 00:39:14,179
and even moving on, so it depends on your plans.

982 ( Clive )
00:39:14,179 –> 00:39:15,699
And sometimes they also tell me that,

983 ( Clive )
00:39:15,699 –> 00:39:18,639
oh, I have kids and I want to buy this property right now,

984 ( Clive )
00:39:18,639 –> 00:39:19,739
but later on I will shift,

985 ( Clive )
00:39:19,739 –> 00:39:21,340
because I need to move to another place closer

986 ( Clive )
00:39:21,340 –> 00:39:22,820
to that school, right?

987 ( Clive )
00:39:22,820 –> 00:39:24,000
So those are the considerations.

988 ( Clive )
00:39:24,000 –> 00:39:25,980
So I will say that, then maybe in this case,

989 ( Clive )
00:39:25,980 –> 00:39:27,900
if you know that you are going to move,

990 ( Clive )
00:39:27,900 –> 00:39:30,360
then you might not want to buy like a 5-bedder

991 ( Clive )
00:39:30,360 –> 00:39:31,280
or something like that

992 ( Clive )
00:39:31,280 –> 00:39:33,679
where only the two of you are staying in, right?

993 ( Clive )
00:39:33,679 –> 00:39:35,039
So those are the considerations.

994 ( Clive )
00:39:35,039 –> 00:39:36,760
But from a loan perspective,

99 ( Clive )
00:39:36,760 –> 00:39:38,139
I generally will tell them

996 ( Clive )
00:39:38,139 –> 00:39:40,760
that although now the government allows you

997 ( Clive )
00:39:40,760 –> 00:39:44,659
to leverage up to 55% of your income towards the property,

998 ( Clive )
00:39:44,659 –> 00:39:47,820
you’ll probably want to keep it about the 40%, 50%

999 ( Clive )
00:39:47,820 –> 00:39:48,860
just to be safe.

1000 ( Clive )
00:39:48,860 –> 00:39:50,199
Just to be safe.

1001 ( Melvin )
00:39:50,199 –> 00:39:52,000
– Right, great thanks.

1002 ( Melvin )
00:39:52,000 –> 00:39:55,239
Yeah, any final advice for our audience before we end

1003 ( Melvin )
00:39:55,239 –> 00:39:58,699
today’s chat, maybe we start from Jo’An first.

1004 ( Melvin )
00:39:58,699 –> 00:40:01,619
Any final tips that you wanna share?

1005 ( Jo’An )
00:40:01,619 –> 00:40:03,519
– I think if you’re looking to buy a property,

1006 ( Jo’An )
00:40:03,519 –> 00:40:05,599
it’s very important to do your approval in-principle,

1007 ( Jo’An )
00:40:05,599 –> 00:40:08,780
but how you define, so for example, your basic income

1008 ( Jo’An )
00:40:08,780 –> 00:40:11,820
and how the bank is define a basic income is very different,

1009 ( Jo’An )
00:40:11,820 –> 00:40:14,320
so it’s important to get the commitment from the bank

1010 ( Jo’An )
00:40:14,320 –> 00:40:15,179
that, hey, you know what?

1011 ( Jo’An )
00:40:15,179 –> 00:40:17,440
I’m gonna extend this amount of loan to you,

1012 ( Jo’An )
00:40:17,440 –> 00:40:19,699
before you go and place the option

1013 ( Jo’An )
00:40:19,699 –> 00:40:22,219
and then do a valuation check before,

1014 ( Jo’An )
00:40:22,219 –> 00:40:25,619
to ensure that you are not overpaying for the property.

1015 ( Jo’An )
00:40:25,619 –> 00:40:30,500
That’s the two things that I think is very important.

1016 ( Melvin / Clive )
00:40:30,500 –> 00:40:31,780
– How about Clive? – I think for me,

1017 ( Clive )
00:40:31,780 –> 00:40:35,219
it’s you really need to do forward planning.

1018 ( Clive )
00:40:35,219 –> 00:40:38,300
If you know that you want to be investing in properties,

1019 ( Clive )
00:40:38,300 –> 00:40:40,920
there are certain things that you can do deliberately

1020 ( Clive )
00:40:40,920 –> 00:40:43,820
in structuring your loan that would gear you up

1021 ( Clive )
00:40:43,820 –> 00:40:46,340
for a more efficient purchase in future.

1022 ( Clive )
00:40:46,340 –> 00:40:48,139
So if you know that, right?

1023 ( Clive )
00:40:48,139 –> 00:40:50,579
And you must really forecast it,

1024 ( Clive )
00:40:50,579 –> 00:40:51,659
you can come back and we say, okay,

1025 ( Clive )
00:40:51,659 –> 00:40:53,980
when we sit down at the table to buy a private property,

1026 ( Clive )
00:40:53,980 –> 00:40:55,519
how do we structure the loan

1027 ( Clive )
00:40:55,519 –> 00:40:57,880
so that in future it’s much easier?

1028 ( Clive )
00:40:57,880 –> 00:40:59,300
And there are a lot of tools,

1029 ( Clive )
00:40:59,300 –> 00:41:01,880
especially when you buy into a private property, right?

1030 ( Clive )
00:41:01,880 –> 00:41:05,440
That can really help you grow your entire portfolio

1031 ( Clive )
00:41:05,440 –> 00:41:07,320
in the residential market and then after that,

1032 ( Clive )
00:41:07,320 –> 00:41:08,760
you will start looking at the commercial market

1033 ( Clive )
00:41:08,760 –> 00:41:10,960
because you don’t wanna keep paying,

1034 ( Clive )
00:41:10,960 –> 00:41:13,719
especially now third property 25% ABSD,

1035 ( Clive )
00:41:13,719 –> 00:41:15,500
so you’re going to the commercial market

1036 ( Clive )
00:41:15,500 –> 00:41:18,179
to stop paying ABSD, right?

1037 ( Clive )
00:41:18,179 –> 00:41:19,280
So those are the plans,

1038 ( Clive )
00:41:19,280 –> 00:41:22,719
you must really forecast 10, maybe 15 years down the road,

1039 ( Clive )
00:41:22,719 –> 00:41:25,639
if you can, then we can work backwards to see

1040 ( Clive )
00:41:25,639 –> 00:41:28,340
how we can streamline the purchases along the way.

1041 ( Melvin )
00:41:28,340 –> 00:41:31,460
– Thank you for staying tuned with us on this episode

1042 ( Melvin )
00:41:31,460 –> 00:41:33,480
and everything about mortgage loans,

1043 ( Melvin )
00:41:33,480 –> 00:41:35,119
so if you want to know more about Redbrick

1044 ( Melvin )
00:41:35,119 –> 00:41:37,079
and their services, as well as their advisory,

1045 ( Melvin )
00:41:37,079 –> 00:41:38,460
you can head onto their website,

1046 ( Melvin )
00:41:38,460 –> 00:41:41,159
you can also look for Clive and Jo’An, their team,

1047 ( Melvin )
00:41:41,159 –> 00:41:42,780
I think they’ll be very happy to chat with you further

1048 ( Melvin )
00:41:42,780 –> 00:41:44,460
about your plans whether is it refinancing

1049 ( Melvin )
00:41:44,460 –> 00:41:46,139
or purchasing that first home.

1050 ( Melvin )
00:41:46,139 –> 00:41:47,800
So thanks for staying tuned to Sofa So Good

1051 ( Melvin )
00:41:47,800 –> 00:41:48,840
and we’ll see you soon, cheers.

1052 ( Jo’An / Clive )
00:41:48,840 –> 00:41:50,340
– Thank you. – Thank you.

1053
00:41:50,340 –> 00:41:52,780
because we don’t want to have any surprises from the bank

1054
00:41:52,780 –> 00:41:54,639
after you place the option,

1055
00:41:54,639 –> 00:41:58,000
so I think there are many calculators online.