tag:blogger.com,1999:blog-17478547.post7291447729434719361..comments2024-03-27T20:17:30.597+08:00Comments on Growing your tree of prosperity: After Action Review : Supercharge your REITS investments.Christopher Ng Wai Chunghttp://www.blogger.com/profile/15534057160494859977noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-17478547.post-35335075562528452952017-11-29T00:21:58.383+08:002017-11-29T00:21:58.383+08:00Hi SGDividends,
Mortgage interest is not tax dedu...Hi SGDividends,<br /><br />Mortgage interest is not tax deductible in Singapore.<br /><br />For me it involved moving around with the ownership as well to optimize TDSR so i needed a lawyer to structure. I paid 3k (which the back subsidized). I'm not sure its just a simple equity loan if you need a lawyer, but that is at most 3-5k which a one time cost. <br /><br />Btw, you can take a equity loan even if you are not the "owner" of the house. DBS for example allows for Mortgagor (owner who pledges house as collateral) to be and the borrower (TDSR salary requirement) to be separate person.Hhttps://www.blogger.com/profile/01278790002776880646noreply@blogger.comtag:blogger.com,1999:blog-17478547.post-81023570485283521012017-11-26T19:06:50.555+08:002017-11-26T19:06:50.555+08:00Hi cool guy,
Thanks.. agree with u. Cashflow has...Hi cool guy, <br /><br />Thanks.. agree with u. Cashflow has to be right . <br /><br />I believe one can claim rental tax relief on the interest too..correctly me if I'm wrong if u use a rental property <br /><br />Is there any fee for equity loan like lawyers or processing ?SGDividendshttps://www.blogger.com/profile/10774926511253473514noreply@blogger.comtag:blogger.com,1999:blog-17478547.post-32917466253517020212017-11-26T11:16:02.546+08:002017-11-26T11:16:02.546+08:00Maybe in a future article, I will simulate a term ...Maybe in a future article, I will simulate a term loan and a margin account, and then calculate the probability of utter destruction.<br /><br />Looks fun so long as no one actually tries it.Christopher Ng Wai Chunghttps://www.blogger.com/profile/15534057160494859977noreply@blogger.comtag:blogger.com,1999:blog-17478547.post-11912218294196588652017-11-26T00:40:29.623+08:002017-11-26T00:40:29.623+08:00Yes you could but that will increase the ways/chan...Yes you could but that will increase the ways/chances that something can go wrong and also magnify the impacts when something does go wrong... responsible leverage :)Hhttps://www.blogger.com/profile/01278790002776880646noreply@blogger.comtag:blogger.com,1999:blog-17478547.post-69510691664970091852017-11-24T08:50:26.627+08:002017-11-24T08:50:26.627+08:00Oh my goodness, I just realised that proceeds from...Oh my goodness, I just realised that proceeds from a term loan can be farmed into a margin account !Christopher Ng Wai Chunghttps://www.blogger.com/profile/15534057160494859977noreply@blogger.comtag:blogger.com,1999:blog-17478547.post-67908686267472922682017-11-24T08:43:47.061+08:002017-11-24T08:43:47.061+08:00Thanks, this is a solid strategy and share !Thanks, this is a solid strategy and share !Christopher Ng Wai Chunghttps://www.blogger.com/profile/15534057160494859977noreply@blogger.comtag:blogger.com,1999:blog-17478547.post-26530812407461677912017-11-24T00:35:40.205+08:002017-11-24T00:35:40.205+08:00It's called a term loan and this is how it wor...It's called a term loan and this is how it works.<br /><br />You will need a <br />1. private property (you can't do this with a HDB) <br />2. less than 80% mortgage on your property. <br />3. Income (because of TDSR)<br />4. Age not too close to 65<br /><br />Example.<br />For simplicity, assume your property is valued at 1 million and fully paid up and that you are 45 years old earning $10000 per month<br /><br />The banks will be happy to grant you a term loan $800000 using your house as collateral at regular mortgage rates... currently about 1.5% still.<br /><br />At 1.5%, 800k, 20 year mortgage. Monthly repayment is 3,860. (Note, In order to comply with TDSR you will need to earn about 7k a month assuming no other loans outstanding. Eg car loan)<br /><br />You can then use that 800k to invest in Reits. <br /><br />The key benefit with this approach is that you will never suffer from a margin call. Your 800k position might become zero (if you bought Noble) but you would never get margin called<br /><br />The key drawback is that because you are paying back principal every month, you nett cash flow may not be very high. 7%*800K - (3860*12) = 10k cash flow. Only equivalent to having another 142K of assets generating cash flow at 7% even though you borrowed 800k. You are still building NAV though because the money actually went back to repaying the loan. (Your loan is getting smaller but your 800K reit is still there)<br /><br />Additionally because of risk that your investment is not able to offset this high outflow, or that the mortgage interest climbs to 3%, you might need to keep a year's repayment as buffer hence you might not invest the full mortgaged sum leading to a overall lower return due to the unutilized capital. <br /><br />Another limitation is that this only works if you have a sufficient equity to release in your property and you earn a fairly good salary. It will not work for a fresh grad.Hhttps://www.blogger.com/profile/01278790002776880646noreply@blogger.com