Not only it does improve your cash flow, but several benefits come along with downsizing and rightsizing your property such as (HDB, EC, CONDO). We’ll talk more in the context of HDB today.
What exactly is downsizing your flat?
The actual terminology is downsizing, or rightsizing (as how HDB labels it), is the conversion of your property into a size that is optimum for you and your family.
To put it simply, if you are living in a 5-room flat that has space that is not utilized, you can consider this move.
Downsizing is one of the methods you can consider releasing value from your property. Upon the move, you will make a net sale proceed which will in return improve your cashflow.
With funds unleashed, you may even consider injecting the funds into investments, or it can serve as a just-in-time or emergency fund such as (SARs, COVID-19) to maintain your cash flow.
What are the returns after downsizing?
With the decision to consider for downsizing, take a look at the visual below to have a better idea to carefully consider the cost involved.
We know that as a potential property seller, my utmost priority would be to minimize the cost involved to the best of me and my family's interest.
Consider your outstanding housing loans & Taxes (if any). This amount has to be factored in when you get your projected net sale profit.
Plan and factor in your future housing cost.
Take data from previous resale median prices in a different location as a point reference. Have a look at the data below to find out the average median resale price of as a guide based on your residing estate
4 room median resale price on average FY2019
Source from data.gov.sg
5 room median resale price on average FY2019
Source from data.gov.sg
Opportunity cost. Be realistic at your goals to strike a balance to have a fair amount of amenities versus the available transport networks. Strike a balance to your desired profit.
Other Expenses should be considered and factored in such as any possible repair or renovation cost involved to which may be used to improve you and your family's lifestyle.
Got incentives not?
I feel you. That's what I'll be asking too. Besides the proceeds from the sale of flat, do bear in mind that there are 2 incentives we should look at to better guide us at our choices.
Silver Housing Bonus
If you are selling your current flat or private housing with Annual Value not exceeding $13,000 and buying a 3-room or smaller flat, you can supplement your retirement income through the Silver Housing Bonus (SHB) scheme. Find out how you can apply for the SHB and receive up to $30,000 cash bonus when you top-up your proceeds into your CPF Retirement Account (RA), and join CPF LIFE.
Source from HDB.gov.sg
If you are a senior Singaporean/PR who is aged 55 and above, you may want to consider this scheme when your kids have branched out to their own homes and this silver housing bonus may be a good choice to leapfrog your retirement planning.
After slogging and working for decades to raise your children, how about making good use of the bonus to secure and stabilize your retirement?
Write to us and let us know if your parents have taken this scheme and how is it okay?
2.Proximity Housing Grant
The Proximity Housing Grant (PHG) has been introduced to help more families to buy a resale flat to live with or close to each other for mutual care and support.
Source HDB.gov.sg
It will be a value-added assurance that while attending to your daily lives, you are also able to be near your parents or have your parents near you to continue to enjoy the family support for one another.
Asides these two schemes, elders aged 65 & above with many years remaining in their HDB flat's lease may consider the Lease Buyback Scheme. It allows an individual to sell off a portion of their flat lease. Of course, there are more considerations to take note of should one decides to pursue this scheme.
Always remember, before any decision, PLAN, THINK & CALCULATE wisely for the long haul.
Not sure what to do next?
HYMK Propertyplace is for you. Get in touch with us and let us assist you to explore the possibilities to execute tailored property strategies for the best of your interest.
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