Saturday, January 16, 2010
HDB Mortgage Slaves
I have been writing a lot on HDB policies and the ills of it recently basically because I am keeping up the pressure on the Minister of National Development to do something about it.
Mr. Mah Bow Tan has been very hardworking recently. I should say that he has made his utmost efforts recently to appear in Main Stream Media (MSM) to explain his HDB pricing policy is still "affordable".
Mr. Leong Sze Hian of TOC (The Online Citizen) has written quite a number of comments and queries on HDB policy. He has made many valid points and HDB has so far unable to provide satisfactory answers to all the questions raised so far.
According to Mr. Mah Bow Tan and his statutory board HDB, HDB flats are still "affordable", citing the "fact" that most Singaporeans are using less than 30% of their income for their HDB mortgage payment.
However, I should point out here that the Minister and his people have missed the point totally. They have based their "affordability" argument on a mortgage of 30 years. When I bought my HDB flat, I have tried to choose to go a mortgage of 15 years instead of 25 years. We settled for a 20 year mortgage instead.
My reason for a shorter mortgage is that the longer mortgage you have, the more interests you pay. And the increase of interests is not linear but rather compounded. Furthermore, imagine if you buy your flat at the average age of 27, if you go for 30 years of mortgage, it would mean that you could only pay off your mortgage at the age of 57! And if you use all your money in CPF to pay the mortgage, you will have no money for your retirement!
So what happen if you don't have enough savings for your retirement? In fact, the problem of insufficient retirement financing is surfacing slowly. The extend of the problem will explode in the next two decades when 3 generations of Singaporeans have spent all their money in financing their mortgage (for 3 decades) and have nothing left for retirement at all.
Now PAP government will tell you that oh, you can actually do a reverse mortgage of your flat! How nice of that, right? But it would mean that after slogging for 30 years, you will have nothing left to leave for your children!
In fact, the kind of "precision mathematics" that the PAP government has laid out for most Singaporeans is that most of us will be enslaved by the whole system! You will be slave to your HDB mortgage for all your working life and please make sure that you don't lose your job during this 30 years period else you will be living like those campers at Sembawang Park, Changi Beach, East Coast Park... without a roof over your head. But the best thing is this, even if you managed to pay off your mortgage for the 30 years of your productive life, you will be left with nothing for retirement!
Thus, the PAP government will OFFER you to reverse mortgage your HDB flat! Meaning that you have paid hefty interests (believe me, the total amount of interests you are paying may even be 50% of the loan if you loan from banks!) in paying for your HDB flats, you will end up selling it away cheap cheap to the government or banks! And if you die early, the government of bank will have the last laugh in taking your whole flat without paying anything further!
It means that, we will practically become SLAVES of our HDB mortgage! I would advise my young readers that if you are looking for a flat, make sure that you could pay off your mortgage in 15 years at your comfort zone... preferably 25% of your total household income. At the very worst, take only 20 years of mortgage and nothing more than that. If you can't, you better consider other alternatives. Don't be enslaved by this system, this myth of "affordability".
I will continue to fight the PAP, urging people of Tampines to vote Mah Bow Tan out, to send a strong signal to PAP that we do not want to be enslaved by the very system that they have built. We don't want our children to pay crazy prices for just a PUBLIC HOUSING which will in the end enslave them for the rest of their lives. We want to tell the PAP government that they could no longer fool us with such flawed argument and mathematical calculations. Most importantly, we want change to the way on how our lives are being governed.
Goh Meng Seng