Dave's Approach:

We mapped out their affordability carefully, taking into account their limited remaining CPF OA, existing disciplined cash savings, and the eventual sale proceeds from their fully MOP-completed HDB flat. The Deferred Payment Scheme (DPS) was the key enabler, allowing them to secure the EC while keeping their family settled during the construction period.

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We identified a 3-bedroom EC unit priced at $1.48M. The DPS structure allowed them to:

• Secure the unit with lower initial outlay

• Continue staying in their HDB until the EC TOPs

• Sell the HDB closer to TOP to avoid interim rental

• Use HDB sales proceeds later to fund remaining obligations and loan servicing

 

Transaction Breakdown:

• Purchase Price: $1,480,000

• Buyer Stamp Duty: $42,000

• Legal & Misc: $4,000

• Total Cost: $1,526,000

• Loan (75% LTV): $1,110,000

• Cash + CPF Required at booking: 5% cash + 15% CPF: $74,000 (cash), $222,000 (CPF)

 

Funding Allocation at Booking:

• CPF OA available: $55,000 (used fully)

• Cash used: $74,000

• Shortfall for booking: $222,000 - $55,000 = $167,000 (fully covered from disciplined cash savings)

• Remaining cash buffer after booking: $240,000 - $74,000 - $167,000 = -$1,000 (effectively fully funded with negligible shortfall)

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Deferred Payment Scheme Timeline:

• No loan repayment required until TOP (approx. 3 years)

• Continued CPF and cash savings accumulation during construction

• Estimated additional savings before TOP: ~$100,000 (combining ongoing monthly CPF and cash savings)

• Existing HDB sold near TOP, projected sale price: ~$730,000

• Outstanding loan balance at sale: ~$200,000

• CPF refund (principal + accrued interest): ~$380,000

• Estimated net cash proceeds from HDB sale: ~$150,000

• Total sales proceeds (cash + CPF refund): ~$550,000

 

Holding Power Assessment:

Upon TOP, after HDB sale and applying the full net proceeds, all remaining obligations are comfortably met. Post-TOP monthly loan instalments at 3% interest over 25 years will be approximately $5,240, well within their income capacity even if one party takes a temporary career break for childcare needs.

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Final Plan & Outcome:

Daniel and Cheryl proceeded with the EC purchase under the DPS. The approach allowed them to provide their children with a better living environment while maintaining stability throughout construction. Their disciplined long-term savings effort provided the financial capacity to cover the booking stage fully, eliminating the need for interim financing. The timing of the HDB sale closer to TOP ensured maximum equity extraction while avoiding unnecessary cash flow pressure during construction.