![]() ![]() Retirement researcher Dr Wade Pfau recommends that reverse mortgage greatly enhance a retiree’s income. ![]() In the United States, this is also a problem. This is not a problem unique to Singapore. There are other options out there, but for some reason, they seem unappealing to retirees. The problem is that they would still need to live on their property. Many of the seniors grew up in a situation where there are limited investment options and the safest wealth-building way is through holding multiple properties or scaling up properties.Įventually, they end up with their property and CPF being a large part of their assets. This solution is less for us but for immediate seniors. Equity Income Loan Unlocks a “Third” Stream of Income for the Asset Rich, Cash Poor With those things out of the way, let us think deeper about this loan. At the end of the loan tenure, the property must still have 30 years of lease left (this means that when you apply, the lease left must be ).Only Singaporeans and Permanent Residents need to apply.I suspect that in the event that the donor (the owner) is mentally incapacitated, the donee appointed have the power to make the financial decision to service and pay off the loan. The borrower needs to set up a Lasting Power of Attorney (LPA) if they have not set up one to qualify for the loan.Only private property owners are eligible for this loan.The interest accrued is fixed at 2.88% a year.There must not be an existing mortgage tied to the property. ![]() You will still retain the equity of the home.This means that the loan amount is limited. The lump-sum can only be used to top up to the owner’s CPF RA and up to the Enhanced Retirement Sum.The income is for you to spend on your expenses. Due to #1, you do not have to worry whether the increase in income will go towards covering the interest payment.You do not have to serve interest or principal payment during the loan tenure but only at maturity.There are some features of this equity income loan that is unique: I think currently, none of the local banks offers a reverse mortgage.įrom what I understand of a reverse mortgage, there are clauses in the loan tied to the maintenance and upkeep of your property condition. A reverse mortgage is also a loan but is more tightly integrated with your property. As your CPF RA is topped up, and you have reached 65 years old, your CPF LIFE annuity provides a higher income.Once DBS approves the loan, this lump sum will be used to top-up both your spouse and your CPF RA respectively.Determine how much your spouse and you need to top-up in your CPF Retirement Account so that it will reach the Enhanced Retirement Sum (ERS).Assess the latest value of your private property.Many homeowners also prefer to remain in their own homes and be in familiar surroundings.Īs a senior, you need more income so that you have more money to meet your expenses (or just more income because more income is cool)īut you do not have any more resources that you could use to generate the income (or because you are unaware or unwilling to touch other resources)ĭBS Home Equity Income loan fits your need: The DBS Equity Income loan serves the senior Singaporeans or PR that lives in a private property who wish to supplement and enhance their retirement income.Īccording to DBS’s research, the average homeowner above 50 years old here holds some 60% of their wealth in housing equity. How does the DBS Home Equity Income Loan Work?ĭBS provided this very nice infographic to easily explain how the home equity income loan work.
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