Question: Wilfred, my girlfriend and I are 26 years old. We intend to buy a new flat. However, the prices are so expensive that we figured we need to save for quite a long time before we have enough to pay for the downpayment. Moreover, we do not wish to borrow to the maximum as we do not have the intention to remain in debt for so long. My parents are willing to help us by paying for part of the flat. They say, it is a good opportunity for them to indirectly invest in new HDB flat so as to take advantage of the subsidy. I think this is a good arrangement as it lightens our financial burden. Moreover, with the financial backing, we can aim for better location or even go for Executive Condominium. What is your opinion?
Answer: I am concerned that your parents and you are trying to break the law when you say they are helping out to invest indirectly in a HDB flat. According to HDB Act 51(8), HDB flat cannot be held in trust without prior approval. Moreover, you should try to solve your own problems instead of relying on parents’ help. They raised you up for more than 2 decades. It is time you stand on your own two feet and manage your own finances. It is more healthy for your marriage that you and your wife-to-be do not get yourselves into a situation in which parents interfere with the way your family is run. Learn to be independent. Grow up. You are no longer a small boy.
As for not wanting to get into too much debt, you can always go for a smaller HDB like 4-room flat. It does not mean you will need to stay in the same flat forever as you can always move to a larger property after the minimum occupancy period. This depends on your financial situation which means it depends on the growth of your salary. Perhaps it is more important to ‘invest’ in your own career / education so as to get a higher salary which in turn will help you in your finances. There is also a discipline in financial planning call credit management in which you pay off your debt in a certain way so as to reduce the period of loan. Credit management is only offered by professional financial planners but it can also be learnt as it is not too difficult.
You may wish to read this related article: Man lost almost his entire property to siblings due to poor financial planning in which an individual lost almost his entire property because HDB flat cannot be held in trust without prior approval.
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