Unlock the value of your home

Unlock the value of your home

Cashing in your fixed assets to make retirement a bit easier is a logical step but somehow property has wormed its way into a special place in our hearts and we just can't bear to let it go.

How to unlock the value of your home

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    Depending on your location and the size of the rooms, you will be able to earn at least a few hundred dollars a month. People who have the luxury of living with their children can sublet their entire apartment and reap some serious money.

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    Significant sums of money can be tapped if elderly home owners sell up and downgrade to smaller apartments.

    For example, a 1,346 sq ft unit in Springdale condominium sold for $1.45 million in May, while a 1,130 sq ft unit in the same development went for $1.15 million in the same month.

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    This cash incentive is aimed at encouraging those over 55 to downgrade their homes to buy three-room or smaller HDB flats.

    The bonus cash carrot can go as high as $20,000 if they use some of the net sales proceeds to top up their CPF Retirement Account and enter the CPF Life annuity scheme.

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    One of the rules is that at least one owner has to be a Singapore citizen aged 55 or above and the gross monthly household income should be $3,000 or less.

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    This is a subsidised scheme targeting lower-income elderly households, which allows HDB residents in three-room or smaller flats to monetise their flats to supplement their retirement needs.

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    This scheme applies to owners of three-room or smaller flats, with at least one owner who is a Singapore citizen.

    All owners have to be 63 or older with a gross monthly household income of $3,000 or less. The owners cannot have a second property, and must have lived in the flat for at least five years.

Call it perverse perhaps, but most Singaporeans would rather hold on to their real estate and live - or scrape by on - an asset-rich but cash-poor life.

Yet there are schemes that can turn the value of their homes into real spending money.

For example, reverse mortgages allow home owners to convert the savings locked up in their houses into a steady stream of income.

Reverse mortgages, which NTUC Income and OCBC Bank used to offer a few years back, met with such cool demand that both institutions have canned them.

Instead of a regular loan where the property owner pays a monthly instalment to the bank, reverse mortgages involve the financial institution paying the borrower. It is akin to a line of credit and provides a regular income stream. The main reason senior citizens shunned them is that on the mortgagor's death, the property will be sold by the bank for the deceased's estate so the parents could not bequeath it to their children.

But there are other programmes around, some offering juicy cash bonuses from the Housing Board, others involving banks, with the aim of letting people use some of the capital that has built up in their homes and now sits idle.

Mr Ong Lean Wan, chief executive of financial advisory Life Planning Association, noted that any decision to do with property is an "emotional one".

"It is not easy to advise them on what to do. Also, what if they sell now, and prices increase in the next three to five years? What would they feel about missing out on $50,000 or $100,000?" he said.

"For those who are really short of cash, this will probably be a good idea, but they just have to make sure that they do not regret their choices."

If you are open to the idea of turning your home into a cash generator during retirement or are just keen to transform bricks and mortar into dollars and cents, check out some of the options here:

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