With soaring property prices and unceasing cooling measures, more buyers are considering buying their second or third property under their children’s names.
Here are some of the reasons:
1) Buy for the next generation just in case they can’t afford one in the future.
2) Buy it under a child who hasn’t bought any property to avoid paying ABSD (Additional Buyer Stamp Duty).
3) Ask a child under 30 to buy the property and apply for a 30 or 35-year loan, for higher loan-to-value ratio, longer tenure and lower monthly repayment.
Being a nerdy bookworm, the number of books I can borrow from libraries is never enough. So when I find out that there’s no age limit to apply for library membership, I immediately know how to ‘work around it’.
One afternoon while my one-week-old baby was sleeping and my confinement lady was busy, I sneaked out of the house and headed straight to the nearest library.
With my baby’s birth certificate and my IC, the application was instantly approved. In less than 5 minutes, I got a welcome pack and a new membership card.
I couldn’t wait to borrow six books right away using the new card. Hurray! I could now borrow a total of 14 books – six more than the original eight from my premium membership card!
It didn’t take long for me to realize that it’s difficult to cope with both a newborn and the new books I borrowed. Twenty-one days passed like a split-second and I was soon behind the return date.
At the end, I had to settle the sum of late payment (for my baby). I also found out from the librarian that all fines are capped at $25. Exceeding that, your borrowing account will be automatically suspended from the system – until you come in person to ‘clear the debt’.
Fortunately, I have returned the books and paid the fine. Otherwise, my poor girl will be banned from the library system even before she learns ABC!
The morale of this story: If you want to buy any property under your children, do them a favor and pay it in full!
Alternatively, make sure that you or the younger generation have no problem paying the mortgage to avoid repossession by the bank in the future. You don’t want to leave a permanent mark in the credit history of your kids.
Above all, buy with a ‘safety margin’ to avoid the property becoming a negative equity (outstanding loan higher than property value) when the market prices continues to go south. You don’t want to see your children coughing up money to top up the difference (between the outstanding loan and property’s current value) while being pressed by the bank.
Remember the Japanese who bought properties during the property bubble in the 1980s with a multi-generation mortgage of 100 years. After two lost decades (and still counting), their second and third generations are still repaying those home loans borrowed by their grandfather!
Haha, buying in my sons’ names, I didn’t encounter any problem until when they came back from the U.S. after the Lehman Brothers disaster in 2008 and I asked them to sign Trust Deeds. You can guess what big problem I got into, totally un-prepared?
wingping
Haha, really? I don’t think I am that type of parent who will buy properties in my children’s names. Will tell them mommy won’t have anything to give to them, except my unconditional love and good memories. Hopefully they can fend for themselves as soon as possible.