Property prices suddenly began to sink again in the third quarter of this year, with the annual increase evaporating and falling. The significant drop in property prices may be "good news" to Home Ownership Scheme owners, as it provides them with a golden opportunity to pay for their land at a cheap price. Owners who did not complete the land premium payment last year while property prices were low should not miss this opportunity again.
Owners of properties that have fully paid for their HOS flats or have not fully paid for them can use bank mortgages to pay the land premium without having to pay the land premium in one lump sum. Using a bank to replenish the land price for a mortgage can not only successfully replenish the land price, but also achieve the effect of cashing out in disguised form if there is still a remaining loan. With interest rates currently high, excess cash can be used for interest-earning investments to offset interest expenses on mortgage repayments.
The lower the property price, the cheaper the land premium will be.
The land premium is calculated by deducting the discount rate from the property valuation when purchasing the HOS flat. Due to the current decline in property prices, the property valuation has also declined. Therefore, the land premium will be cheaper a few years ago when the property market was high. For example, Mr. Chen's (pseudonym) home ownership flat is valued at NT$5 million, with a discount rate of 30%, and the required land premium is NT$1.5 million. Assume that Mr. Chen's HOS flat valuation was $6.5 million a few years ago, and the land premium he had to pay at that time was $1.95 million. The difference between the two was $450,000. Since the government has relaxed the bank mortgage ratio to 70%, if the property has been fully paid or has been paid for a period of time, the owner may have a chance to cash out the remaining loan by refinancing or remortgaging to compensate for the land price.
For example, the current valuation of Mr. Chen's unit is NT$5 million, and he still has an outstanding loan of NT$1.5 million. After obtaining a 70% mortgage, he can obtain a loan of NT$3.5 million, deducting the land premium of NT$1.5 million and the outstanding loan of NT$1.5 million. 500,000 yuan can be cashed out. In addition, you can get additional rewards when you apply for a mortgage through a mortgage referral company. Coupled with the bank cash rebate, the actual amount "taken away" is not only NT$500,000.
Can be put up for sale after paying the land price
There are several advantages to HOS flats after land premium is paid, including that they can be sold in the private market and the properties will be rented out. Before the "Policy Address" is released this year, another benefit of the land premium Home Ownership Scheme is that buyers can assume 90% of the mortgage. However, since the government has extended the HOS guarantee period to 50 years, that is, the property price can be used to finance 90% of the mortgage for the first 40 years, there is one less advantage compared to the past land premium.
However, the property can be rented out, which is naturally beneficial from the perspective of using funds. Especially since property prices are currently on a downward trend, property owners want to strengthen their defense. Taking advantage of the current situation where rents are rising and the mainstream market prefers to rent rather than buy, leasing properties to preserve their strength is also a proper approach.