At 30 years old, your spouse and you have been living with your parents. You are evaluating  to purchase a resale property for your spouse and you to live in. Currently, your gross income  is $60,000 per year while your spouse does not work. You have a new car loan $60,000 and outstanding credit card debt of $20,000. 
You have savings, $80,000 in cash but no other asset. Your outstanding balance in your Central Provident Fund (CPF) Ordinary Account which you can use to repay housing loan is $0:

(a) You intend to pay off your $20,000 credit card debt in 5 years. The current annual  percentage rate (APR) is 24%.Compute the amount you need to pay every month?

(b) Your new car loan of $60,000 taken is at APR of 5% per year for 5 years. You are going  repay your car loan monthly. Determine the monthly payment to your car loan and the effective annual rate (EAR)?

(c) Based on the current Central Provident Fund (CPF) rate, employer contributes 17% of  gross income while employee contributes 20% of gross income. Given the total  contributions (employer and employee) is 37%, 23% out of the 37% goes to Ordinary  Account, 6% goes to Special Account and 8% goes to Medisave Account for your age group. You can only use the balance in the Ordinary Account to repay housing loan. 
What is the monthly CPF amount that can be used to repay your housing loan? 

What is the maximum amount of monthly repayment (including CPF Ordinary Account) you can have to repay a housing loan? 
(d) To buy the resale property, you have approached a bank for a home loan for 30 years.  The current home loan rate is 3% per year. Based on Monetary Authority of Singapore  (MAS) rules for total debt servicing ratios (TDSR), the bank can only lend you a  maximum of 55% of your gross monthly income? The TDSR is defined as:

TDSR = (borrower's total monthly debt obligations / borrower's gross monthly income)*100% 
where the borrower's total monthly debt obligations is the sum of your monthly car  loan, credit card debt and housing loan?Find the maximum loan amount the bank can  lend to you based on your gross monthly income? 

(e) Should you buy the resale property now? Appraise using financial considerations above and other factors?

Answer rating: 100% (QA)

a The amount you need to pay every month to pay off your 20000 credit card debt in 5 years would be ... View the full answer