Mortgage 101: Singapore Edition [Chills 60 with Mortgage Master]

Not sure if you should refinance your mortgage? Can’t tell the difference between SIBOR and SORA? Floating vs fixed rate – what are the pros & cons? If you are looking for advice on mortgages in Singapore, you’ve come to the right place. Get your mortgage questions answered in Chills 60 as we discuss everything you need to know about mortgages in Singapore with The Mortgage Master ( himself, David Baey!

In this episode, we are going on a deep dive into the topic of mortgages in Singapore, a topic that has befuddled many. Whether you are a salaried employee or self-employed, you will learn how to calculate your loan eligibility with concrete examples & numbers. You will also get David’s honest opinions on strategies like “sell one, buy two” and your options when it comes to leveraging.

PS. Check out Coconut Avenue, one of the podcasts under The Financial Coconut where we discuss property-related topics in Singapore! Season 2 just started and you do not want to miss it:


podcast Transcript

Andrew: How do you get the best mortgage deals for yourself? Should you refinance? We talk about interest rates and what you need to know about SORA (Singapore Overnight Rate Average), which is the new interest rate benchmark in Singapore. Understand what it means and how it affects you. Also, should you choose fixed or floating rate? 

For all these questions, you’re not going to hear “it depends” kind of answer because my guest is very forthcoming, no-holds-barred kind of style. He’ll share his own take on several questions related to mortgages. 

Expand Full Transcript

We talk about foreclosure and what happens when you cannot pay off your mortgage loans. You’ll also find out how to calculate your loan eligibility with concrete examples and numbers and we’ll consider different scenarios like whether you are self-employed or an employee. We also discuss insider strategies on how high net worth individuals leverage to buy more properties. 

Although I have to say that what you’ll hear is not financial advice. Please do your own due diligence. Let’s understand the pros and cons of such leveraging strategies.

Hello, my name is Andrew and welcome to another Chills with TFC episode. In this series, we talk to interesting people with relevant experience and insights to help us learn from their perspectives so that we can create the life we love and manage our finances well. 

My guest first appeared on Coconut Avenue, our property podcast and he has shared useful tips regarding mortgages. Therefore, we’ve invited him on Chills with TFC to share more about this topic. Let’s welcome CEO and co-founder of Mortgage Master, David Baey!

You’ve been on Coconut Avenue. That was our property podcast. That was a bit more than six months ago. Give us an update on how the property market is doing? How are the mortgage rates? Are more people taking up mortgage rates… or less people? What’s the interest rate? Give us some context. 

David: Okay, so on interest rates first. Interest rates seemed to have reached an all-time low maybe around April, June this year. That was probably when I was on Coconut Avenue and it has not shifted much from there.

In fact, it is tiering a little… very little upwards. For example, for a significant sized loan, let’s say two million, 1.1%, two, three years fixed is now 1.15%, three years fixed. Three basis points is really insignificant, but at the same time, it is slowly tiering upwards. 

Why so? Because there is talks in the market that the US Fed rates may increase by 2023 and when that announcement happens, it will be priced in before and so interest rates will start tiering upwards. As such, right now, floating rates are actually tiering… The spreads are so low, SORA rates start from… a million-dollar loan will get you SORA plus 0.8, which gets you less than 1%.

Andrew: If you need some reference, you can refer to the Coconut Avenue episode. Search for “Mortgage Master David”. But for the sake of this episode, for those who are listening in for the first time, I also need to have us define SORA. 

David: Yeah, wow… ouch. Okay. Long ago, we have used SIBOR for the longest time. I think most people in the finance world know what SIBOR is: singapore Interbank Offered Rate. It’s a rate of which ABS (Association of Banks in Singapore) publishes every morning and it actually is a rate of which banks lend and borrow money from each other, that’s why Singapore Interbank Offered Rate. 

This rate is transparent and fair because banks cannot cheat banks. So DBS has been having… The three local banks, DBS UOB, OCBC having a lot of liquid cash, will lend money to foreign banks for the time being when foreign banks have to do huge loans to their clients. 

However, because of London, LIBOR (London Interbank Offered Rate) was manipulated in the past by certain banks… HSBC and others. I’m not trying to say…

Andrew: I didn’t catch that but okay. Please go on. 

David: Listen to the news. Things that are not concrete, don’t say lah. With the fear that this LIBOR… Hong Kong is HIBOR: Hong Kong Interbank Offered Rate, Singapore is SIBOR. So there’s a chance that this can be manipulated. 

So MAS (Monetary Authority of Singapore) is doing away with SIBOR in the near future. They never said the date, they said in the near future and they want all the banks to take their floating rates and peg it towards SORA (Singapore Overnight Rate Average) which is the financial institutions’ overnight lending rate. 

Andrew: For self-employed versus employees, how does the home loan eligibility work? 

David: Okay. When you’re an employee, actually calculation is very simple. You either use TDSR for private or MSR and TDSR. 

Andrew: Let’s go through. TDSR: Total Debt Servicing Ratio. Please explain it. 

David: Okay. When you buy a house, you always have to go through TDSR regardless of whether it’s private or HDB (Housing Development Board). TDSR stands for all your total debts, the ratio cannot be more than 60%. 

Andrew: Car loans, everything. 

David: All total debts. 

Andrew: Every loan that you have.

David: Okay so for example, I use easy numbers. A guy is privileged, earns $10 000 a month. 60% is $6000. So $6000 of his income can be used to service all liabilities. If he owns a car and the car loan is $1000 a month, he’s left with $5000. If he uses many credit cards and the minimum sum payable added together is another $1000, minus another $1000, he’s left with $4000. Insurance… he has a lot but insurance is not a liability, so you don’t need to care. So he has $4000. 

So then we’ll do the maths and reverse engineer. It’s all algebra actually. With $4000 left of income for loans, how much is his maximum loan? That’s how we calculate home loan eligibility. That’s for private.

For HDB, we also must calculate MSR (Mortgage Servicing Ratio) and take the lesser of, which is 30%. So TDSR is total debt, MSR is only Mortgage Servicing Ratio. If he owns a shop, an office, that’s a mortgage. If he doesn’t own any other property, then it’s just $10 000 a month, $3000 is for mortgage. Then it’s just $3000 based of that and then find the home loan eligibility based on $3000.

Yup. So technically, if a guy has no liabilities at all, he’s 40 years old and above and he earns $10 000, a HDB loan will get you $3000… can use $3000, while a private loan can use $6000. He can borrow double for a private property. 

Andrew: So you’re saying for an employee, it’s very straightforward because we just look at your income every month. CPF (Central Provident Fund) contributions. It’s all very obvious.

David: Yes and no. So employee, right? Privileged people or people working in the government sector has many months of bonuses. 

Andrew: Privileged people? 

David: Or commission-based people. There’s basic pay and there’s commission bonus pay. Everything that’s commission and bonus, you have to take a 30% haircut, so you only count 70% of it.

Andrew: Okay. Got to take 30% haircut because you don’t know if the bonus is coming in next year. 

David: Correct, so it’s a variable pay. As you can see, the government has said that variable income is… only 70% is taken. 

So now we move on to the next thing. Self-employed. Same thing. If you’re self-employed, you’re forever variable income. If I declare my income tax $120K, so that’s $10K a month. It’s only $7K because it’s 70%. 

If you just became self-employed, let’s say I am in Google earning a million a year and then I mid-life crisis, I decide to start my own small business called The Financial Orange. 

Andrew: Not a competitor.

David: Anyway, it’ll be silly if I really do that… and I pay myself $20K a month, but it’s my own money. I put in the company. That $20K is not income. The banks will check ACRA (Accounting and Corporate Regulatory Authority), know that the company paying you is your own company and it’s zero income until you declare income tax next year. 

So if I want, if I’m earning a million a year in Google and I want to buy a house, I buy now when I still have the job in Google, because once I quit the job, the bank thinks I have zero income. 

Andrew: Okay. The first year that you are running The Financial Orange or whatever fruit you want to run, it’s zero income. Because this company, which you set up and own yourself and operate yourself is giving yourself the income and so the bank… to be safe, they treat it as zero income.

David: Even if Andrew owns 90% of the company, I only own 10%, it’s still zero. They don’t count like, oh, 90% is [indiscernible] no, it’s still zero. You own the company, end of story.

Andrew: Until the next year when you submit… 

David: Declare only income tax. 

Andrew: … your notice of assessment?

David: Yeah, notice of assessment. Correct.

Andrew: So on that topic, we can talk about notice of assessments and tax filing, CPF contributions. How important are all these factors and how do they contribute towards these eligibilities?

David: Okay. So again, employed people is very simple. CPF contributions… if you earn up to $6K, you only contribute up to $6K of salary. So it’s easy to see that you really earn $6K at least. If you will need a loan that has more money and you need to earn more than 6K then provide your payslips. 

If your company is more obscure… so for example, if I’m getting paid by DBS Bank, StarHub, SingTel, it’s obviously not obscure. But if you are being paid by Mortgage Master, the first month I incorporate and you are my first employee, then maybe the bank will also ask for salary crediting just to be sure that I can pay your CPF for you. I can give you payslips, you can Photoshop… please don’t but you can. Then you just started work, you’ve got no income tax. So salary crediting, they will check up to this extent and that’s to be safe and nothing wrong for the banks to be safe. They are lending you in excess of a few hundred thousand to millions of dollars. So that’s where all these income is considered. 

Now, if you are self-employed, make sure that the NOA (Notice of Assessment) is declared correctly. 

Andrew: By right, you should. 

David: Yeah, so if you decide not to declare and IRAS (Inland Revenue Authority of Singapore) don’t find out… okay, not that I’m encouraging it, and you cannot get a home loan and you say “but I’m rich”. Then I say “but the banks only care about black and white. This is Singapore”. So it’s always about black and white: your income tax, your NOA, CPF contribution, salary crediting. These are what is considered.

Andrew: But what if you have assets and your income is not showing a huge amount but you have assets to prove that you could actually finance the loan?

David: So in 2013, when TDSR was implemented, the government actually allowed some leeway and that is where pledging and unpledging of funds was created and it’s a way to determine whether a person, like you said, like I have money but I… Okay. 

So right now, I don’t own The Financial Coconut of course, but I already exited. Millionaire already. So I say “hey Reggie, I’m very interested in… 

Andrew: Retirement life. 

David: I want to help out in this very good idea and educate people about finance. You know my background anyway.” So Reggie say, “okay, but you cannot work for free. How much do you want?” “I want $2000 a month.” “Okay, steady.” okay, so he says “I’ll pay you $2000 a month.” 

I am a millionaire. I buy a new house. I only earn $2000 a month, I need a million dollar loan. I obviously cannot get that but I have cash in my bank which I don’t want to use to pay the house because my money earns more money than the housing loan. 

So if I need, let’s say $5000 income, but Reggie only pays me $2000, I need to show $3000 more income. Every $1000 equates to… if I show the bank $160K, I have $1000 more salary. So I need $3000 more salary, I just need to show the bank $540 000. 

Andrew: Oh, it can be stocks, it can be… 

David: Cash is the best. 

Andrew: Cash is the best? 

David: Because stocks are variable. Your stocks can crash. Your cash cannot crash. 

Andrew: Definitely not crypto. If you show crypto to the banks… 

David: It’s actually leeway. So last time only the government say you can show your portfolio, but banks… Government law and banks guidelines are different. Law means can, bank say “I not happy, I don’t want. My credit is stringent.” The bank wins. But bank say “I want to lend”, government say cannot, law wins.

So the guidelines… you have to respect the banks’ guidelines as well. The bank… the government say can but banks say only cash and then after a while, the bank open up and say SGX (Singapore Exchange), your NASDAQ (National Association of Securities Dealers Automated Quotations) funds. I can see your stocks… then after that they can see. Some banks now can see gold.

So they open up more and more and become open-minded after time. But yes, maybe one day crypto can also. I don’t know. But there are haircuts. So for example, it’s variable like we say, salary variable right? Some banks… the stocks and shares, they only take 30% haircut. Some banks… maybe crypto, they only take 20%. I have no idea. 

But let’s say if you are rich enough to show funds or pledge funds, you can also use that method to get more loan.

Andrew: Okay. Did you say for every $1000, you need to show… 

David: Show $160k… 

Andrew: $160k! That’s a huge… 

David: … or pledge for four years, $48,000 thereabouts.

Andrew: That’s a huge safety margin, I would say for the banks. 

David: Yeah, but they also make sure… you have to show it twice: when you apply for loan, once, and the day they are going to give you the money disbursed for your loan. Why? Because when you show this extra money, they have to make sure it is over and above what you have to pay for the house. 

Andrew: Okay. 

David: Means if I buy a million dollar house, I minimally have $160K to downpay so they want to make sure that after you pay for the house, you still got an additional $160K. So they make you show twice.

Andrew: Okay. Let’s talk a bit about credit score because we’ve heard this saying that you need to have some credit card spending to demonstrate that you have good credit and therefore… then you have a good credit score so that you can get your bank loan. 

So what if someone believes that you shouldn’t have credit cards? What if someone doesn’t have credit cards and he or she doesn’t owe anything. Technically, they should have a good credit score, but there’s no credit proof. 

David: Okay. So we talk about loan eligibility, right? Of course, if you’re employed by a very renowned firm and your income is high and your loan is small, no problem. So when we talk about… and your credit is clean. You have zero credit cards, of course no problem. 

But let’s say it’s a very marginal call. Your income is just nice, your loan is there or you need a little bit of push like can I use your bonus to this extent or not, and we have to justify for you as a banker. 

Credit score and credit record then comes into play and having no… I’ll rank it in a very funny way. Having credit cards that you pay in full every time is rank number one. Rank number two is having credit cards that you pay on time, not pay in full. Rank number three… actually two and three is very subjective, depending on which bank, if you got no credit cards at all. 

Andrew: So number two can be paying on time but just paying the minimum? 

David: Yes. 

Andrew: You’re not paying in full. 

David: Yes. So why? Willingness to pay and ability to pay is something that you need credit cards to show and having no credit cards doesn’t show that you have ability to pay or willingness to pay. 

I’ll give you a very funny scenario. When I was a banker, very high income, very rich individual and high-profile family. $5 million property, $1 million loan. Now, it’s very easy to lend. Your property worth 5 million, you only borrow 1 million. 

Andrew: Because they’re paying 4 million in cash? 

David: I’m not afraid you zao (run away). But I had to paiseh (embarrassed) reject. So family high-profile means his father… rich father, high-profile but he is normal. He got a bit angry with me. He’s like “why the bank… do you know who I am?”

Andrew: Actually, I’m curious to know who.

David: “Do you know I’m a private banking customer?” So of course I’m like “okay, I’ll ask my credit.” I would never be able to tell the reasons. It’s so many years, I don’t think the guy even remembers anymore now, because I solved this problem for him at the end. 

But the credit department actually told me this “look, we see this guy’s GIRO (General Interbank Recurring Order). He has three accounts with us in the bank and two accounts are funded. One account is not funded. The account that’s not funded, all the GIRO is from that account. Every single month, GIRO not enough.”

Instead of writing an email, the credit officer called me and explained to me. He is… hear this word: chao kuan (miserly). Got money to pay, don’t want to pay. You got some friends, right? Very rich one, but go dinner also always want you to pay for them? Chao kuan. I don’t like these kinds of clients. How do you want me to explain to the client? Just say my credit don’t approve. He wants a reason. I cannot tell him chao kuan. 

Andrew: You got to phrase it differently. “You chao kuan, cannot give you money.” 

David: Cannot lah. So in the end, this guy knows the CEO. His father knows the CEO. So problem solved. Father call CEO, end of story.

Andrew: But for mere mortals like us… so you would recommend getting a credit card, even if you just spend like $50 a month or whatever, just pay for it.

David: Now I’m a mortgage middleman. I’m the problem solver. So let’s say Andrew, you’re applying for a loan. You actually are buffering, like in-between, maybe can get, maybe cannot get because you want to buy a more expensive house and you 中 Toto (won the lottery) so you got money but not enough income. 

Andrew: My income’s not high enough… for example.

David: Let’s say we use the pledge and unpledge way and let’s say… I’ll give you an example. Your GIRO is from DBS and your GIRO actually missed the past three months. You forgot to transfer standing instruction to your DBS account. I’d say DBS may actually reject your unpledged money… show the money because you won the lottery, you cannot throw money to get higher loan. DBS will reject you. 

So when I ask you, I will ask you questions like “your GIRO, which bank? Ever got rejected? Got? Why?” “I was overseas in Hong Kong. I forgot to top up the account.” “Oh, no wonder. Then don’t apply DBS, apply UOB (United Overseas Bank). Why? Because DBS can see your GIRO chao kuan, UOB cannot see.

Andrew: My takeaway is don’t chao kuan. 

David: Actually, yeah. Just don’t chao kuan. 

Andrew: Because credit score is also… you have to demonstrate that you can… 

David: Willingness to pay, not just the ability to pay. A lot of people have to be like that rich guy, got the ability to pay, but willingness to pay is chao kuan or not?

Andrew: So your behaviour demonstrated that you could possibly not pay on time and the bank doesn’t like that. 

David: Who likes a friend got money, borrow money from you and then go holiday don’t pay you?

Andrew: And you never see that person. So we talked about the eligibility, we talked about servicing the loan right at the start. Now we talk about at the end of the loan. Towards the end, the loan gets smaller, right? If it gets smaller and smaller, is it true that at some point we need to… let’s say you want to pay a lump sum. Of course… are there penalties for that? Are there fees if you want to pay off your loan early?

David: No. In a loan, there is something called commitment fee and commitment period so if your loan is locked in and you want to pay down your loan or pay your loan in full, then there’s a commitment fee. Lock in normally happens two or three years. So when you get a new loan, you probably can’t prepay in the first two years to three years. Let’s say three years.

Then when you refinance it… let’s say interest rates are like 1.15%, three years fixed like I mentioned and then on the fourth year, it’s already 1.8%. So you want to refinance to lower, 1.5%. When you refinance, you pay down at that time, no fees. But if during the lock in period you pay down, there is fees. 

So if your loan gets smaller and smaller, again, refinancing may not be the solution for you because HDB above $250 to $300K, private above $500k then the bank subsidizes your legal fees for refinancing.

If you don’t have these subsidies, it’s not worth it to refinance. Then we will advise you to.. This is your last refinancing Andrew, your loan is already $505,000. The next time, 3 years later, will be less than 500K, no full subsidies. You don’t want the lowest rate. You want the most stable rate so you don’t have to refinance anymore.

So the next 3 years lock in, after that you want to pay down, pay down. After that, you want to pay down, you can pay down. 

Andrew: But does it mean that we also need to pay in one lump sum? Because no one might want to finance us if the mortgage sum is too small because we’re at the end of it. 

David: Yep. But you are staying in your financial institution, so you got a stable rate. Please don’t take the rate that… lowest is 1%, highest is 6%. Then now it’s 6%, you jialat (in a dire situation). You take… when you cannot refinance any more… 

Andrew: You’ll want to refinance, if it’s 6%. 

David: But if you cannot refinance for free anymore, you will take a rate today that you know next time cannot. You would take… lowest is 1.5%, highest is 2.5%.

Andrew: So put yourself in between that fixed rate so you roughly know. 

David: It’s not the lowest, but you get the most stable. So you will never kena (get) 6%. You will never get 1% also, but you can live with it. 

Andrew: So something for you to think about. All right. We covered some basics, but I think I want to go into more advanced strategies because you’re the Mortgage Master. 师父 (Master), teach us all the advanced stuff. 

You hear all this about people starting businesses to buy properties. What are some strategies that the rich people do to get properties?

David: I would say.. Rich people have a lot of leverage… leverage avenues which 平民百姓 (common people) like us don’t have. 

Andrew: Mere mortals like us… But I hear, I also happy. Maybe I can get to employ one of these strategies one day. 

David: So actually there are… I’m sure all of us have heard and seen advertisements on Facebook, on YouTube that…

Andrew: “Sell one, buy two!” 

David: Yeah, sell one, buy two, or “how I earn $20 000 passive income by the age of 28”, stuff like that. Are they lying? No, they are not. Is it true? Of course… not lying means true. Is it the correct thing to do? No, it’s not exactly correct as well. 

Everything that can be done with high returns, always in life, come with high risk. It’s standard. High risk, high return. You want to buy Bitcoin? High returns, right? High risk. It was US$40 000. Now, it’s US$60 000. You can go back to US$40 000, right? You can make double, you also can lose half. 

When these parties online… they hook you in and they explain it to you, one of the bad points is that they don’t just explain to you once. They give you half the formula and then they ask you to pay more, subscription, come for another $2000 course and stuff like that.

But that aside, which is disgusting by itself… I’m Baey. Come and find me.

Andrew: No qualms about saying your honest opinions.

David: It’s that they do not tell you the cons. If they only tell you the way to leverage to get more, that’s the pros. There are good points and they don’t tell you the cons. Any consultant that don’t tell you cons are conmen in my opinion. If you think you’re not a conman, again, I’m Baey, come and find me. 

Andrew: The guest’s opinion is his own.

David: You must be fair. You must tell the whole story and then let the person decide. This is good, this is bad… you still want? Take it, it’s on you. My job is to give you all the information and advise you the way there and also my opinions. 

Okay. So how do you leverage? I’ll give you a scenario where it’s me, Reggie and Andrew. If it was just me, and I have $100K extra today and I want to invest, I will not invest in a residential property because I have to pay ABSD (Additional Buyer Stamp Duty). That’s number one. 

Number two, with just $100 000 and let’s say I can take a 75% loan for commercial property, I can buy $400k property, which means not a very good selection of choices and you can’t really get much. 

Andrew: Choices are limited because of your low capital.

David: Yes. So what I will do is like “hey Andrew, you also want to buy, right? Reggie, you also want to buy. You got $100K, I got $100k, he got $100k. We have $300 000 now. With a 70% loan, we can buy a $1 million property. 

Andrew: Nice. 

David: So the pro is that with our income tax… because we are all self-employed or employed, doesn’t matter, it allows us to use ourselves as personal guarantor to buy commercial property. Three of us can buy together a $1 million property. 

Andrew: Okay, so we set up a company called The Financial Orange and then we use this company to buy property. Each of us put in $100k. Now we have $300,000 to play with.

David: Correct, and then the $700 000 loan is about… let’s say $3000 a month and I can rent out this $1 million office for $3500 a month. We make $500. So actually, the income… they advertise, the income actually nett is $500 but in advertisements, “I have $3500 passive income!” But actually, it’s only nett $500. So that’s number one.

“Eh, but our income actually still can sustain more. So what are we going to do?” Buy another property and buy another property and buy another property using our personal names as guarantor. All we need to do is to have enough cash downpayment. 

So let’s say, how you sell one, buy two? I have a million-dollar house. I have $600k loan. I sell $600K, I got $400k cash. Then now I can buy two… two $900k properties, $200K, $200K downpayment. What they fail to tell you is also your liabilities is no longer just 600k. It’s now two $900k with $200K downpayment, it’s now 700K loan each. It’s $1.4 million. 

Andrew: There are two mortgages running at the same time.

David: Yes, and the risks is… One scenario, what’s the risk? I fail to rent out the property. Jialat. I don’t even have $3k to pay the mortgage now. That is a bad scenario. 

A not so bad scenario is rental prices decrease because there’s a lot of supply. If I can think of the idea and you can think of the idea and we share these online and 200 people think of idea, there’s now 200 more supply. You think rental prices don’t drop? Everythin is about supply and demand. 

And then the worst thing is property prices drop. Bank margin call, and then for those amounts of money not covered under the secured property, let’s say it drops too much. 1 million property, $700k loan. Property dropped to $800k, banks say only lend you $600k. $100K not covered. They charge you 10% on that. 

Andrew: And do I have to pay that $100k on the spot?

David: You either pay $100k on the spot or I charge you 10% interest on $100k. 

Andrew: Because unsecured. 

David: Yes. Then what are you going to do? In the end, you lose money. So having one is okay, but let’s say me, Andrew and Reggie went to leverage. We have 5 now. Suddenly jialat. 

Andrew: We can have 5 because we’re buying through a company and therefore, we dont incure ABSD, right? 

David: Correct. 

Andrew: So it’s a leveraging play. You are talking about the pro, so to speak. The pro… you get to leverage.

David: Correct, and there’s even ways… so Credit Bureau Singapore sees bank loans. Credit Bureau Singapore doesn’t see loans from ValueMax, doesn’t see loans from MoneyMax, doesn’t see loans from [indiscernible], doesn’t see loans from [indiscernible]. 

So you may not even know what companies I’m telling you, but imagine this. I start one company with Reggie and Andrew. I take one loan from financial institution A, interest rate 6% but we still make money. Then Credit Bureau cannot check, right? Then we do another… we do these five more times. Wow. I got so much loans. One renter don’t pay, GG (good game). 

So there are pros, which is the ease of making wealth come fast, and there’s the cons where things don’t go your way, the road to bankruptcy is very clear also and it’s no joke at the end of the day. Yeah. 

Andrew: Okay, so I like that tagline. I think can use as a tagline: if they don’t tell you the cons, then they are conmen. That’s what you are trying to say, right? It’s important to understand the both sides of the picture. Definitely, leveraging play… many people are interested in that but you need to understand the flip side of it as well.

David: I think it’s brilliant, right? Andrew, call Reggie. 

Andrew: It’s a way to get around… 

David: We don’t need to buy five, right? Say if you can do three, do one. Don’t stretch ourselves too much because if one doesn’t happen, like when rental market is bad, property prices drop. You all still can afford it but if you can afford three, do one. You confirm can pass. You can afford three, you do three, you put (yourself) at risk. Some people can afford three, do five… you get rich fast, you get poor fast.

Andrew: Any other strategies that involve maximum leverage or no downpayment or skipping taxes… or is it just hearsay? 

David: Okay, no such thing as skip taxes…

Andrew: Or avoid… 

David: Cheng hu (Government), I love you. I pay my taxes. 

Andrew: Yeah, me too. Me too.

David: No downpayment… again, a fallacy. When they say no downpayment, it means you sell A, you take A’s money to downpay B. So technically, you never have additional money outflow from your bank but still got downpay… where got such thing as no downpayment. You think go Courts buy furniture? Even that one also $1 downpayment, if I’m not wrong. So still got 1 what. 

There’s no such thing and the advertisements are saying facts positioned in a way to make you think that it’s good. I’m not saying it’s bad. I’m saying that it’s positioned in a way that make you do not look at the cons.

I watched these shows before. There’s a US version, there’s a UK version. The only people that you can con are people who want to make something from nothing. And so these advertisements are actually… what are they doing? They’re telling you, you can make something from nothing.

Andrew: They have a certain target audience in mind.

David: Yeah, exactly. So it’s really quite interesting. The tagline from that show is that people who are greedy and want to get something from nothing are the people who get conned easily. 

Andrew: Okay, but of course, we are not saying that they are scams or anything. It’s just that you need to understand what the whole scheme is about. 

David: I think it’s brilliant because I actually sat in one of those seminars before. I was invited as a guest so that I can give mortgage advice to the clients. At the end of the whole session, it was my turn to give the mortgage advice. I just apologized… say I’m not free. I suddenly feel ill and I left. 

Sitting through that thing… everything that he said was correct, but the way he positioned it, if I tell the truth, I am not giving face to his business. I would actually pecha his lobang (expose him) so I just left instead. He is not saying wrong things, he’s just saying half-truths.

Andrew: Okay. Before we wrap up this part of the conversation, anything else about mortgage loans that you think you want to highlight or emphasize once again? 

David: Make sure you check on your mortgages or at least, let Mortgage Master send out the reminders before you. 

Andrew: Okay. 

David: Because a lot of people forget. One of the things that made me fall in love with mortgages was a very unique case. The guy is still my friend right now… become family friend already. When I first started in 2009… walk-in customer, doing well in life. Then I just talked to him. He was like “oh, I have two loans from another bank.” I’m like “yeah, refinance” and he said “no, interest rates are okay.” 

“What’s your interest rates?” “Last time, 6%. Now, it’s 4.5%.” I’m like “your loan add together, 2 million. You know now interest rates are 2%… that time ’09, it was 2%. 2% of 2 million, it’s $40 000 a year.”

So at first, my mouth opened and he asked me why. Then I told him the reason, his mouth opened. “I thought 4.5% very good. Last time, I paid 6%.” Yah, but you know times change. Last time, 4.5% is good. Now 2% is good. That was ’09. Today, 1.15%. 

Andrew: Yeah, now 2% is high. 

David: Yeah, so it’s all relative. Make sure that you monitor or at least have somebody to monitor for you.

Andrew: Okay. All right, thank you. Thank you, David. 

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I have three more questions for you. I’m sure you didn’t answer them in Coconut Avenue. 

David: Okay. 

Andrew: The first one is what is one of your core life principles?

David: Never tire of doing what’s right. That’s the core value of Mortgage Master. 

Andrew: Value back to company and company back to personal.

David: Just always do the right thing. One of the things I say to my business partners, my investors as well as my colleagues, the people working for Mortgage Master is look, we’ve seen a lot of rich people in the world do the wrong thing and get rich. If they fail, they got no friends. I’m so conservative that I do the right thing. If I don’t get rich, I still have friends. If I am poor, my friends support me. I am putting my own safety net by doing the right thing. 

So my core value is to do the right thing. It makes sense to do the right thing, then just do the right thing. That’s how I look at it logically as well. 

Andrew: That’s one of your core values.

David: Yeah. 

Andrew: Okay. We’re a finance podcast. What is a piece of financial advice that comes to mind that you think should be shared more often? 

David: Do not ever over leverage. Really, don’t over leverage. 

Andrew: Wow. The whole podcast, we did talk about how to leverage, but okay. Good point. 

David: Leveraging is a facility which lets you get wealth faster but… so I say, I never say don’t leverage. Don’t over leverage because if you leverage to the extent where you think… you paint the worst case scenario in your head and you can afford it. Okay, stop there. Don’t go over there. 

Andrew: Yeah, okay. What is an area of your life that you are giving additional focus right now? 

David: My family. 

Andrew: Family? Okay, tell us more. 

David: Of course my family… there are two families. One is my company and everybody is working for us. I’m also working for the company, so it’s part of the family and you know, now work from home and everything. We… on Wednesday, we are having our Google Meet… meeting with drinks. 

Andrew: So everyone bring their own drinks but turn on Google Meet.

David: My COO Rayner has this awesome website to play games together like Hangman, those guessing games. It’s quite fun. We have to make it a point to interact with each other because if not, you just get sick of… am I working for something other than myself? It becomes very boring at home. And then internally, in my family… 

Andrew: Your real family. How do you balance? Because you are running a business and then you have to… of course, you have your own family at the same time. 

David: I think many people have heard me over the years. My wife is the rock of everything. She settles a lot of things and without her, nothing can be done. At the same time also… So three weeks ago, my youngest son got Covid. 

Andrew: Okay. 

David: None of us in the family has it and we are still negative, right? But my two sons had to stay at home. One is close to 3, one is close to 5. How to work with 2 boys at home running around? 

Andrew: You have to work from home also, right?

David: And I can… in that time, had to quarantine. It was the older rules. I cannot bring them down to the void deck to walk when my wife has meetings or I have to talk to a VC. In fact, I was supposed to have this podcast. I was begging Reggie and Andrew “can I do it from home?” They say “sound issues”. Actually, in my heart, I would say not possible. Halfway through, you will hear one of the boys yell. 

Andrew: Well, that’s a real sound issue

David: Yeah, so it’s horrible. It was horrible but it’s also funny that during this horrible time where you have to spend… you’re forced to spend time with your kids, we also got closer. We also had the family moment. I wouldn’t trade it. As a father, when your kids grow older, one day, they will stop hugging you and stuff like that. You know, you imagine that? It’s awesome. 

So my children, my wife. Family, number one… #1 importance. #2 is of course Mortgage Master. 

Andrew: I bet your wife is listening as well, like a confession down there. Your wife’s the rock of the family. 

David: She subscribe, follow… 

Andrew: Subscribe, follow, turn on notifications. 

David: Okay. Thank you so much, David. 

Andrew: Hey, thank you, Andrew.

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