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Thursday 9 August 2012

.....No DIBS one ahhh!!!!! You can Choice!

Interestingly, one reader just called me and said, and i quote

"You call this good leal ah!?, other developers are giving DIBS lar..." (no, it is not a typo, the word deal was intentionally wrote as leal!)

So, there was a discussion between DIBS and differed interest scheme by Maybank....so, which is better for purchasers?

To answer that, we ought to know what DIBS is all about.

1) DIBS or more appopriate DBIS is an acronymn for Developer Bearing Interest Scheme. (yes, we all know that oredi!?!)

2) When developer bears purchasers' interest during contruction, this is a COST to developer.

3) Developer will pass on this cost to consumer, which is the buyer.

4) This cost will normally be calculated base on the interest to be borne by developer during construction, which is 36 months. (even if construction period is less than 36 months, developer will more often than not allocate this interest cost up to 36 months. Thus, it is only a saving to developer and not consumer and as again, more often than not, developers may not pass this saving back to buyers).

5) This allocation of interest cost by developer will also factor in the case of an increase in interest or BLR during the 36 months period).

Thus, we can see that from the above point 3), 4) and 5), if you were to purchase a property with DIBS, you will tend to pay more of interest (factored into your purchase price) as compared to a non DIBS where developers do not factored in this cost into the selling price.

You are very likely differ less interst during construction, more so if the construction period is less than 36 months (early vacant possession by developer).

....my point is, there is no free lunch, this is not a laissez-faire state, it is capitalism!

...so, the discussion continues on with this particular reader....

"like that your free SPA, free legal fees on loan documantation and stamp duty on loan is not free?"

My answer is: Of course lah! There is no free lunch! (i hate to break this to all, but most would have already known anyway...)

BUT, the difference are:-

1) SPA fees factored in is cheaper as if you were to bear on your own as developers give volume of cases to lawyers and in return, they get a good discount from lawyers.

2) stamp duty factored into selling price is according to the scale under stamping act

3) these cost factored in will give you a lower cash flow as compared to you forking out cash....

So, DIBS or differ your interest during construction? YOU CAN CHOICE!

N/B: wrong grammars used are intentional....

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