The plight of an elderly woman who lived in a $4 million condominium but relied on bank loans to get by provides a stark cautionary tale on the consequence of being asset-rich but cash-poor.
You should never view downgrading as bad because your lifestyle will change; you may not need a big home when you are older, especially if your children have left the roost. If she had sold her property earlier, she would have had around $2 million in cash left and would not have needed to incur high bank charges for her loan and even more punishing penalties for outstanding condominium arrears, which can attract annual interest rates akin to the 24 per cent charged on credit card debt.
The median amount paid out in 2023 to three-room and smaller flats is about $130,000 while four-roomers have been getting median payouts of about $180,000. Owners of five-room and bigger units have been reaping average proceeds of about $240,000.Importance of lifelong income