19 Jun 2018
The first home is a rite of passage for many Singaporeans and it's an exciting step into adulthood. However, inexperience and insufficient research can lead to some critical mistakes.
Here are five common ones and how you can avoid them:
The cost of your first home goes beyond purchasing the actual house, so it's good to factor in the additional expenses. When planning your budget, make sure you take into account the following:
Stamp duty fees
Application and option fees
Valuation report fees
Monthly payments for the Home Protection Scheme (HPS)
Interest accumulated from your housing loan
Which housing grants your qualify for
Not taking these into consideration paints an inaccurate picture of your financial standing and what kind of home you can afford, leading to inadequate and ill-informed planning.
Start your process with meticulous and intensive research to find out all the costs you can possibly incur. If possible, talk to some homeowners to find out their personal experiences and get a sense of what to look out for.
Everyone has different feelings about a new home, ranging from eagerness to move in, to concern about your ability to afford it.
This mixed bag of emotions can end up pressuring you into buying your new home impulsively. But sometimes, a "window-shopping" approach is best.
The general rule of thumb here is to never immediately decide. It may be tempting to fall in love at first sight with a home - plus, an added sense of urgency comes from real estate agents who tell you they have other buyers ready to close the deal.
We also tend to expedite things with common benchmarks such as the higher the price, the greater the value of a home or that the more amenities you have within walking distance, the better.
However, do an objective ranking of the factors that mean the most to you such as the amount of space or proximity to amenities. Assessing your options with your head and not your heart helps you realize exactly what you want (or do not want).
For example, some may appreciate having many amenities available nearby, but that comes with a busier neighbourhood and more traffic congestions.
The same approach should be applied when you're getting a housing loan. Instead of going to a bank that you have a long-standing relationship with, take the time to compare the interest rates and features to see which option matches your needs closest.
Foresight is the key to landing a well-suited home. Your potential new neighbourhood is subject to change so if you're in it for the long haul, start finding out how it will be in future.
The best way is to check the URA's Master Plan, which contains the development plans over the next 10 to 15 years here.
For instance, if you are looking for a quiet neighbourhood, avoid areas that are primed to be developed into business hubs - one example is Jurong Lake District, set to be Singapore's "second CBD".
Another future to "predict" is your own: your living situation. For example, newlyweds should take into consideration whether they intend to have children and how many. This helps determine how many rooms you'll need.
With your plans in mind, look for a place that suits not only your present situation but your future needs too.
Before you can buy a flat, you need to to put down a deposit and sign the OTP. From there, you have 21 days to complete your purchase.
As such, it is key to confirm you're able to get a loan to do so before signing.
If you are pressed for time, do still take a moment to get In-Principle Approval (IPA) for peace of mind. An IPA is essentially an agreement with your bank that you will get the loan when you need it. Whether or not you get it depends on your financial state and credit history.
Do note that an IPA is not necessarily a 100% guarantee, but it is a helpful solution in certain situations - consider your options carefully.
If you are buying a HDB flat, you will automatically get coverage under the HDB Fire Insurance Scheme. Unfortunately, many homeowners assume it gives sufficient coverage and incur heavy financial losses in unforeseen events.
That's because fire insurance only covers your home's structure and not its contents! That's where an actual home insurance policy comes in.
One good example is Enhanced HomePlus, which covers your home contents and personal belongings for up to $120,000. It also extends protection to your renovations and everything else you hold dear - even your money, mirrors and pets!
Avoid this critical mistake and find out about Enhanced HomePlus here.