Buying your first home? Follow these 3 must-know tips to avoid common pitfalls
4-minute read | Last updated: June 2023
Congratulations, you've made it!
You’re financially independent and ready to purchase your first home. You’ve viewed numerous apartments and finally found something you love. You can’t wait to place a deposit and plan how you’d decorate every corner of your new abode.
But hang on. Purchasing a home is easier said than done. In fact, it entails much planning, research, and discipline.
Fear not if you lack experience in this area. We’re giving you the house rules. Here are 3 tips to get a handle on house hunting and avoid pitfalls most first-timers encounter:
1. Do your sums thoroughly before house hunting
Setting a budget for your new home is a must, whether it’s Built-to-Order (BTO)1 or resale. Your first home is a big milestone, but it’s not the only one you’ll have.
Careful financial planning ensures you don’t blow all your life savings at once. It also relieves the stress of realising that you’ve signed the Option to Purchase (OTP)2 prematurely before securing your loan. Budgeting assures you the peace of knowing that after making this huge purchase, you can still live comfortably without drastic adjustments to your lifestyle.
1 Built-to-Order (BTO) flats are HDB flats that will only be built after 65-70% of the apartments have been booked. BTOs have a wait time of three to four years from the date the construction begins.
2 The Option to Purchase (OTP) is a legally binding contract between you and the flat seller at an agreed price.
How then should you do your sums?
For starters, don’t take the listed price at face value. Before you start budgeting, research the market thoroughly and observe how it is performing. Look into all the additional expenses that you may incur. Key things to pay attention to include:
- Housing grants you’re eligible for (ranging from $5,000 to $80,000)
- Down payment required
- Monthly instalments
- Stamp duties
- Legal fees
- Accumulated loan interest
- Property agency commission
- Renovation costs
Also, be honest with yourself about your current financial situation. Have a discussion with your family. It’s good to be optimistic but realistic. Being prudent with your budget may require some compromise with the house you choose. However, remember that your first home may not be your forever home. It’s just the first step of your housing journey.
2. Never rush into buying your home
You can’t wait to get the keys to your new home! Rushing through the process and tightening your timeline might be tempting. But jumping the gun may lead to poor decisions that ultimately cause dissatisfaction and regret.
Take your time to view as many units as possible – and never decide on the first home that checks all your boxes! (Who knows, another more suitable listing might surface next week.) Gather a few options. Weigh and rank all the factors objectively and know your non-negotiables.
Make sure these questions are on your checklist:
- Do I like the space and the layout of the flat?
- Is the neighbourhood pleasant?
- How accessible are general amenities?
- Am I close to any bus stops and/or MRT/LRT stations?
- Will the value of the house appreciate significantly over time?
- How many other potential buyers are there?
Give yourself a reasonable runway to accommodate unexpected things cropping up, such as needing emergency funds or your preferred house no longer being available. And, do not cave into pressure from anyone – your parents, friends, or the real estate agent. At the end of the day, you’re purchasing a house for yourself, not them.
3. Your family needs might change
You’re going to be living in your new home for at least five years, based on the Minimum Occupation Period (MOP)3. It’s vital that you have an idea of what your life may look like in the years to come.
Many first-home buyers are engaged couples or newlyweds. Before you even start looking for a home, take family planning into consideration. The number of kids you intend to have can affect your choice of location, size, and design of your home.
Once again, ask yourself:
- Am I located near childcare centres/ schools and playgrounds?
- Do I have enough rooms to accommodate a larger family?
- Is my intended home design child-friendly?
3 The Minimum Occupation Period (MOP) is the time that you are required to physically occupy your flat before you can sell it on the open market.
Protect your home with the MSIG Enhanced HomePlus plan
By familiarising yourself with the pitfalls and knowing these tips, we hope you’ll have greater confidence in selecting your first home and avoiding building a house of cards. Our homes are not just the biggest purchase we’ll make in life; it’s where we’ll build our lives. So, one last thing to get your house in order: secure it with reliable home insurance.
MSIG Enhanced HomePlus insurance plan offers all-around protection for your home and household contents. Our policy provides comprehensive coverage for home-related accidents, from renovation mishaps to furniture damage to even the loss of domestic pets. To learn more about our home insurance plans, click the link below.
