Purchasing a home can be a daunting task, especially for first-time property buyers.
Before even embarking on the journey to find that perfect dream home, one should first consider the below questions so that no one gets burned out in the process.
- What are the loan options available?
- How much are you expected to pay upfront?
- Where and what kind of residential properties should one look at?
Property Tip Number 1 : Consider your Finances Carefully.
Depending on the quality of each individual’s financials, it would always be advisable to work out the budget you have before starting on the journey. First-time property buyers tends to get carried away when such big amounts of money come into consideration. Always be sure that you are comfortable with the loan payment relative to your income. Some first time owners tend to over do it and end up suffering when interest rates goes too high beyond their control.
Debt Servicing Ratio
A comfortable guideline to follow would be to make use of a mortgage servicing ratio of at most 30 percent of one’s gross monthly pay. This is the proportion of mortgage payment against the household income. Usually, anything more than 30% would be considered too taxing.
It would also not be advisable to service a loan up to 65 years old. Is it wise to stretch the loan tenure to its maximum number of years, considering that you will have to still be working at 65 to service the loan? Ask yourself this, “How many of us want to or can work till the age of 65?”
Property Tip Number 2 : Consider Your Monthly Debt Servicing Ratio.
Car Loans, Installment Plans and Credit Card bills are often overlooked and forgotten by many at the end of the month. They may not seem to be of any effect on you when purchasing a house but all these will affect your credit standings and determine how much loan you can take up. It is therefore advisable for you to work with your banker to get a Letter of Approval from the bank. This will give you a clearer picture of how much in loans you are eligible for.
*For First-Time Property Buyers, I would always advise them to allow me to arrange a banker from one of the few major banks in Singapore to help them do an assessment on our first meeting. If you have such needs, do feel free to call us at 9630 3213.
Property Tip Number 3 : What You Need May Not Be What You Want.
After considering a whole lot of financial considerations, it puts you in a better to position to embark on this journey to find a new home. But still, with all the finances in place, it is advisable to sit down and think through if what you want is what you actually need from the property.
Buyers tend to get a little unrealistic about their search in the beginning. For example, hacking down the walls of a 4 room HDB, leaving just 1 room for own stay. New Buyers should not only think about their immediate needs, but also their needs in the next 5 years which includes family planning and accessibility to workplaces. Ideally, your home should be near schools and childcare centers your kids might be attending, shops and transportation that are within walking distance for you and your family.
Property Tip Number 4 : Remember the Other Expenses Involved.
Now that you have tied down on the new home that has caught your attention, let’s not forget that there are still other costs involved in your new purchase. Stamp Fees, Legal Fees, Valuation Fees will be payable on top of the cash down payment required to book your unit. Depending on the type of property purchased, the cash down payment can range between S$1 to 5% of the property price agreed. Many a times, an agent fee of 2% will be payable to the agent servicing you throughout your search for your new home.
It is also important for you to do necessary researches on your eligibility for housing grants if you are purchasing a HDB. CPF grants can range between S$10,000 to S$30,000 depending on various deciding factors.
Should you as a first-time property buyer require more information on your purchase, feel free to enquire through our enquiry page or give us a call at 9630 3213 any time. No obligations and fees are chargeable.
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