Sometimes daunting, other times overwhelming, the journey of a first-time home buyer through the purchasing process can be complicated and time-consuming. Here are some things to consider if you don’t want to be hit by an unwanted surprise.
By Christopher Chitty
Ironically the budget, or at least your capability to finance the mortgage on the property (including taking out bank loans), is your best tool. Ascertaining your financial viability with regards to the property is a key consideration. Having an agent’s expertise in the matter should not indemnify you from determining your financial competence. You owe it to yourself to seek out the best bank loans and interest rates, as well as to get pre-approved for a loan by the bank before you approach an agent or developer. When you have a maximum price in your head, it’ll help you and the agent focus on units within your affordability range.
2) Property type
There are three types of properties most buyers are likely to consider. Build-To-Order (BTO) flats are straightforward, unless you’re looking at the resale market. Meanwhile, condominiums and executive condominiums (ECs) are purchased either from the resale market or from developers. The type of property you want must complement your budget to avoid falling further into debt. For example, if your budget only allows for a 3-room BTO flat, don’t stretch it for the perceived glamour of an EC or condo unit. In a nutshell, spend within your means.
A budget and the type of property go hand in hand. Is it as a permanent residence where you intend to raise a family and retire? Or could it be home for a few years before you look to flip it in the resale market? Finally, are you buying strictly for investment purposes to rent out for passive income? An investor should consider a one- or two-bedroom apartment to keep costs down, while a homeowner may opt for a larger four-bedder. Identify your purpose, then adhere to the limitations it imposes on you.
A mature estate benefits from greater connectivity and a wider selection of amenities such as shopping malls and schools. It is, therefore, the main motivator for sellers to price their units at a premium. It is also a motivator for developers to take advantage of the location and its perceived value to price their units while taking into consideration how much they paid for the land, design and construction costs. Buying a property in a non-mature estate may be more affordable, but you’ll likely spend on cab fares to travel further afield, for instance. However, such incremental costs cannot compare to a large outlay of cash for a home with a dwindling lease in a mature area. Consider your needs carefully.
The favourable distance from your home to amenities is subjective. For some, 10 minutes is fine while others may consider it too long. Also, what type of amenities are necessary? Do you need to have a shopping mall or sports centre nearby? Is the bus stop or MRT station a short walk away? Your choice of amenities is one of those deciding factors. To ignore their importance is to deal with years of frustration every time you head out to buy food or shop for groceries.
6) Market timing
Unless you’re deep in the property market with sufficient technical knowledge on the movement of prices month to month, much of the planning towards purchasing a home at the best price is conjecture. Fortunately, most buyers can determine if the timing is indeed right to buy a home. A buyer and sellers’ market is cyclical, but it is an easy one to watch for. However, this is better suited for when a resale property is on the cards. If it’s new, then consider the number of launches in a year, its surplus and popularity. 2018 is expected to see a slew of new launches that will boost the market. Land sales are a huge influence on how developers sell their units. Do your research, but remember that there is no shortage of properties.
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