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First-time home buyer? Avoid these mistakes

For many, a home is probably the biggest purchase one will make in a lifetime. If you’re in the market for your very first home purchase, the sheer number of things to consider could leave you with analysis paralysis. Knowing some common mistakes first-time home owners make—and how to avoid them—could help before you sign on the dotted line.

Underestimating your budget

house renovation costs, new home budget

Buying a new home involves a whole range of fees and charges that first-time buyers might not be aware of. Your budget should take into account not only the purchase price, but also other costs such as property valuation reports, buyer stamp duty fees, property taxes, property agent commissions, or even home or fire insurance fees that can quickly add up. And that’s before we add in renovation costs, especially if you’re considering a resale property.

Do your sums properly by checking on all associated fees that come with a property purchase. You could also work with your bank to get a detailed loan assessment done, which would determine how much you would be able to loan, and what the monthly mortgage costs would be. Are these manageable? Certain restrictions on the loan amounts might apply, so it’s important to determine that before hitting the showflat circuit.

Calculate your loans

Going for affordable vs. convenient

property next to mrt station

Singapore property prices being what they are, your options might likely have to be a compromise between various practical considerations. Do you pick a more affordable and perhaps larger home further from town, or a higher priced but likely smaller home more conveniently situated?

Before you make that decision, there are a range of factors to keep in mind. Would your new home location make commuting to work and back a daily chore? Would you need a larger space, perhaps not now but if you start a family? What schools are available in the area? Where is your support system located, i.e. your parents or the in-laws? Does the surrounding neighbourhood have what you need for daily essentials?

While something as major as the shifting of a home is almost always a significant change, would the new location offer you the lifestyle that you’d be comfortable with and can afford?

Skipping the diligence

Another mistake some might make is deciding on a property based on the heart, not the head. However, you’ll probably want to do a bit more research before jumping into such a big commitment.

While the house you’re viewing might seem perfect for your current or future needs, you should tap on resources such as the URA Master Plan to find out about future developments that might impact your new home and its value. A new MRT line would be convenient in the long run, but could you live with the construction noise, dust and disruption that comes with it? Check out past transactions in the area as well, so that you have a better idea of what the place is worth, and how low it could potentially go. If it seems like everyone is selling their property in that area, find out why.

Not working on a realistic timeline

Buying a house is a lengthy, multi-party process with different timelines depending on the property type. If the property is still under construction, you’re looking at a progressive payment scheme. For completed properties, the process typically takes around 12 weeks from when you exercise the purchase agreement, as such:

  • On day 1, the buyer will give the 1% option amount in cash
  • By day 14, the buyer pays the balance 4% in cash; this will kick-start the completion period of 10 to 12 weeks
  • Within 2 weeks from day 14, the buyer would need to pay stamp duties
  • 2 weeks before completion, the buyer would need to settle the remaining 15% with cash downpayment or from their CPF

Know the payment milestones, and work out your funds and cash flow to ensure you have enough at each due date.

Download the HDB resale checklist (PDF)

Download the BTO checklist (PDF)

Glossing over the house inspection process

what to look out for during house viewing

When properly done, a careful inspection of the house prior to committing to purchase can save buyers money in the long run. Some helpful tips:

  • Allocate enough time to view the house. 30 minutes per house should be the minimum, and more depending on the features it contains.
  • Diligently view each and every room. After all, you are paying for the entire space, and the wood flooring in the study might be harbouring a pest infestation that would be costly to eradicate.
  • Check for sunrise and sunset directions to see if the afternoon heat hits your living spaces, potentially resulting in higher bills needed to cool the space.
  • Take a walk or drive around the neighbourhood to get a sense of the available amenities, location, community, and accessibility.

Buying a new home, especially for the first time, ranks as one of the major milestones in life. Prepare for it properly, and you’ll soon be relaxing from the comfort of your own home.

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