Surfing Pinterest for inspiration or browsing through stacks of Home and Decor magazines can be really fun when you’re thinking of getting your home first. It’s easy to visualise your dream home, but to afford it is an entirely different matter.
For many, owning their own house is a life-changing event. Nothing says independence as much as having your own place. However, home prices in Singapore aren’t anything to scoff at, and any mistake made here during the planning process can prove to be a costly one.
But fret not as we’re here to help you avoid these pitfalls that could prove to be costly mistakes.
1. Crunch the numbers
Beyond just knowing how much the flat in your desired estate will cost, you need to factor in additional costs such as option fees, down payment, and interest payable over the 25-year period. CPF’s Our First Home Calculator comes in handy to help you get all the costs of home ownership.
Make sure you have enough money to cover the initial down payment for the house. If you don’t have it yet, then wait and save more till you do. And when checking the numbers, do not take any emergency fund into consideration.
If you plan your purchase carefully and don’t buy a house that is more costly than you can afford, you’ll be able to pay your monthly instalments entirely through CPF. This way, you won’t feel the pinch on your monthly budgets.
2. Don’t forget to window shop
If you are going to take a bank loan for the purchase of the house, then you need to make sure that you don’t settle for the first loan that is offered to you. A little bit of research may show you some options where you may be offered lower interest rates or better loan amounts.
Also read: HDB loan refinancing: Is it a good idea?
3. Emergency scenarios
Exactly why we said don’t take emergency funds or reserves into consideration when scrounging up cash for the down payment. In your zeal to buy your dream house, don’t exceed your budget and break your emergency funds.
Expenses tend to creep in slowly and funnelling your money into the loan instalments will leave you ill-equipped to meet any emergency expense that might crop up. You can never know when or where your car might break down, so set aside some savings to help soothe things over for a while.
4. Inspect the house
This goes without saying but you need to really check the house. A simple google search will turn up many horror stories of defective windows, scratched doors, cracks in the walls, electrical points that don’t work, etc. Arm yourself with a stack of post-its and marker to highlight all of these defects. If it’s a BTO, the Building Services Centre will be able to rectify these issues free of charge. Many contractors or interior designers will also offer to do defect checks for your home if you engage their services.
You don’t want to end up owning a home and paying a loan instalment on one end and an equal amount towards repairs on the other.
Owning a home can be a very rewarding experience and with a little caution and some attention to detail, these costly mistakes can be avoided.
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