4 Financial Planning Tips for Buying Your First Home
As my readership grows right in front of my very eyes, I am asked to cover different topics that are not only for those in the US, but those considering moving and buying abroad. While these tips have a specific country designation assigned, I think they are a good example of tips to consider when beginning your home search. Like everything in life make sure to do your own research and make a decision that works best for you.
There are various types of factors to take into account when you’re embarking on a search for your new home. Part of this has to do with the facts and figures of the property market, while the other end of the equation is finding a residential property that meets all of your needs. This will depend on where you want to live in Singapore, what your current residential status is, and how many people are currently in your family. There are different requirements for purchasing real estate for temporary expats, for example, those who cannot lawfully own landed property unless meeting particular requirements and becoming a permanent resident. On the other hand, if you’re a permanent resident and this is the first time you’re purchasing a home, you will find that you’ll be eligible for many governmental incentives. These also have their pros and cons, though. Here are four tips for how to financially plan your move as you begin a search for your new home.
Start with Solid Information
One of the most important things when you’re searching for mortgage packages are hard numbers. Before you even start considering properties or searching for homes, you’ll want to assess exactly what type of price range and financial commitments your budget will allow. If you’re looking for a mortgage calculator, PropertyGuru Singapore has some useful tools to help would-be buyers compare rates and assess the feasibility of buying based on individual resources. You’ll need these figures either from your financial portfolio or bank to get started, so make sure you’re entering the numbers correctly. This will immediately narrow your search to focus on properties in locales that you can afford. There’s no point in searching on a real estate portal for properties you can’t afford, especially if you’re easily tempted.
How Much Can You Afford for a Deposit?
This is one of the most important questions you’ll need to determine when you’re choosing a mortgage and how much you’re able to commit to spend on a home. If you don’t have anything saved for an initial down payment when you take out a mortgage, then the simple fact is that you’re probably not ready to own property. There’s also frequently a deposit requirement from the bank when taking out a home loan to ensure that you’re not going to default when you can no longer afford the payments, but this varies from bank to bank. You’ll want to check with your financial advisor if you have one about this requirement, or speak with a bank representative.
Deciding on Lock-in Period Versus
The decision on whether to take out a home loan with a lock-in period (fixed rate) versus one without is one of the trickiest choices you’ll make in this process. While lock-in periods often offer attractive rates that won’t fluctuate once you’re bound by the mortgage, at the same time, should rates lower further or if you find a package with better terms, you’ll no longer be able to change your mind without severe penalties and other issues. According to Yahoo! Finance, there are some benefits to opting for a home loan without a lock in period, since it provides flexibility and the option to change your package if you find a better deal somewhere else. This depends a lot on whether you want guaranteed stability versus the ability to shop around if something better comes along.
The State of the Real Estate Market
The New Paper details how SIBOR fluctuates with the federal reserve of the United States, and given measures to increase interest rates this past January, Singapore interest rates are also set to rise. However, the good news is that the rise looks to be steady and not an unmanageable amount, and actually puts many interest rates on par with what they were before the housing rates dropped lower than ever before. Therefore, although rates are slowly increasing, that doesn’t mean that it’s actually a bad time to purchase a home. If they were skyrocketing and all over the place, then perhaps it would be wise to wait, but you can also avoid this issue by locking into a mortgage at a set rate. It’s all a matter of deciding what you want to do in the long-term.
Home-ownership is not only a complicated decision to make, but it’s also a long-term commitment. Nonetheless, as long as you buy at a wise time and take advantage of current deals and trends within the real estate sector, you’ll be sure to acquire a home that you’ll enjoy. A good rule of thumb is also to enlist the services of either a financial advisor or realtor, or both if you can afford to, who can guide you through the processes and legalese of purchasing real estate. There are often fees and other costs on top of just the purchase price which you may not be aware of, especially where mortgages are concerned. Make sure you’re fully informed as you go through the process of signing on the dotted line.