4 Things to consider before buying your first home
The latest trend in the housing market is of young home buyers. People in their twenties are now considering buying a home as opposed to renting one. No doubt, buying your own home is a clear indication of the fact that you have finally arrived. It is a way of showing to the world that you have attained financial self-sufficiency. But, are you really ready to buy your first home?
There are many factors to consider before making the purchase decision. Firstly, you need to be sure of your finances. You should do your necessary research on the best home loan option. If required take some help from friends and family, and of course, bank on your savings that you created solely for the purpose of buying your first home. Secondly, you need to get a fair idea of the housing market in Singapore and decide on the area where you wish to buy your home. With the required finances and the ideal location, there is no turning back. While these are important, there are many other factors to consider. Here are few more things that you should think about while making your final decision.
Buying is different from renting
Buying your own home does sound good, but if you are someone who has been living in a rented apartment, then it is important for you to understand the differences between the two. When you own a house, you are solely responsible for it. You will have to take care of all the maintenance. Unlike a rented apartment, there won’t be a landlord who will take care of the furnishing and repairs. So, either you will have to get someone to do it for you or be prepared to undertake all the maintenance and cleaning work on your own.
Another thing to note is that when you buy a home, you should stay in it for at least 3-5 years. You cannot keep switching properties the way you would as a tenant. If the real estate market drops, then it might take longer for you to reclaim the value of your home. So, buying a home means you are in for the long haul. If you are more of a gypsy, then buying might not be the best option for you.
Get an idea of different types of properties available
There are all kinds of properties in Singapore. Before you decide to buy a home, it is important to consider the different types of properties available in the market. According to a post by Valuepenguin.sg, Singapore has several housing categories: HDB (public housing provided by the Housing & Development Board), private apartments/condominiums, semi-detached properties and landed properties. While the majority of Singaporeans live in HDB dwellings, expats who are non-residents are not allowed to purchase this type of property unless they are married to a Singaporean citizen (and even then your best bet is a resale property). Additionally, you can’t buy landed properties, which includes terrace, semi-detached, bungalow, townhouse and non-commercial shop properties, without prior approval by the LSA.
Get an understanding of the criteria for approval
Buying your first property in Singapore does involve some approvals. To begin with, you will have to apply online with the Singapore Land Authority (SLA) and pay a non-refundable fee of $1,220. For foreigners, the main requirement is to either hold a PR status or should be making some economic contribution to the country. Exceptional economic contribution depends on a variety of factors including your after-tax wages (a good jumping off point is somewhere between S$7,000 to S$10,000 per household a month). Additionally, your desired property cannot exceed 1,393.5 sq metres (15,000 sq. feet) or be situated in a good class bungalow area. Not only that, you will not be allowed to sell your property for 5 years and you will not be able to rent it out.
Account for miscellaneous taxes and financial options
If you are a Singapore local, then you could rely on your family and friends to fund a portion of the amount you will be paying for your house. For those of you who wish to not get family in the picture, the best way to go about it is by opting for a home loan. There are multiple home loan options in Singapore. You can finance up to 80% of the transaction with your home loan and use your savings to pay off the rest. To ensure you get the best rates, make sure you do your research on all home loan options in Singapore. You could even take the help of a financial advisor to find the best home loan option for you.
These were some of the things to consider when buying a house in Singapore. We hope this information helps you make the right choice.
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