8 things first-time home buyers should think about

by Michelle Chin (mchin@sph.com.sg)
published on 15 February 2016

Purchasing your first piece of property?

1. Location, accessibility and amenities
Consider your lifestyle, routine and commute when choosing where to live. Mr Kelvin Fong, a senior group district director from PropNex Realty said: “Many first-time buyers prefer a location near to their parents and workplace. This is especially true if buyers are exploring the option of asking their parents to help with childcare duties.” “Generally, more home buyers value convenience in terms of access to public transport options and proximity to parents’ homes than the amenities available.” 

2. Affordability
Affordability is key. You need to set a realistic budget before you even begin scouting around. Mr Fong said: “Buyers should plan their  finances and find out what they can really afford in the long run. Do so before making the commitment to buy any piece of property.“ Factor in your income level, current and future expenses, your savings, existing debt obligations, and the loan you are eligible to receive.”

3. Don't be hasty
Mr Fong advises buyers to apply for approval in principal for a bank loan before committing to purchase any property. This gives you a clear idea of what is affordable and what beyond your budget when deciding on a home.He said: “The bank will consider your loan amount after taking into account your financial commitments like credit cards, car loans, existing property loans or any forms of loans with banks.”Getting approval in principle does not mean that you are obliged to take up the actual loan. It is simply a process to evaluate how much you are eligible to receive in the event you require a loan.

4. Plan ahead
Have an idea on how long you intend to live in the property you are purchasing. To avoid paying seller stamp duty, ensure that you can live in the property for at least four to five years. Mr Fong said: “Your first piece of property should ideally be an asset which can appreciate in value and growth in terms of monetary worth. A first home may not necessarily be a Housing Board flat. If buyers can afford it, an executive condominium o rprivate property may be a first home. “With careful planning and astute calculations, some young couples or buyers of their first home may be able to afford more than one piece of property in the years to come.”

5. Get informed
To be able to sell the piece of property for a profit in future, think about how you can use the value of  a current asset to work in your favour. Mr Fong said: “Do not sell the asset if you do not have a plan on how to grow the value of it. Tap on the expertise of the right property agents, who are not merely focused on selling, but are capable of planning for your assets and able to give sound advice.“This will help you to plan ahead even before you acquire your first property.”

6. Be aware of payment methods
Mr Fong gives a breakdown of the modes of payment for purchasing a property. For first-time buyers of HDB flats, buyers can use the Central Provident Fund (CPF) to pay the stamp duty and legal fees. The valuation fees will be forked out by the buyers. To finance your first executive condominium or private property, the first five per cent will be paid in cash and 15 per cent can be paid by CPF or cash. For private housing, buyers will have to pay for the valuation fees.

7. Grants and subsides
Research on which government grants and subsidies you are eligible for. Some example include the CPF housing grants for HDB flats, executive condominiums, as well as Design, Build and Sell Scheme (DBSS) flats.

8. Conduct ample research 
Be diligent when researching on the prices. Research on the prices different types of units in the neighborhood fetch. Mr Fong said: “Being aware of prices of past transactions is helpful too. Do a comparison to discover the trends during different market conditions. “Make enquires by contacting a few agents. Being knowledgeable helps you make a well-informed decision on a reasonable price to fork out when making the purchase.