Want to be a smart property buyer? You’re not alone. Singapore is one of the hottest real estate markets in Asia, but it has its traps as well. The good news is that there are things you can do to avoid some of these pitfalls. Here are five common mistakes first-time buyers make when making this big financial decision and how to avoid them.
1. Impulsive Buying
Most first-time buyers are impulsive, so they get into the market too early and don’t take enough time to think about how much they really need and what they really can afford. This is why they end up spending more than they should on their property. You need to ask relevant questions about the property, the location, the layout, the amenities, and the size. Ensure you buy what you will not regret later.
2. Cost Underestimation
Buying a house in Singapore is one of the biggest investments you’ll make in your lifetime. But with all the hype around the property market, it can be easy to get swept up in the hype, and not give it enough thought. Your budget doesn’t have to be set in stone; but if you don’t know how much you can afford, then it will be hard for you to find a house that fits within your budget. When planning your budget, take cognizance of the following items:
- The down payment required
- Stamp duty fees
- Application fees
- Legal fees
- Valuation fees
- Grants you qualify for
- HPS – Home protection Scheme payment
- Cost of renovation.
Not getting it right at this point can cause a lot of issues for first-time buyers along the way.
3. Not Understanding the Market
It’s important to understand what type of home you want, as well as your budget. If you’re planning on buying an HDB flat, it’s best to get a mortgage with a bank or a property agent. You need to be aware of the different types of mortgages available and be able to compare them before making your decision.
Singapore has a very strong property market, and buyers need to be aware of all the factors that affect prices and what they can expect from their property purchase. If you don’t know what properties in your area are selling for, then how can you determine whether or not you will get a good deal?
First-time buyers need to understand that multiple factors affect property prices, including:
Direct taxes – Property taxes and stamp duty
Indirect taxes – Value added tax (VAT), sales tax (SGST), GST, and so on
Land supply – The number of new homes being built, new developments coming up, rezoning, and land availability
Inflation rate – Price rises due to inflationary pressures
4. Depositing Your Entire Savings
While it’s understandable that you want to put as much money into your property as possible, it’s important not to do so at the expense of your financial well-being. If you’re not sure where your money is going, it’s best not to commit it all until you’re ready to move in.
You may be tempted to deposit all of your savings into a single deposit account, but this can be risky. For one thing, doing so leaves you vulnerable if something happens to one bank or another. And if there is any delay in getting approval for a mortgage or loan from the bank, then some or all of your money may be locked up for several months or even years while you wait for the approval.
5. Not Hiring a Real Estate Agent
If you’re planning to purchase a property in Singapore, hiring an agent is a must. Not only will they help you understand the legal and financial aspects of your transaction, but they can also provide you with some very valuable information about local real estate market trends.
If you’re on your own, be sure to research the market for your chosen property before making an offer. Look at recent sales and ask neighbors about their experiences with similar properties. You can also use online tools like Redzepi’s Property IQ which allows users to search for properties by location and other parameters.
Also, avoid making any major decisions without consulting professionals. For example, if you’re buying a condominium unit, don’t rely on the information provided by the developer or their sales team alone — there are plenty of red flags that should give you pause!
To sum up, it is important to be cognizant of the buying process and how to spot specific traits in a property so you can ensure that the steps you take to protect yourself during negotiation are indeed the right ones. Ultimately, buying a home should not be a stressful event if done correctly and with due care by all parties involved. As always, SmartMortgage wishes you all the best in your real estate endeavors!