5 THINGS YOU MUST KNOW AS A PROPERTY BUYER!
For first time buyers, what is the process to go through, what are some of the things to consider? Today, we will provide some tips for you to get started with 5 things you must know as a property buyer.
1. What you want to buy
This might sound like we are stating the obvious, but from experience working with clients, they know they want to get a property but often not certain about the details. When pressed about what type of property they want, there is always a familiar answer.
"Do you want a HDB?"
"How about a private?"
"Why don't you get a landed"
There cannot be so many 'maybe's when picking out the property one wants to buy. HDB and private are so different in terms of things to consider and prepare. There must be a specific type of property you want and can buy right now. So to help get to the conclusion, we go to the next point.
2. Why you want to buy
Helping the client understand why they want to buy is an essential task of a competent agent. Some ways to figure out the answer is by explaining the features of both HDB and private.
HDB usually provides the luxury of space, is cheaper and thus affordable. However, the potential of earning money is reduced.
Private properties are expensive, but with that you get the potential of earning money like an investment provided you pick the right property with advice from a competent agent.
BTO is a possible choice if you are young enough, but it's not worth the 8-9 years wait otherwise.
EC on the other hand is more worth the wait than a BTO, so if you are waiting 8-9 years, pick an EC over a BTO.
It's important to have a conclusion based on the buyer's situation, needs, wants and most importantly financial abilities and budget.
3. Financial Considerations
As the budget you have determines the properties you can choose from, there must be calculations being done. This is the most obvious yet often overlooked aspect.
Some points to note include the fact that the financial calculation for loans are different between an EC new launch and resale condo. The EC new launch loan amount is 50% of a resale condo. For buyers whose income is not high enough for an EC, they might still be able to purchase a resale condo/EC in the market.
Therefore, by understanding the financial calculations, you can add up the loan amount possible, your CPF, cash on hand to know your maximum budget available.
4. Choosing the Best
After understanding what you want to buy, the reasons why and the financial constraints you might face, the next step is a natural one to take. From the available choices that meet the criteria set out, pick the best unit.
One consideration to keep in mind here: Especially for first time buyers in their 20s and 30s, this first property you buy would unlikely be the same property you stay in till you die. Do you see yourself live in the same property for 40-50 years without renovations and getting old with it? In today's context, living in your first property till you die is extremely unlikely.
So choose this first unit with the understanding that you are still likely to move sometime in the future.
5. Learning to Plan
Why is there another point even after you have chosen your unit? This last point is in fact the most important one. When you are young, you have to learn to plan. If you are not young, the only time you have to start is now.
With loans going at 30 years tenure at 75% LTV, if you purchase a house at 35, it will be till 65 years old. Taking Aaron as an example, he bought his property at 27-28 years old and he can then sell around 33-34 before buying another property at 30 years tenure. Then at 40-45, he would likely be at the third property. With proper planning, you can enjoy this 30 years loan tenure at least twice in your life.
What's the reason for this? The main thing is to increase savings, and keep upgrading to a bigger property. At 55-65 years old, ideally you would have a big private property you can cash out of and move into a smaller property with cash in your pocket.
Thus, learning to plan your property purchases when young will set you up for comfort and peace of mind in future. It's vital to get the correct real estate related advice, in order to get the right properties which would enable your plans to succeed!
Watch the video to hear from Aaron about the 5 things a property buyer MUST KNOW!