Buying a house can be a very daunting and exhilarating experience, especially if it is your first time doing so. After all, it is probably the largest financial transaction you will make in your life. Due to a lack of familiarity, it is not surprising that you are likely to make easily avoidable mistakes. Here are 3 common mistakes that you can avoid.
Focusing too much on Interest Rates
While interest rates are a major factor in determining the amount of additional cost you are paying for your property, there is more to it than it seems. Simply assuming that the lower the value the better it is for you is nothing but a rookie mistake. Have you ever wondered why there are people around you who choose to take up loans with higher interest rates? Home loans come with many conditions and you should take into account the type of interest rate – whether fixed or floating, the locked-in period as well as the prepayment penalty. Refer to 5 Things to Look Out for when Choosing a Bank Loan for a more detailed explanation of these factors.
Underestimating your Budget
When you buy a house, you do not just pay for the house. In fact, there are a whole range of fees and charges that should be factored into your budget. They include valuation fees, stamp duty fees, property taxes, home insurance, and of course renovation costs. These costs quickly add up, so it is no wonder that you end up with a grand total that is greater than what you have expected.
Whether is it private property or a HDB flat, a valuation fee has to be paid. In the case of private property, the bank will use the valuation figure to qualify your loan and will cost about S$350 to S$750, depending on the purchase price. However, this valuation fee can only be paid using cash. Likewise, for a HDB flat, the fee varies depending on the type of flat, but ranges between S$140 and S$200.
Buyer’s Stamp Duty (BSD) Fees
You are required to pay BSD for documents executed for the sale and purchase of property located in Singapore. The fee is calculated based on the purchase price as stated in the document to be stamped or the market value of the property, whichever is the higher amount. The fee will be 1% of your home cost for the first S$180k, 2% for the next S$180k, 3% for the next S$640k and 4% for the remaining amount. As an example, a property that is valued at S$400k will require a BSD fee of S$6,600 to be paid.
Avoiding Professional Advice
Rather than spending all your time and effort in selecting the ideal apartment, it is important that you also devote some time into getting a mortgage broker. The mortgage broker will be able to advise you on your loan eligibility based on your financial credibility and debt to income ratio (TDSR) as well as recommend you, from an objective stance, the best home loan for you. A mortgage broker will be also able to assist you in navigating all the financial matters relating to securing your home loan. In addition, many mortgage brokers offer free consultation services so there is no harm in speaking to a mortgage broker to see what they can do for you. After all, even a slight difference in your home loan can mean a difference of thousands of dollars at the end of each year.
Here at KeyQuest Mortgage, we are able to provide you with free no obligation consultation services. Interested to know more? Contact Us now to get the best mortgage loan rates in Singapore.