Photo Credit: Gov.sg
Buying a home can be a very daunting task, but these five Cs can make it easier to know which house is best for you.
Photo Credit: Lone Star Analysis
Capital– Money needed to purchase a house
The average person will not be able to pay for their house upfront so a loan will most likely be taken out. Hypothetically, if you were to purchase a Build-To-Order HDB flat costing S$400,00, you would need to set aside S$40,000 for the down payment of the 10% HBD loan. In addition to that, you would need S$100,000 as a down payment for the 25% bank loan. That’s a lot of money just needed for down payments. A common rule of thumb is to purchase property that is around 5 times your annual income and never more than seven times.
Capital Appreciation– Future value of housing
When looking for a new house it is important to think about the future and if you are planning on upgrading your living space to a condominium or plan to use your home as a retirement fund. Over time your house will gain more value and by choosing a house that can withstand time, you’ll be more profitable in the future if you decide to sell your home. Think of it as an investment, you are paying money for an asset and over time it will gain more value and eventually you can sell it for a profit.
Cooling Measures– Additional Buyer’s Stamp Duty
ABSD is the main cooling measure to keep in mind when purchasing a new home. For Singaporeans buying their 1st property ABSD does not apply to them, but it does affect permanent residents and some foreigners. Permanent residents can be subjected to an ABSD rate of 5% when buying their first property. Some foreigners are even subjected to ABSD rates of 20% when buying residential housing.
Capacity– How much space you will need
During your life, you will find times when you need more space or have too much space which can be caused by having children or sending them off to college. At first, you might want to start small, but if you plan on having kids a shoebox unit will not be big enough. Make sure you find a home that can accommodate your needs and if you plan on staying for a while try opting for a little extra space.
Community– Does the location make you feel at home
When you are not staying in your new home you will probably be exploring the community around you. It is important to research the area around the house and maybe meet a few neighbors. Being close to a shopping center or a school for your kids are just a few things to keep in mind when looking. You want to make sure you can see yourself living in this area for the next 10-15 years.
Buying a place to live is one of the most important purchases one can make it their life, and hopefully, these 5 Cs will help you make the most of your purchase.