Tips on economical and simple ways for first-time housebuyers taking the plunge

BUYING a home for the first time can be daunting. The process can be complex, stressful and often incur unexpected costs. But it does not have to be a difficult task if you follow these 12 simple steps:

Step 1. Save for the deposit

Start saving early for the house down payment and it will help to reduce your debt burden. The lower the amount you have for the down payment, the higher loan you will need to buy the house. The cost of home mortgage insurance may also increase.

Step 2. Set your budget first

Before looking for your dream house, you must first know the price range that you can afford. In areas where houses are limited and competitive, you are likely to meet other buyers.

When you find your dream house, you may want to buy higher. However, keep to your budget and do not take a mortgage you cannot afford.

Step 3. Look for grants

Central and local governments may have subsidies, tax exemptions or incentives for first-time homebuyers. There are also affordable housing schemes available on the market, so be sure to look them up before purchasing your first home.

Step 4. Check credit status

When applying for a mortgage, your credit status will be one of the keys to getting approval. However, it will also affect your interest rate, even the terms of the loan.

Thus, confirm your credit status before applying for a home loan. Appeal against errors that may affect your credit score, and postpone new credit events such as applying for a car loan or credit card.

Step 5. Study your options

If you can afford a higher monthly repayment, choose the 15 or 20 years of a fixed mortgage with a low-interest rate. You may also consider index mortgages, which are at higher risk but lower in the interest rate for the first few years.

By comparing the interest rates and costs of at least three banks, you will be able to choose the best option for yourself.

Step 6.  Prepare agent fees

Besides the housing deposit, you should also prepare a considerable amount of agent fees if you are buying a sub-sale property. The agent fee is usually 1% to 2% of the transaction price. Do compare prices or even share the cost with the seller.

Step 7. Get the right agent

The right agent is someone who is equipped with the right skills, knowledge and is motivated to find your dream home.

Step 8. Do not go over the total budget

Always choose houses that are priced slightly less than your total estimated budget. If the house you are planning to buy is at the top end of your affordability scale, you might not be able to cover other expenses such as repairs and renovations, or the cost of furniture and home appliances. Leave room for unexpected expenses.

Step 9. Choose the right location

A house within a short drive to a grocery market, school, public transportation and hospital will make your life easier. Also study the topography of the land, water runoff and drainage system of the site to avoid flash floods.

Step 10.  Best timing for home viewing

Visit the house at different times of the day. During the day, it helps you to determine the natural lighting and ventilation of the house. At night, the lighting of the neighbouring units reveals the occupancy rate of the community.

Step 11. Purchase a home for tomorrow

We often look for a house that meets our current needs. Take into consideration your future plans, such as expanding the household size, before deciding on what to buy.

Step 12. Be ready to make a compromise

It is hard to find a perfect house that fulfils all your wishes. A new gated and guarded development will provide better security but at higher prices, whereas an older terraced house will be bigger in size. All trade-offs need to be carefully assessed.

To Read More: Which type of first-time homebuyer are you?

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