It all began with a copy of Home & Decor lying around at K's place. For the next three hours, all we were talking about were Scandinavian paint palettes, bathtubs and waterbeds. A quick subscription to HDB's eAlert service and PropertyGuru got us oohing and ahhing over private pools in Sentosa Cove homes and suggesting Toto numbers to buy during the weekend.
While K was collecting home design inspirations on Pinterest, I was doing my mental sums and making notes on per-square-foot prices by district. As a true-blue strategist (I ranked 2nd in my Chinese Chess club back in university), I was going to gather all my resources and plan every move carefully before I put in my money. As the saying goes, 'If you fail to plan, you plan to fail’.
1. Not knowing the real cost of home ownership
Getting acquainted with the home purchase process took more than knowing how much 3-room and 4-room units cost in our preferred districts. Apart from the listed prices, there were other costs involved. It looked something like this during the different phases:
With these costs and factoring in housing loan interest rates over a 25-year period, it was a significant sum. The bank loan route afforded more interest rate flexibility but had its cons too. Either way, I had the numbers right under my fingertips.
I learnt two new terms; MSR (Mortgage Service Ratio) and TDSR (Total Debt Servicing Ratio).
The MSR is the proportion of my monthly gross income spent on mortgage repayment. By law, it must not exceed 30%. The TDSR is a measurement of my total monthly debt obligations against my total monthly income. By law, it must not exceed 60%.
As I was considering either a HDB flat or an Executive Condominium, I had to take into account these two ratios when choosing a HDB loan
or a bank loan.
If I had chosen to buy a private property, I would only have to factor in the TDSR when calculating my loan obligations. Delving deeper into housing limits and costs associated with home ownership, the Our First Home Calculator on the CPF website
came in very handy.Strategy #1: Work your sums carefully, taking into account housing limits and interest accrued during loan period. 2. Paying more than what it's worth
"Check, check and triple check", my GP teacher used to holler in junior college; reminding us not to lose unnecessary marks due to simple mistakes in our essays. In this case, I kept tabs on the property market and found out that resale prices dropped slightly in some neighbourhoods that I was interested in. Property comparisons were easy with the URA's Property Price Index (PPI)
. I also kept myself fastidiously updated on the transacted prices for resale flats within the last two years on HDB's website.
By then, I knew enough housing and financial abbreviations to rival any insurance or housing agent.Strategy #2: Stay updated on the latest housing prices and avoid overpaying for your first home.3. Not checking for defects and poor workmanship
With the horror stories I read online about buyers discovering leaky toilets and popping floor tiles, a thorough inspection was something on my must-do list. I now know the drill — a long roll of masking tape, a fine marker and keen eyes to inspect every corner of my newly collected flat or a renovated resale unit. For resale units, a professional would be needed to check the electrical systems, plumbing, air conditioning and any other possible defects that I could not identify.
Floors – Check for cracks, chipping, mortar stains, and evenness for ceramic finishes. For timber, check for cracks and warping of wood grains. Approximate repair costs: $200 - $1,500 (depending on size of replacement)Strategy #3: This is YOUR home. Always do a thorough check before signing off to prevent paying for repairs later on.4. Not planning ahead
In the midst of our future home research, K and I had envisioned how our rooms would look like. But on hindsight, we realised we hadn't talked about the numbers — how much we would commit to renovation loans or if we would upgrade after the minimum five-year occupation period.
Some other questions we did not ask ourselves:
What if one of us gets retrenched during the first few years? Would we have enough for our home loan on a single income?
What if we have a surprise pregnancy? Twins?
What if our parents want to move in with us?Strategy #4: Think three to five years ahead from the day you move into your new home.
Nonetheless, we were off to a good start as first-time home buyers, getting acquainted with the tools and grants available to us and understanding how our CPF accounts work in relation to our home purchase. While K continues to pin home design trends, it's time for me to research on the 5 C's — carat-weight, colour, clarity, cut and confidence!
Writer's Profile: Amos works in the media industry. He loves observing people and often ponders on the meaning of life. In between those thoughts, he keeps himself occupied by writing, cooking and wondering when he's going to make his first million.