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Home is where the heart is. It should be a safe and comfortable haven for the family. For those looking for their next home, whether to buy or to rent, here are some things to consider before making the big decision.
The affordability of a home is different for everyone. People must work out how much they can afford to pay each month, be it for rent or to pay off a mortgage, leaving a little extra to cover maintenance.
Buying a property that is too expensive or paying more rent than one can afford can turn into a financial nightmare.
According to a New York Times report, property and home insurance repayments should not be more than 35% of the pre-tax salary.
Buying an affordable house that matches the current income means being able to save and invest rather than spending most of one’s money on housing.
When considering affordability, the following should be taken into account:
- Deposit or down payment
- Monthly payments
- Maintenance fees for non-landed properties or gated communities
- Legal fees for the loan or tenancy agreement
- Brokerage fees
- Parking fees
- Stamp duty
2. Suitability to your needs
Once you know what you can afford, it is time to check out the options in that price bracket and look for the best deal. One that accommodates your needs and budget.
Some compromise on the wish list may be necessary but do not stray too far from the initial plan.
Investing time and effort in research reduces the risk of overpaying. Do not rush the process. Do not worry about losing a good property by delaying a little and carefully considering the decision. There are many other properties out there.
Reach out to a property agent, do an online search of property listings or ask colleagues or friends for recommendations. The most important is to keep an open mind and do your homework.
A good location and a comfortable house can ensure safety and good mental health. The best properties are located in safe areas with easy accessibility to preferred conveniences.
Criteria can differ for individuals. Someone might need a house within walking distance of public transport. Someone else might want a secluded location for privacy and space.
In general, the main priority is a house close to important amenities such as food supplies, medical and educational institutions or less traffic to reduce the time spent commuting.
Consider what could be happening in the neighbourhood in future, not just what it is like now. Are there are upcoming property developments in the surrounding area? This can affect the value of the property. Remember, the property can be improved, but it cannot be moved.
4. Do you like what you see?
Apart from looking at pictures online or getting advice from others, visit the property to examine it and get a good feel for the location.
One person’s comfort can be another’s nightmare so it is important to check things out for yourself and not rely on what a property agent tells you.
Pictures can be misleading and they do not capture noise and smells. A visit is an opportunity to meet the owner, agent or the neighbours.
Important things to find out:
- Have major renovations been done recently?
- What is included in the asking price?
- Does the property and surrounding area feel right?
- What renovations or changes are needed to make the property suit your needs better?
- What is the water pressure like?
- Are there many mosquitoes or other pests?
- Are the neighbours too loud?
- Who occupied the property previously and why are they leaving?
It is good to make several visits before coming to a decision. Visit at different times of the day to check out different situations, such as rush hour traffic, daytime versus night and so on.
Make these visits as quickly as possible rather than skipping them if there is a fear of losing the property. Having all this information is essential to make an informed decision.
5. Are you open to consulting a licensed financial planner?
Check the research and get a second opinion from a licensed financial planner to determine cash flow and financial standing before committing to any property purchase.
They can help assess how you will be able to afford to pay a mortgage 20 to 30 years in the future. This will help ensure financial survival, even if hardships come up in the future.
After doing the research and getting the expert advice, follow your instinct. If something does not feel right when dealing with the property agent or the developer, consider it a red flag and move on.
Do not make a rash decision that can badly affect the financial plan in the future.
Choosing a new home is not an easy process. Bear in mind the importance of research to understand financial limitations, the family’s needs and the potential impact on long-term finances.
If everything balances out, the family will certainly find satisfaction in their new home.
This article first appeared in MyPF
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