Brief guide to a new private apartment purchase

CPCG SG

By: Zeng Han Jun, CPCG, Singapore

Owning a private house is definitely a dream come true for many {for some, it is a nightmare}. However, most new home buyers will find that the financing process is quite a tedious process. To make sure that your purchase is successful and without glitches, there are a few things to take note of.

Getting pre-approved

Being pre-approved means, based on your financial strength, the bank approves that you are qualified to take on a certain amount of housing loan. Why is this important? Imagine that having spent so much time shopping for your dream house. You decided on a particular property and signed the option, only to find out that the bank is unwilling to extend the right amount of housing loan. Being unable to complete the transaction, you risk forfeiting the 1% - 5% cash deposit. Getting pre-approved lets the buyer understand the price range of the properties that he or she can afford.

Taking the maximum pre-approved loan?

Let’s say you are pre-approved for a one million dollar housing loan. Should you use the max approved limit as a guide to sourcing for your deals? Work out your financial commitment with your partner or advisor to determine the exact price range that you can work with. There are many different factors like post graduate studies, monthly investment and etc. Do not blindly take the max limit when you are already highly leveraged now or going to be in the future. It could create nasty problems for you in the future.

Read the fine prints

When the contract is presented to you, your mortgage broker or bank officer will briefly go through the contract with you {they might choose not to as well}. However they are not the ones taking up the housing loan. You are. Take the responsibility to read through the fine prints carefully. Some salespeople might be anxious to sell you the housing loan and might omit telling you about a certain feature which may not be beneficial to you in the long run. Take your time to read through and fully understand its implications. No use complaining after you have signed the contract, but of course you can always refinance out of that housing loan

Choose a law firm

Choose a lawyer whose fee structure is comfortable to you. Normally most lawyer chooses a flat fee but some prefer to use a percentage of your housing loan. Talk to several lawyers; understand their fee structure before committing fully. Alternatively you can ask your mortgage advisor or bank officer for recommendation. They should be able to recommend some really good lawyers if they have been in the industry for quite some time.

Pay your monthly installments promptly

Do not treat your housing loan creditor the same way you treat your business creditors. You can negotiate a longer credit cycle with your business partners but if you try that with your housing loan financier. You could end up having a bad credit report. A bad credit report increases the difficulty of you refinancing to lower interest rates when your current housing loan gets too expensive. Prevent this and you will be able to save yourself more money in the long run.

Being more diligent in the initial stages certainly is taxing but it prevents you from getting on the wrong side of the fence. Work out the housing loan planning with your partner and mortgage advisor to prevent such things from happening.

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