Looking For Your First Home?

Source : The Sunday Times, Sep 7, 2008

There is more to it than setting a budget and selecting a few preferred locations

While there is little to be excited about in today's quiet property market, it may be a good time for genuine home buyers to take advantage of the slowdown and scour the market for bargains.

Now that the inauspicious Hungry Ghost month has passed, developers are gearing up to launch new projects and home sellers may also start to test the waters again.

If you are a first-time home buyer, what should you know before taking the plunge?

Of course, there are the obvious pointers: set a budget, select a few locations you prefer and consider how much space you will need.

Then there are some other considerations that new buyers may not be aware of, said Mr Dennis Ng, spokesman for mortgage consultancy portal HousingLoanSG.com.

For instance, he recommends shopping for a home loan before shopping for the home itself. Obtaining an in-principle loan approval from a bank allows you to calculate the exact loan amount you can get based on your income and repayment ability.

Mr Dennis Khoo, Standard Chartered Bank's general manager of lending, said: 'Quite often, customers can get a larger loan than they were expecting, so they can then look for a larger home.'

The big search

Once that's over and done with, you can start house-hunting in earnest.

New buyers often ask if property agents are really needed. While they can be a big help in the initial browsing stage, it is essential to know just as much as - if not more than - your agent to avoid being short- changed.

First, find out what potential buys are out there by combing the classified ads for a few weeks. You should soon be able to identify price trends and properties that have been on the market for some time, which might be more open to negotiation.

Diversify into online property listings, like ST701 (http://www.st701.com) and the Singapore Land Authority's Nation Property portal (http://www.nationproperty.sg). They often come with pictures, floor plans and location maps, which give valuable information on a particular project.

On top of that, do your homework by checking out recent transactions in the development you are interested in. This will give you an idea of market prices and better bargaining ability.

You can find recent deals for private property online at the Urban Redevelopment Authority's website (http://www.ura.gov.sg). For HDB resale flats, check the HDB website (http://www.hdb.gov.sg).

Mr Ng also advises new buyers to view houses at different times of the day to gauge noise levels and sun exposure that might change throughout the day.

The big buy

When you finally locate your dream home, what do you have to do to secure it?

The bank you plan to take a loan with will arrange for a valuation report of the property and offer the services of lawyers it might have links with. If you find your own lawyer, note that not all lawyers are approved by banks and this may result in additional legal fees, said Mr Ng.

He added that legal fees are typically about $2,000 for HDB flat purchases and $3,000 or more for private property.

Also, it is important to make sure that your lawyer can act for the Central Provident Fund (CPF) Board as well as the bank if you are planning to use your CPF funds for the property purchase, said OCBC Bank's head of consumer secured lending, Mr Gregory Chan.

'Not only is it more convenient, but you also save a bundle on legal costs,' he added.

Another consideration is mortgage insurance, which covers the home loan balance in the event that the borrower dies or is totally and permanently disabled.

'Because life has its uncertainties, it is our practice to recommend all OCBC home loan customers to protect their liability by taking up mortgage insurance,' Mr Chan said.

'We typically recommend that the borrower insures his or her full loan amount to ensure adequate coverage.'