THE path towards owning one’s own house can be a very exciting and liberating journey. The moment when you receive the keys to your first house marks another milestone in life and it is quite thrilling.
A house that you return to each day, your sanctuary, where you can be yourself, seek solitude and just do your own thing isn’t just a dream, it is something that you should achieve, but like all journeys, it requires some preparation and planning.
To prevent your plans from getting derailed or affected by avoidable factors or ignorance, here is a checklist of how to go about owning your first property.
Step 1: Invest in knowledge
There are lots of experts and resources online, so do put aside some time to do your research prior to buying your first property. There are also schemes for first-time house buyers as well as various government initiatives, such as the MyDeposit scheme. Doing your research and compile as much information as you can because these can assist you along your journey, so that you can make more informed decisions.
Step 2: Have a positive mindset
There are many people who keep putting off their decision to buy a property for various reasons. “The market is not good”, “I don’t have enough savings” or even “What if I can’t find a good deal?” All these are hurdles that prevent us from realising your dreams. Procrastination will get you nowhere.
The right mindset to have would be the one that is open to anything to help you achieve your goals, yet mindful enough to make informed decisions.
Personally, I believe that you will not gain anything by hoping or waiting for that ideal time to buy because it is always the right time.
Step 2: Discover your financial capacity and budget
Most banks offer up to 90 per cent loan, but you will still need to come up with the 10 per cent down payment.
Think about your income and/or your household income if you have a spouse. How much do you earn? As a rule you should not be spending more than a third of your salary for your housing loan repayment. Make use of online budgeting apps to help you set aside funds for your new house.
Step 3: Location, location, location!
Location plays a vital role in your decision to buy a property. There are wants and needs to be considered. For example, an ideal house is one that is situated nearby a host of amenities and conveniences, it would easily be classified as a need. So is the distance to your children’s school and your workplace.
And while being near to your favourite malls isn’t so much of a need as much as it is a want, the proximity to such lifestyle facilities does help in increasing the value of the property you have in mind. That would be useful in a few years should you have the desire to sell your property at a profit.
Step 4: Hunt for that perfect bank loan
There are a number of reputable financial portals and resources out there that will let you research and compare before selecting a loan that best suits your repayment profile.
Consider the pros and cons between a traditional term loan (one that requires you to pay a fixed amount of the loan each month within a fixed tenure) or a flexi-loan that gives you the freedom to reduce the interest rate while saving some funds by linking it to a current account.
Choosing the “best” bank loan may sound like an arduous task, but really, it is quite easy to determine which one suits you best. Always remember that “cheapest” or “lowest” rates do not necessarily mean the best. Service, flexibility in terms and conditions as well as reputation also matter.
Step 5: Set aside money for additional costs
While the chosen bank will grant the bulk of the loan needed to procure your property, do remember that other fees such as legal fees, Goods and Services Tax and stamp duty would have to paid out of your pocket.
Besides these necessary fees, you should be prudent in setting aside sufficient cash for renovation costs, furniture, fittings and items such as a refrigerator, washing machine and stove top or oven before moving in.
Step 6: Move in and party!
Time to celebrate and pat yourself on the back for a job well done and a wonderful property acquired!
*Ron Ong is a practising lawyer, investor and property manager, who owns 19 property units worth a total of RM 17.76 million.