There are several ways to build wealth, but one of the best ones is getting on the property ladder. The property ladder is a concept where you start with affordable property, slowly moving to more expensive properties. To get started, you need to know how to find, finance, and buy properties. In this article, we will be discussing the steps you need to take as a Singaporean to own property.
Start Planning Early
Many Singaporeans make the mistake of postponing property ownership until they are married or older. If you want to own a home as early as possible, you need to start planning for it early. This is especially true because property gets expensive over time and the longer you put off planning for it, the more you have to pay for it in the future.
Another consideration is that the population of Singapore is growing, and land is getting scarce. The result is scarce properties and therefore higher prices. If you do not know where to start, talk to a financial planner or real estate agent, both of whom will discuss how much you have to spend and the opinions available to you depending on what you have.
Set a Budget and Do Your Research
This is part of the planning phase, but it is still important that we discuss it. The first question you need to ask yourself is how much you can afford to pay. This amount will determine how much financing you can get and the mortgage options that will be available to you. In most cases, you can borrow four to five times what you make, but you also have to factor in the 5 to 20% deposit that you have to put up.
Your budget will determine which types of properties you can buy and where they will be located. Once you have a budget, you can start looking for properties that you can afford. You should not take a mortgage that will be a problem down the road because if you are unable to keep up your repayments you might lose your property.
Consider a Resale HDB
The two main types of property you can purchase in Singapore are Build-to-Order (BTO) flats and Housing & Development Board (HDB) flats. There are different procedures for buying and owning both types of properties, but arguably the better option is to go with resale HDB flats.
Buying a resale HDB flat means that you are buying directly from an individual owner. Because you are buying an existing flat, the process is pretty straightforward and quick. The main determinant of how fast things go is how fast you can complete an agreement with the property owner.
With a BTO flat, you have to go through a lottery system while waiting for the flats to be completed. The lottery means there is no guarantee that you get a flat so you might end up waiting and getting nothing at the end of it.
Because of these benefits, buying a resale HDB flat is an affordable and convenient way for a lot of Singaporeans to get on the property ladder.
There is a lot more to know about buying resale HDB and PropertyGuru based in Singapore is a great resource to use. PropertyGuru makes it easy to find property for sale or rent in Singapore while also giving you access to agents who will help complete the process. They also provide guides to buying and selling property in the country in addition to funding financing and suitable mortgages for different types of properties.
Consider the Remaining Lease Period
Purchasing resale HDB properties is a great option, especially if you can find homeowners who are looking to sell quickly. However, it is important to consider the remaining lease period. You might not know that the land lease period of resale flats does not reset after it changes hands.
This means older homes have little time left on their 99-year lease. You must check how old a flat is before buying it to ensure you have a lot of time left on the lease. But do remember that the amount of time left on a lease is directly related to the cost of the property; the longer the lease, the more expensive the property.
Think About the Location
The whole point of being on the property ladder is so you can keep climbing. This is only possible if you can sell your previous property to finance a better one. The key determinant in all this is the location. No one wants to buy property in a location that is not ideal for commuting to work. Do not make the mistake of buying property in such areas, no matter how enticing the deal might seem.
Everyone should aim to buy some property as this is a great way of building wealth and leaving a legacy. There are several types of properties to get started with, but we would recommend resale HDB flats as they have lots of benefits that apply to different types of homeowners.