Planning for Your Property Jul, 2016

Financial planning is essential before you commit to a property.

Having a good plan in place to handle your matters is always a good idea - your finances all the more being no exception. Skipping your share of financial planning is the equivalent of committing the mistake to be unprepared in times of unexpected crises. In order to manage your wealth well, doing your financial planning is not a step one can afford to skip. When it comes to handling one’s property affairs, financial planning is all the more a significant responsibility not to be neglected.

Financial planning is specific to every individual. Depending on one’s financial capacity, future plans and goals, everyone requires different forms of financial planning at different stages of their lives. As property constitutes a huge component of one’s finances and assets, planning for your property plans is definitely essential. Before committing to any property of sorts, going through these simple steps is probably a drill everyone should get familiar with.

Conduct a basic assessment of your financial objectives

Assessing your financial goals and plans in the short and long run may sound like a no-brainer, but it is definitely a good place to start from if you want your financial planning to be effective. Personalising your financial plans according to phases of your life is crucial. Different stages of your life call for different priorities and expenses; be it saving for a newlyweds’ home or downgrading to a smaller house for retirement. 

Determining if you should be saving for or investing in a house will greatly affect your financial plans, which is why one should always consider his level of tolerance towards risk as investing in property is a pretty big commitment.

Understand the costs involved

…Which brings us to the next point; to understand what one is in for when committing to a property, knowing all the costs involved is definitely important. Other than the monthly loan instalments which can spread over 25 years or even more, other costs involved in financing a house include the monthly utilities bill, service and conservancy charges and insurance premiums that one has to pay for. 

Other than the cash-down payment that one has to pay first, other additional costs may include the application fee, stamp duty, legal fee and fire insurance that the homeowner has to cover. In other cases, potential buyers may consider a home inspection to check if there may be flaws, such as pest infestation, in the house which you may have overlooked.

Getting your house insured is also an important form of protecting your asset. Protection policies that cover your home in times of unexpected circumstances are a good investment to undertake. From accidental damages caused during renovation to perils such as fire and theft, getting yourself covered should never be considered a waste of money since it is a form of protection for your assets and property. Finding a sustainable premium that one can afford paying in the long term requires much research, but at least most policies offer a 14-day cooling-off period that allows you to cancel the insurance should you change your mind after signing the deal. 

Assess your ability to pay

After understanding the costs involved, it is only natural to see if your financial capacity allows you to invest in the house of your choice. Before you even decide whether to take up an investment or not, doing the appropriate research about government policies and what your local banks offer is not a step you can afford skipping. 

Different countries offer different loans and financing packages that you should always take the initiative to find out more. When it comes to taking up a loan to finance your investment, checking out the current interest rates your bank offers, the loan-to-value ratio and the mortgage rules are fundamentals to planning your finances. It is also important to take other elements such as the foreign exchange risks, initial outlay and stamp duty into consideration.

In Singapore for instance, other than their available cash savings, locals can utilise their Central Provident Fund (CPF) Ordinary Account savings to pay for their property’s monthly loan instalments. Moreover, schemes such as the CPF Housing Grant allow eligible buyers to receive additional subsidies up to $80,000. The government also provides various schemes catered for couple/non-citizen spouse/single Singapore citizen/joint singles applicants.

Before making an offer

The process of looking for an ideal home can be a nightmare; but knowing what you’re in for during and after the house hunting process can make you more ready to handle the many details involved.

Having a clear idea of your budget and plans will allow you to decide how firm and aggressive you should be during the price negotiation process. Evidently, before you can close the deal, much preparation and research have to be done. After all, buying a house is not simply about hiring a property agent to handle and take care of everything for you. It ultimately boils down to much effort and understanding on your part.





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