Nothing says you’re adulting better than getting the keys to your first home and unlocking a new milestone in life. But with every new beginning comes a few hard lessons that must be learned — though some can definitely be avoided.
Reading this is a great first step, because knowing other first-time homeowners’ regrets can save you a lot of trouble and stress. So make sure you don’t make the same mistakes!
5 common regrets of first-time homeowners
1. Getting your OTP before loan approval
Do not trap yourself in the nightmare of signing an OTP and then not getting your home loan approved.
When you buy a house, you will need to put down a deposit (typically $1,000 for HDBs) and sign an Option to Purchase (OTP) form. You then have 21 days henceforth to complete your purchase by exercising the option.
Now, there are heroes among us who think it is possible to get a bank loan approval within said 21 days. Of course, there are people who have pulled this off, but they are the exception, not the norm.
Getting your OTP before your loan approval is only overly optimistic, but also very risky. You’ll be risking your deposit and your new home because the seller has every right to sell the house to another buyer should your OTP expire and you are not financially ready to complete the purchase.
We cannot stress how crucial it is that you at least get the loan approval either from HDB or from the bank, before you sign the OTP.
2. Overlooking hidden costs
In the negotiation process of getting the best price for your new home, new homeowners (or even experienced ones) may overlook the hidden costs of home ownership.
Besides budgeting for your renovations, which is an arguably flexible amount depending on your tastes and expectations, there are other costs you need to take into consideration, which cannot be waived or reduced at whim. These include:
- Property valuation reports: Free with Ohmyhome! With HDB, you can submit a Request for Value after obtaining your OTP, for a $120 processing fee.
- Buyer stamp duty: For a $500k property, this can total up to about $9,600. We talk more about the rates here.
- Home insurance fees: Free for 1 year with Ohmyhome!
- Fire insurance fees: About $5.50 for a 5-year term)
- Legal fees: $1,800 – $3,000 with a bank. HDB legal fees are based on the selling price and are subject to a minimum of $20. You can go here for a quick estimate of your legal fees.
- HDB service and conservancy charges (or condo maintenance fees): $20-$80 for HDBs, and about $300-$800 for condos.
- Agent commissions: The market rate is 2%, which is about $10,000 for a $500k home. With Ohmyhome, we only charge 1% or half the price. That gives you an additional $5,000 in your pocket!
Some of these may affect your holding power and your ability to comfortably keep the property, or may even make or break your decision to buy the home if you realise you cannot afford it when you factor in all the hidden costs!
3. Future-proof decisions
Foresight goes a long way in making sure your first home gives you enough returns for a potential future upgrade. Being aware of your new home’s environment, available and upcoming amenities, and future developments in the area will serve you well in making smart, future-proof decisions. You can check out the Urban Redevelopment Authority’s Master Plan, which charts development plans for the next 10 to 15 years.
This is a great way to suss out the potential of your chosen neighbourhood and whether it will be further developed into a hub, whether the unit has sufficient rooms, and whether its surroundings are family-friendly, should you intend to have kids soon.
4. Overspending on renovations
So many first-time homeowners have trodden on this beaten path. You’re excited and full of anticipation; you finally have a place to call your own, and you just want it to be perfect.
However, everything comes with a price tag, and overspending on renovations on what may be a temporary home for only the next five years may leave you with burdensome home loans to pay off, leaving you cash-strapped at the end of your Minimum Occupation Period and throwing a wrench into your plans to upgrade.
Take the time to decide what you can or cannot afford, as well as plot a list of wants versus needs so you can make rational and discerning decisions. There is very little point in having a showroom-worthy home when you are struggling with monthly payments and cannot enjoy your beautiful new space. You can read more on how to keep your renovation costs lean here.
5. Knowing the market
Knowing what subsidies and grants you are eligible for can help make your new home a lot more affordable. Doing your due diligence and looking up previous transaction prices will also give you a rough estimate of what makes a reasonable offer so you do not overpay for a resale unit. When you go for viewings, it is wise to take some time to explore the neighbourhood so you know what amenities are available in the vicinity and can make cross-comparisons with other units you have shortlisted.
Knowing the market also includes knowing what financial tools and loans are available to you. While it is best to have the savings to pay off your renovation works in cash, many are also unaware that renovation loans are available and instead take out personal loans that have a higher interest rate, unnecessarily adding to their financial burden. Research all your options as thoroughly as you can so you can cherry-pick from the available resources to suit your needs.
Leave no room for these rookie regrets!
Let Ohmyhome’s smart data-matching technology MATCH you with the right home, according to your specific needs. Submit your preferences to us and our algorithm will filter all our available listings based on those, and we’ll WhatsApp them to you once we find a match. We’ll also send you relevant content that you can use for your research and inform your home-buying decision, so you no longer have to spend hours searching online for the information that you need. Because at Ohmyhome, we’re always by your side, always on your side.
Secure an appointment with any of our Super Agents by dropping us a message in the chatbox at the bottom, right-hand corner of the screen. You can also WhatsApp us at 9755 9283!