So, you want to buy a house. Unless you have stacks of cash at your disposal, purchasing a home requires a long-term financial commitment that may last until the next generation.
Be it a landed or a high-rise property, it is highly recommended for you to gauge your state of readiness before sealing a deal with the developer or the real estate agency.
To make life simpler, we have compiled five questions potential homebuyers must ask themselves as part of their homework prior to making the great leap forward.
1. Do I have the financial capability to purchase a home?
Well, maybe you have saved up enough money to pay the downpayment and all other costs related to the purchase. Or, you may just withdraw some money from your Employees’ Provident Fund (EPF) account.
Thinks look quite good for now. But, after signing the sales and purchase agreement, you find out that you may have to fork out more extra money to install iron grilles on doors and windows. Perhaps, the house needs some repairing to be done.
Besides, don’t forget to calculate other monthly financial commitments like a car loan, an education fund for your kids, study loan repayment and personal loan.
Finally, please make sure you have enough money to cover your expenses and the most important of all, to support your living and family.
2. Buy or rent?
Most of the time, it can be cheaper to rent a house rather than buying it. Of course, owning a house provides you with an indescribable sense of accomplishment (although technically, the bank owns the house until you have the loan in full).
Renting is practical when you don’t intend to stay for a long time, the rental rate is lower than the monthly loan installment, houses are ridiculously overpriced in the area you plan to live or you will inherit your parents’ house.
However, renting too has its downsides. Maybe you are unlucky enough to encounter ‘the landlord from hell’ who shirks from the responsibility of forking his or her own money to pay for the maintenance of the house.
Worse still, the landlord may bring a potential buyer to take a look at the house while you and your family can only stare in horror at the unwelcomed guests.
3. Should I sign up for a home mortgage insurance plan?
The only certainty in life is death. Grim as it may sound, every homebuyer needs to consider this fact, especially for those who are above 40 and planning to pay for their home loan installments for the next 30 or 35 years.s
Yes, you have to pay an additional sum to insure your home loan but at the same time, it bestows peace of mind to yourself and your loved ones.
Financial institutions in Malaysia offer two types of mortgage life insurance namely, Mortgage Reducing Term Assurance (MRTA) or Mortgage Decreasing Term Assurance (MDTA) and Mortgage Level Term Assurance (MLTA).
Please consult your friendly banker for further information on MRTA/MDTA and MLTA to help you choose which one is the most suitable for you.
4. Does the house have a good resale or rental value?
Some people buy houses for the sake of reselling or renting them. Nothing wrong with that as it is not illegal making money that way.
Since cheap houses are hard to find these days, please perform an evaluation to ensure the prices will not plummet in the long run.
Find out the resale and rental value of other houses within the same locality and other factors that may influence the prices such as the availability of amenities, public transportation system, or crime rates.
If the forecast looks gloomy, find a house somewhere else.
5. Do I really need to buy a house at the moment?
Most of the time, newlyweds get pretty excited about buying a dream house to shelter themselves and their yet-to-be-born children.
The trend has always skewed toward homeownership especially among those with a higher level of education.
Still, always think about the future because you may need to relocate due to a change in jobs or business locations.
Don’t simply jump into the bandwagon just because everyone else is doing it. The road lies ahead is full of uncertainties and you may be in for a rocky ride.