In a group gathering of my old secondary classmates last month, we talked about what was the best investment we have made so far. One of them started with something sappy like time and energy spend developing his relationship with his then girlfriend (current wife and mother of his child). Not surprisingly, no one else agreed.
Relationships often entail lavishing time and money generously on each other. Sentimental gifts such as bouquets of roses do not grow on trees, well literally, they do, but you get my point. Dating is not cheap and don’t get me started on when you get serious with each other. More practical material investments like shares, bonds, property soon came into the picture. As expected, it soon spiralled into a big bragging contest among boys who never really grew up…
But that got me thinking, so what was my best investment I have made? Financially speaking, I would say it is my 4 room HDB flat with my then girlfriend. As per any romantic Singaporean couple, after putting down the deposit for the HDB flat, we decided to get married ☺.
You can never go wrong with the well-tested, practical route to successful marriage that many Singaporeans have taken before you. By no means, it was one of the most difficult financial decisions we had to make. This was our first foray into property and we were worried about what we needed to pay and whether we could afford it.
When we finally found our dream home, the signing of the Option to Purchase (OTP) was mixed with jubilation as well as an overwhelming fear that we are in over our heads. But over the years, that purchase has grown significantly in both financial and emotional value to me and my wife. With the benefit of hindsight now, I would like to share 3 important experiences that my wife and I took away from the purchase.
"The housing agent is not your ‘BRO’"
No matter how close your housing agent is to you, as long as she/he benefits financially from the sale of the property, their advice is never impartial. Be aware of the fact and it will save you thousands of dollars when you decide to make an offer for the flat. Rely on your own research and judgement, rather than fully on their advisory, when making an offer. Remember, they want to close the deal as fast as possible and it may not always be to your financial benefit.
Secondly, if you are buying a resale HDB flat, you do not have to pay the housing agent any fee. They may try to charge you the ‘industry practice’ of 1% of the purchase price as a buyer, but there is no regulations stating that you have to engage their services to purchase the flat. There is only a need to check your HDB loan eligibility to see if you qualify for a HDB loan (if not you can take a bank loan) and to make the first appointment with HDB online. You do all these yourself by following the step by step guide from the HDB InfoWEB link below. This will save you a few thousand dollars to pay for your full leather sofa set later on.
Click here for the Resale Checklist which highlights the important policies and procedures that you should take note of before buying a resale flat.
"Buy what you can afford"
When we purchased our HDB flat, we made sure that both our CPF ordinary contribution can cover the monthly loan repayment amount. This way, the actual amount of our salary that we take home every month is not affected by our loan payment. There is also the issue of which housing loan (HDB or bank) to consider and to sign up for. In the end, we took the HDB loan. The decision on which loan to take is a bit more complex. I will most likely write another separate blog entry on this issue next time.
"There is more to come…"
After coughing up the money for the property purchase, we had to cough up more for the renovation and furnishings. We decided not to engage an Interior Designer, so we got different contractors to do up the separate parts of our home based on our own design and requirement. Doing that easily saved us more than $15,000, but I had to be very involved in the whole renovation process. Once we got the contacts for the craftsman, we had to liaise separately with each of them to get the work done. We also ran into problems when some of the separate work had to be timed one after another to be on schedule. It was a tiring month long project, but at the same time it was very fulfilling to see the project develop day by day.
July 29, 2015
About Jasper Kuan
Jasper is an educator by heart and banker by profession. After teaching with the MOE for more than 6 years, he took the plunge and joined the banking industry after much consideration.