Becoming a homeowner is one of life’s major milestones, especially in a competitive real estate market like Singapore. While the allure of finally having a place to call your own is incredibly exciting, it’s crucial to approach this new chapter with caution. Rushing into decisions or neglecting vital aspects can quickly turn your dream home into a financial nightmare. Therefore, avoiding common mistakes is as important as making the right choices. Here, we look at some typical pitfalls you should steer clear of when buying a house in Singapore.
1. Not doing enough research
Many first-time homebuyers underestimate the value of thorough research. This is a huge mistake, considering that a home is one of the most significant investments you will make in your lifetime.
Solution: In addition to researching property prices and real estate trends in Singapore, delve into the history and future development plans of the area you’re considering. Check local amenities, public transport, schools, and even noise levels to ensure they align with your lifestyle.
2. Overspending on renovations
Your new home is a blank canvas, and the idea of making it your own can be irresistible. In Singapore, the average cost of renovating a new BTO flat can range from S$30,000 to S$50,000, depending on your choice of materials and design, according to Qanvast. However, many new homeowners get carried away with upscale enhancements, pushing these costs even higher. Plus, if you don’t budget for a contingency fund and encounter unforeseen issues in the course of your renovation, you may find yourself taking out an unplanned loan. This can add financial stress to your first few years of homeownership.
Solution: To avoid this pitfall, set a realistic budget and stick to it. Always account for contingencies and try to find a balance between your dream design and what you can afford.
3. Rushing into decisions
The excitement of buying a new home often comes with a sense of urgency to finalise every detail quickly. But it’s crucial to remember that these decisions will impact your finances, well-being, and overall lifestyle for years to come. For example, settling for the first contractor who gives you a quote could result in shoddy workmanship or inflated costs.
Solution: Consult experts like financial advisors and real estate agents to make informed choices. If possible, sleep on major decisions, giving your brain time to process the information fully, so you’re less likely to make impulsive decisions you might regret.
4. Underestimating hidden costs
When it comes to buying a new house, the down payment and home loan are just the tip of the iceberg. Many first-time homeowners underestimate the range of ‘hidden costs’ that accompany the purchase and upkeep of a home. Such costs include the Buyer’s Stamp Duty (BSD), legal fees for property transactions, agent commissions and more. These can add a substantial sum to your initial budget, causing unnecessary stress and financial strain if you’re not prepared.
Solution: Before making your purchase, consult a financial planner to review your entire financial situation and to understand how a home purchase fits into your overall plan. The costs of homeownership don’t end once you get the keys. Continue to keep an eye on your finances and adapt your budget as needed.
5. Not buying home insurance
While cutting corners might seem like a good way to save money, foregoing home insurance is not a wise choice, especially in Singapore. Many people assume that the mandatory fire insurance for HDB flats is sufficient, but that only covers structural damage to the flat itself, not the contents within or any personal home improvements.
Solution: Given that your home is probably one of your largest investments, adequate protection is crucial. Here’s why home and contents insurance should be on your checklist:
- Financial protection: Owning a home is likely one of the largest investments you’ll make. This insurance protects that investment by covering the costs to repair or rebuild your home in the event of disasters like fires, storms, or floods.
- Asset coverage: Apart from the structure, the belongings inside your home also have significant value — both monetary and sentimental. Home and contents insurance can help replace or repair furniture, electronics, and even personal items like jewellery or artwork in case of theft, damage, or loss.
- Living expenses: Some policies offer coverage for living expenses, paying for temporary accommodation if your home becomes uninhabitable due to covered damages.
It’s crucial to consider several factors when choosing a home and contents insurance policy, including the amount you’ve spent on renovations. This ensures that you’re adequately covered and not underinsured in the event of a loss or damage. This way, you don’t have to worry about how you will afford to replace items or repair your home after an unfortunate event.
The safety net of Expat Insurance’s home, contents and valuables Insurance
Expat Insurance’s home, contents and valuables insurance policy is tailor-made to give new homeowners in Singapore the peace of mind they deserve. It’s a safety net that protects you against the unexpected, letting you focus on making the most out of your new living space. With competitive premiums and customisable options, there’s no reason to leave your biggest investment unprotected.