Below are some advice before buying a property:
1. Understand your requirements
List down your requirements based on the level of importance and differentiate your needs and wants. Sometimes we buy a property based on what our friends are buying but it is important to take a quiet moment to discuss with your family what you really need to prevent buyer remorse. Are you buying for investment or own stay? Are you more focused on rental yield or capital appreciation? If you are buying for own stay, how long will you be intending to stay there? Why are you selling your current property? These are some very important questions to ask yourself.
2. Try not to change jobs at least one year before buying your dream home
While it is normal to change jobs to benefit your career advancement, it may also complicate your mortgage approval. The banker wants to see that you have a stable income and employment status, so that they can feel confident that you can afford to repay your mortgage loan. Even if the bank pre-approved your mortgage loan based on your income and job, any change in your job status during the interim period may still affect your loan approval.
For loan approval, you generally need to provide proof of one to two consecutive years of steady employment and income. When you change jobs, that continuous record of income and employment is disrupted, especially if you change to a lower-paying job to follow your passion.
3. Delay buying your car
If you would like to live in your dream sports car rather than your dream home then go ahead because if you're buying a car with cash, it will reduce the amount of cash you have on hand to pay for your dream house. If you're buying your car through credit, it would affect your Total Debt Servicing Ratio (TDSR). TDSR factors in all debt obligations, including the property loan you're applying for, credit card, car loans, student loans, and other secured or unsecured loans.
4. Don't apply for new credit cards & don't get behind your credit card payments
Applying for new credit card when you're trying to get a mortgage may complicate your home loan application. A new credit account may affect your credit score and may raise questions about the stability of your finances. If you're considering a new card and a new home at the same time, you may want to put the new card on hold.
Searching for your dream home on your own may be emotionally tiring and time consuming. A professional, experienced real estate agent can help you sieve out duplicate listings, narrow down your choices and spot issues with the physical property as well as the negotiation process with sellers. Moreover your agent will help to verify ownership of property as well as advice you on the neighborhood and other matters, just in case situations arise where you need professional advice and have no one to turn to.
If you go for viewings without your own real estate agent, the seller’s agent may not act in your best interest as their goal is to get the highest and best offer for the seller since they are engaged by the seller. Having your own agent whose interests are more aligned with yours will help you make more informed choices.
The cost of engaging an agent won’t come directly out of your pocket because as a buyer buying private residential properties, you generally don’t pay the buyer agent’s commission. It’s usually paid by the seller to the seller’s agent, who then splits the commission with the buyer’s agent.
6. Do not get too emotional and forget your requirements / overstretch budget
It is easy to get emotionally attached to a property that is well suited to your requirements. It may be the house of your dreams, but one has to consider the practical details as well before making the decision. If your dream home is way above your budget and loan eligibility, you may feel financially stretched and it may drain and mentally stress you affecting your family or marital relationship. You may worry excessively about unforeseen medical expenses, rising school fees, cost of living, insurance, etc.
Therefore the above advice will help potential buyers looking to buy their desired property secure their loan even when TDSR floor interest rate is revised upwards to 4.5%.