As travel destinations go, Singapore is one of the most interesting cities in the world to visit for tourists and world travellers. So what about the traveller who is ready to settle down and make a life somewhere, to take a break from travel and find some sense of permanence?
Singapore is more than an amazing travel destination, it’s also one of the best places in the world to live, which makes buying a property there an attractive prospect. But wait, slow down there travel junkie!
This isn’t a backpacking trip through South East Asia, there are complex financial matters to consider! Taking out a mortgage and owning property is one of the biggest financial commitments you can make in your life, and it’s a huge milestone. Combine that with the challenges already faced by those taking the leap into the expat life and your new dream travel life could become a nightmare!
While some people prefer to rent for longer periods of time to ensure mobility and not wanting to be tied down to one place, overall, it’s better to own than rent since you’re actually investing in something. Right now, the real estate market in Singapore is going through a transitional period as cooling measures put into place by the government continue on. There are many predictions about what this current state of affairs will do to mortgage rates and the types of property available, but what’s most important is to ensure that you’re making an investment that’s right for you. Here are five things to consider before making a final decision about a home loan.
1. How to finance your travelling expat home – HDB Versus Bank Loan
Being a traveller who is finally looking to settle down from the travel lifestyle and have a break from exploring the world, you’ll want top get a firm grip on the finance and mortgage market where you’re planning to buy – in this case in Singapore. When you’re shopping around for your first mortgage, it may seem as simple as finding the lowest rate, but it’s much more complicated than that.
According to The Middle Ground, one of the biggest reasons that buyers are attracted to HDB loans is that up to 90 percent of the loan can be borrowed, whereas banks will only offer up to 80 percent, otherwise known as the Loan To Value (LTV). While it’s not guaranteed that you’ll qualify for the maximum LTV, it’s still a major driving factor in how home-owners choose to fund their property purchases.
2. More complicated than what to pack in your backpack! – A New Mortgage Versus Refinancing
At first glance, it might just be enough to scare you back into your walking boots and back down the road less travelled! The transition from world traveller nomad to international property hunter can be daunting. In addition to different lender options, there’s also two different home loan options you’ll encounter, and that is a new mortgage versus a refinanced mortgage. Searching PropertyGuru Singapore for a housing loan Singapore will reveal a variety of different options, but will also tell you other details that are very important. For example, if you’re refinancing a mortgage, once you replace an HDB loan with a bank loan, you can’t change your mind and the HDB option will never be available again.
Although you may find more attractive rates with the bank, you should go forward knowing exactly what you’re getting into. There are many different options for homeowners looking to take out their first mortgage or refinance, but the biggest determining factor between all the possibilities you’ll encounter is the fine print, in terms of what other options are excluded and other restrictions. By agreeing to the specific terms of a home loan, whether new or refinanced, you need to be aware not only to what you’re signing on for, but also, potentially what you’re giving up. This is why sitting down with the bank as well as a financial advisor is absolutely paramount, since the average person simply doesn’t know the ins and outs of the real estate industry. While you may find a large variety of exciting options for excellent rates, you need to make sure you know exactly what you’re getting into.
3. The Future of your travelling Expat Home – Real Estate Market Predictions
After finally hanging up the backpack and boots, you want to make sure the next time you put them back on again is out of choice, rather than financial catastrophe! The Edge Markets predicts that mortgage rates will start to rise due to declining confidence in the Asian real estate market and too much supply, but this remains to be seen. Nonetheless, it’s still a good idea to keep a close eye on what type of rates are being offered and to be decisive once you decide you’re ready to sign on the dotted line.
4. Beginning your expat travel lifestyle – Preparing for the Long Haul
Having been a world traveller and nomad for some time, you may not be fully up on the financial aspects of running a home and staying in one place. Bear in mind that currently, supply for the property market in Singapore is way up. That means that if you decided you wanted to sell your new home for some reason, the market is weak and it’d be very difficult to recoup your expenses and move somewhere else. It’s advisable that before you take out a loan, not only should you be aware of the state of your personal finances, but also how well the home you’re considering fits your lifestyle.
You’re not only paying for a property, but also for the location and any expenses or savings you’ll see from where you are. Is food more expensive in the area you’re looking at? Do you have a longer commute to work? Are you planning on adding to your family? These are all questions that need to be addressed, since you’re planning your future and making a huge decision once you sign a loan agreement. This is especially true if you’re agreeing to a lock-in period for a consistent rate, because that means that you won’t be able to take advantage of any drops in rates in the future. Generally, owning property means a certain level of permanence that renting doesn’t provide. While this can mean great security and owning property, rather than renting, is simply a better investment in the long run, make sure that home you want is actually right for you.
5. Travelling ain’t cheap either – Considering Other Expenses!
Some say that traveling is complicated, but owning a house has far more to think about than backpacking and traveling the world! While things like your travel to work and the price of food is very relevant, you also have to bear in mind that certain types of properties potentially can incur more expenses than others. For example, if you decide to purchase a house as a landed property, you will be responsible for more things than if you decided to opt for a condo. You’ll need to upkeep the yard as well as the house, which may be pre-owned and have unknown problems, whereas a condo offers amenities and the convenience of live-in maintenance staff. On the other hand, a house can also offer more privacy and owning land property is different than non-landed. Overall, you simply need to take into account what other expenditures might crop up once you take out a mortgage to become a home-owner depending on the type of property you choose.
Final thoughts for the traveller looking to settle down in Singapore…
For the intrepid traveller who’s ready to put down their travel gear and make some real roots, Singapore is both a travel destination and a great place to live. Overall, there are a lot of options for new buyers in Singapore right now, with attractive loan rates that come with caveats attached. The key to choosing the one that’s right for you is how much you can afford to pay for a property, and if you feel confident in your timing. While watching the real estate market is certainly prudent, it shouldn’t be the all, end all of your decision-making process. Rather, sign on for a mortgage when you feel confident about your financial situation, the type of property you really want, and when you’re ready to take the plunge into a more permanent living situation.
Happy travels and even happier living, in Singapore!
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