Wednesday, December 21, 2016

#adulting: How to buy a house.

Hello guys! So it's been a really exciting year so far, I witnessed a hotel get burnt to a crisp, moved in with my then bf, got my dri...

Hello guys!

So it's been a really exciting year so far, I witnessed a hotel get burnt to a crisp, moved in with my then bf, got my driving license, got engaged, got married, got blue hair, and most recently, BOUGHT A HOUSE.
Oh actually, the most recent exciting thing in my life is the real Christmas tree that is in my living room but that's a story for another time. Also yes, we're married but our wedding will be next year. Yes, I'm a very secretive person. More details in a future post.
(Photo by Smithankyou).

Anyway, I just wanted to say, buying a house is a complicated issue okay. As I was saying previously, it's not like going out to buy some clothes. You can't just saunter into Forever 21, spend 5 minutes of flipping through the racks and then deciding to buy a tank top that's even cheaper than a Venti Non-Fat Sugar-Free Vanilla Latte (key to my heart). Buying a house requires a little more time and effort than that. So today, I will answer some questions on BUYING A HOUSE.
(Photo also by Smithankyou).

#1 Where do I find a house to buy?

So you can use online platforms like PropertyGuru and 99.co to view properties that are on sale. You
can filter them by size, budget, location, and number of bathrooms.
Yes, you can also input ridiculous values to see how the other half lives.

And then try to arrange appointments to view the apartments that you fancy. James and I got an agent. Sure there are fees involved, but the fees are borne by the seller, not the buyer. And we were the buyers so why not?

Also there are many fake listings and duplicate listings on these portals, so it's good if you can get an agent to help you sort them out and help you to set up viewings. I had originally contacted Ena to help me out with that, but we later decided to go with an agent recommended by James' company.

We fell in love with the first apartment we viewed! We viewed a few others after that, but we just decided nothing compared to the first. SO WE GOT IT. With a mortgage of course.

#2 What is a mortgage?

So you've heard of the term mortgage and you know it's somewhat related to buying a house. And also you played Monopoly as a kid. We all know that the mortgage for Park Lane and Mayfair (or Nassim Road and Queen Astrid Park, depending on which version you're playing) is the highest. 
(Via Imgur. Also wtf since when did Nassim Road and Queen Astrid Park morph into Sentosa Cove and Marina Bay?!)

But what is mortgage? It's when people like me want to buy a house but do not have immediate funds to pay for the whole house. So, you put a deposit down for the house, and ask the bank to lend you the rest of the money. And then you will pay the bank back over the next 20-30 years, depending on the plan you choose. 
(Via Giphy).

So you know, mortgage is essentially the sum you borrow from the bank to pay for your house. Also called a mortgage loan, home loan, or housing loan. Or HDB loan if you borrow from HDB.

Oh, and if you suddenly lose your ability to pay the money back to the bank, the bank can seize your house from you. Because you borrow money to pay for your house, if you don't pay the money, then, no more house lor.

#3 Must I get a mortgage?

Well, houses are expensive in Singapore. So unless you have a lot of money in the bank so much so that you can pay for the house in full, I would say yes, you need a mortgage.
(Via Funny Junk).

#4 How much money do I need?

Okay assuming you take a home loan like how James and I did, you need to cough up 20% of the value of your house, not inclusive of stamp duty. Here's how your 20% is broken down - 
Upfront
1% - Pay the owner Option to Purchase (OTP). The OTP will give the buyer exclusive rights to buy the property within the next 14 days. 
Read: Pay 1% for OTP which is the tissue paper packet chope of the property world.

Within 14 days
4% - Exercise the OTP to confirm that you are buying the house.

3 - 4 months
15% - Pay the rest of the deposit. 

#5 How much money can I borrow?

It depends on a variety of factors namely, both your ages, incomes, and the duration you plan to pay your loan. Or your age, income and duration if you intend to buy a house by yourself. I don't know how they calculate it exactly, but you can just enter the figures into the OCBC Home Loan Calculator here and the OCBC website will do the calculations for you.
Also under MAS regulations, banks can only lend you a maximum of 80% of your property value, so make sure you can pay 20% upfront.

#6 Are all home loans the same?

No, of course not. Home loans are all different. Some come with a $1,000 worth of TANGS vouchers, and some come with Dyson fans. But that's really not what you should be concerned about. You can easily buy the free gifts yourself.
(Via Giphy).

What you should be concerned with is the type of mortgages available:

So there's fixed rate and there's floating/variable rate. Which one should you get? Unless you are extremely knowledgeable on the matter, the best thing to do is to speak to a home loan specialist when you need to take up a loan because what the bank can offer you is dependent on too many factors. From your credit scores, to current market conditions, to what promos the bank is currently running. Basically, get someone to give you sound advice, which was what we did with OCBC.
If situations change, you can always remortgage in 2 years. If you decide that you made the wrong decision within a few months, well, tough luck. So it's important to talk to a mortgage specialist who is not slimy, and will recommend the products best suited for you.

FYI, we went with OCBC's 36 month fixed deposit mortgage, meaning that the interest for our mortgage will be pegged to whatever interest OCBC is giving to customers for putting their money into fixed deposit accounts. Other popular packages include the SIBOR dependent mortgages (which we were considering), variable interest rates, and short term fixed interest rates (which we did not consider at all).
(Via OCBC).

#7 What is SIBOR?

That's what I asked the OCBC team during my first meeting with them. They told me that it's Singapore Interbank Offered Rate, also pronounced as "psy-bor". I, the classy Singaporean, pronounced it as "see-bor" with a Hokkien accent. Don't do that.
What you might imagine a "Si-Bor" to look like.

Anyhow, SIBOR stands for Singapore Interbank Offered Rate. It's the daily rate based on the interest rates at which banks offer to lend funds to other banks in the Singapore interbank market. So it's very transparent because everyone knows what the rate is, and it's the same across all banks in Singapore.

#8 What's this stamp duty then?

Stamp duty is property tax you pay to the government when buying your house. Because you are buying, the tax you pay is called, "Buyer's Stamp Duty" and abbreviated as "BSD". When you see it amongst words like mortgage, material and maintenance, sometimes your brain will read it as "BDSM". Totally normal. (I think).

Anyway the buyers stamp duty is:
So, 3% of the cost of your house, assuming that your house costs more than $360,000.

Also if you happen to be a PR or a foreigner, you have to pay something called the Additional Buyer's Stamp Duty (ABSD). The ABSD for PRs is 5% and the ABSD for foreigners is 15%. And this is on top of your 3% BSD. 
So right, many people (agents included), have told me that James and I would have to pay that 15% ABSD if we were to buy a property. And I was outraged. Like, I am potentially helping you increase the TFR of the population, how dare you take away my citizen rights and make me pay 15% extra?!

Well, turns out these people don't know their stuff. Resourceful Jac trawled though the IRAS site and found this:
This means if you are a Singapore citizen, you don't have to pay ABSD for the purchase of your first home no matter who you marry. Some people. Anyhow tell me I have to pay 15% extra.

Anyway, I just wanted to thank OCBC for enabling James and I to become home owners! We're one step closer to becoming real adults now! 
Or maybe not.

And now I'll like to leave you with this good video by Diddy – Dirty Money and Skylar Grey, because you know, I HAVE A HOME THAT I OWN THAT I CAN GO TO NOW. 


Cheers! 
❤ Jac.

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