Bad Financial Positioning
Your financial planning should start as early as 18 months preceding your upgrade. Be mindful of how much debts you have on hand. Clear as many of them as you can and do not accumulate more. Pay attention to your credit ratings score. Have you been on time on your loan repayments or have you taken any large loan within a short period? These are the little details that will lower your credit ratings. Having good awareness of your debts and credit rating will put you in a good financial position. When you upgrade, you will be able to meet the Total Debt Servicing Ratio (TDSR) which will allow you to put down the minimum down payment for your dream home. Because of your good credit ratings, your loan application with the bank will also go smoothly.
Not Understanding The Terms To Bank Loans And HDB Loans
Taking a home loan is a big decision that have a bearing on the future. Once you have taken a home loan, there is no turning back. Therefore one needs to have full understanding of what the terms are. What might be good for you in the short term might not work for you in the long run. With HDB loans, you can borrow up to 90% of your home value with CPF covering the remaining 10%. You need not have upfront cash when using HDB loans. Bank loans covers only 75% of your property. You will need to pay minimum 5% of your property in cash with the remainder by CPF. Bank loans are also subjected to interest rates fluctuations. Your loan repayments may change as a result so be sure to plan for them.
Being Unprepared For Unforeseen Circumstances
This is the most common mistake i have noticed in my line of work. There are many things that can go wrong in the build up to you getting the keys to your dream home. Property developers may take longer then they anticipate to complete your units. Interior design firms may face unexpected delays from their subcontractors. If you are buying a resale condominium unit, the previous tenants to the home may request for more time to move their things. Never assume your transition will be smooth and that you will move in on your expected completion date. For this reason, always be mentally prepared for unforeseen circumstances and have a plan for when things go wrong.
Upgrading your home to a condomium can be a relaxing and ultimately rewarding experience. Give yourself ample time by planning your upgrading early. Financially, position yourself favorable. Arm yourself with all the knowledge you require to make an informed decision, especially when it comes to your home loans. Always have a back up plan for when things go wrong. By following these tips, you will avoid making unnecessary(and costly) mistakes. I wish you an enjoyable home upgrading experience! All the best!