Many times, homebuyers fail to properly plan when deciding to purchase a property and finding a financing package to SUIT the property purchase strategy. Only later, do homebuyers find that although they have found the best (cheapest?) financing package, there is still a mismatch as it is not the RIGHT financing package. If the financing package benefits the homebuyer in the short-term, the homebuyer’s strategy must also be to HOLD the property for a short term.
Among the questions you must ask yourself in deciding the strategy for your home purchase are:
- What is the intention of purchasing the property? Is it for investment or own occupation?
- If investment, do you rent it out or hold to dispose it later? If dispose, when?
- If own occupation,do you have plans to eventually move to a bigger house? If so, will you dispose the house, re-finance the house to a lower loan rate and collect rental? If yes to any of the question, when will the above happen?
- What is your personal outlook towards (specifically) the housing industry in the next 5 to 10 years, and towards (generally) the economic conditions of the country? Do you expect an improving market conditions which high appreciate the value of your property, or a prolonged stable environment is more likely?
- How much capital growth (property appreciation) in percentage do you expect your property to gain on a yearly basis? Will the capital gains make it worthwhile to dispose the property in your determined time-frame, taking into account the acquisition, maintenance, interest-servicing and disposal costs?
- Do you plan to make any capital pre-payments for your house, or make an early-settlement, or are you more inclined to make regular instalment payments throughout the whole financing tenure?
- Do you take risks (which may give better rewards) on your financing package, or do you prefer fixed financing packages to minimise the risks when rates fluctuate upwards?
