Questions You Must Ask Yourself Before Choosing The Right Financing Package

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:

  1. What is the intention of purchasing the property? Is it for investment or own occupation?
  2. If investment, do you rent it out or hold to dispose it later? If dispose, when?
  3. 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?
  4. 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?
  5. 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?
  6. 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?
  7. 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?

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