It is quite common that, when looking back at the entire home purchasing journey after acquiring their first flat, some rookie homebuyers regret not having made the best purchase decision as they have not done adequate preparation. Well, it is indeed that we mostly improve and accumulate experience by extensive “trial and error”, however, it does no harm if we can learn from others’ mistakes to save the time and effort spent to rectify our own mistakes. Hence, we have summed up 7 things pertaining to purchasing properties that you must know before it is too late.
1. Did Not Consider the Affordability
There are cases where homebuyers have neglected their affordability when purchasing a flat and then sadly realize they could not make it through the stress test when applying for a mortgage. At the end they could only either seek help from their families or increase the down payment to reduce the amount of monthly mortgage repayment. In fact, plenty of websites equipped with mortgage calculators are there to help. Among all, that of mReferral Mortgage Brokerage Services even offers mortgage calculator with the affordability function through which prospective homebuyers can calibrate the value of property they can afford as well as the maximum mortgage loan by simply entering their monthly income.
Talk to our experts now
2. Did Not Engage a Mortgage Referral Company
Some homebuyers may find it time-consuming to visit banks one by one to obtain mortgage information, make relevant comparisons and submit applications after signing the agreement for sale and purchase. In fact, they can actually save the effort by engaging a mortgage referral company which helps do the comparison and sort out the most competitive mortgage plan with the lowest interest rate. These companies will even assign a designated professional to follow up the case who will remind his clients if any application documents are missing. And most importantly, the entire process is FREE!
3. Purchased the Property in Two First-time Homebuyers’ Names
A few years ago the Government rolled out some “spicy” measures with which non-first-time-homebuyers are subject to a stamp duty at 15% of the property price. In this case, if a couple purchases and co-owns a property in their names, they may have to pay the 15% stamp duty if they wish to acquire another property or the old stamp duty rates if they plan to convey the property to another person through internal transfer in the future. Therefore, if the property is affordable and the buyer has an income sufficient to pass the stress test, it would be better to purchase the property in one person’s name.
4. Visited the Desired Property or the Desired District Only
Sometimes, homebuyers may have strong preferences on a particular estate or district and want to conduct property visits to that residence or district only so as to avoid being pushed by real estate agents. Yet, visiting properties in different estates or districts allows homebuyers to have a more in-depth understanding of the pros and cons of living in various districts as well as how much the flats in their desired district should be worth. In addition, it is suggested that people should pay a visit to both first-hand and second-hand properties to grasp an idea about their differences so that they will not regret purchasing a second-hand property instead of a first-hand one or vice versa in the future.
Talk to our experts now
5. Bought the Property at a Higher Price for its Luxurious Decor
Plenty of properties, especially the aged ones, are sold at prices higher than the prevailing price after having undergone major refurbishments, yet it is suggested that buyers of this kind of flats should rethink if the decor is worth the price they paid and if problems of the property are concealed by the luxurious decor. In fact, properties with their problems intentionally covered up with decent decor do exist in the market and buyers of which often realize they are bothered with problems like pipe leaks after they have acquired the property. It is also worth noting that all decorations will deteriorate over time, meaning that when purchasers of these flats sell the property in the future, it is possible that they cannot mark them up as the decor would have already grown old.
6. Paid a Large Sum of Down Payment with a Small Mortgage Loan
We may often be advised by our parents that we should avoid excessive borrowing as this would create extra financial burden in the future. Nonetheless, Hong Kong is currently enjoying a low interest rate environment and citizens are offered a wide range of mortgage discounts, such as cash rebates and deposit-linked mortgage through which homebuyers can save interest expenses by linking their savings interest rate with their mortgage interest rate. With these offers, homebuyers can actually apply for a mortgage with a high loan-to-value ratio and spare sufficient cash flow for emergencies, financial investments and even deposits in mortgage-linked deposit accounts.
7. Did Not Pay Attention to the Management Fees
Compared to aged properties, first-hand properties or residences built in recent years tend to charge a management fee that is way higher than that of aged ones as these properties are often equipped with facilities like club house. Since having more facilities means having higher demand for repairs, the management fee increments of new properties are also generally higher than that of aged ones, which could be something homebuyers regret not having paid attention to.
On the other hand, some homebuyers may also regret getting an aged residence as they may need to renovate the flat soon after it has become theirs. Worse still, if the building does not have enough maintenance reserve, the purchaser may even need to invest tens of thousands of dollars in the refurbishment. Thus, it is recommended that homebuyers should check whether or not their desired property has undergone any renovation and whether or not it has sufficient reserve for property management and maintenance before signing any agreements for sale and purchase.
Want to know what other points to note for first-time homebuyers are? Click here to contact our customer service specialists for more details!