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Finances play a huge role in the milestones accompanying the life stages of a young adult and buying your first home is probably the biggest purchase that you will first be making. It involves a myriad of tasks that have significant financial implications. Here are some tips that would help potential first-time home buyers plan ahead financially.
There are several ways to make your purchase more affordable. For a start, tapping on the various types of CPF housing grants will make your future HDB flats more affordable. Grants include:
• Enhanced CPF Housing Grant
• Family Grant
• Proximity Housing Grant
This is especially the case for young couples who may not be earning that much yet, as these grants can significantly reduce the initial purchase price and make home ownership a reality.
If your first home is an HDB flat, you have the option of choosing between a HDB housing loan or a financial institution to finance your purchase. This can affect the amount you need to pay for the flat's downpayment and the interest rates also differ.
It is also important to know how much CPF savings you can use for your housing purchase.
It is important to plan with your retirement needs in mind. If you use more of your CPF savings for housing, you will have less CPF savings for retirement. Hence, if financial circumstances permit, young couples can consider using a combination of CPF and cash to pay for housing, so that their CPF savings can grow with interest. With more retirement savings set aside in CPF, you can enjoy higher monthly payouts for a more comfortable retirement.
To save on renovation costs, one can consider hiring a contractor which can often be 30% - 50% cheaper than an interior designer. However, be prepared to spend a considerable amount of time liaising with different technicians as a contractor usually does not perform the role of project management.
At first glance, the entire process of building your dream home is both a time-consuming and costly affair. However, it is possible to mitigate these challenges through early financial planning.When planning your home financing methods, strike a balance so that you can grow your savings steadily for a more comfortable retirement as well.
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