This is essential for your new home purchase during these challenging times


The latest data shows that Singapore new private home sales in June has dropped to the lowest level since May 2020. At the first glance, you may be mistaken in thinking that the property trend has an abrupt reversal after months of surging private home prices in the earlier part of the year. You may even be thinking that prices of properties are finally coming down!


Unfortunately, or maybe fortunately for some, I don't think so.


I don't think we are going to see property prices, especially those of private homes, dropping any time soon. In fact, I'm optimistic that the property prices will continue to rise for the rest of the year.


You may be thinking why.


Simple. It's all about demand and supply.

In my earlier post on property, I have stated that we are having a big bump in the number of HDB units attaining MOP status this year. It's expected that 31,000 HDB units will attain MOP status this year. This is almost double of the average number (17,000) derived between 2016 and 2020. Hence, we are going to see a huge demand from the HDB upgraders this year.


While we have a huge demand, we are not exactly seeing a huge supply in new private homes this year. Remember, there are only 11 new launch projects this year (based on PropertyGuru research). All these point towards demand outpacing supply in our housing market in the near future.


If you are looking to buy a new home in the coming months, it's imperative that you have to be extra cautious in making your purchase. Prices are likely not going to go down due to the low supply of new homes. Rising interest rate environment might also prove to be challenging for your finances.


Essentially, you have to avoid two big pitfalls in your new home purchase during these challenging times.


The first pitfall is the failure to optimise your monthly mortgage repayment. Interest rates are rising faster than what any of us is comfortable with. The surest way to doom yourself in your home purchase is to purchase a new home where you cannot afford to pay the monthly instalments as the interest rate grows. This is especially true if you are purchasing a second property for investment purposes. In such a scenario, you need to be especially careful if you are going to service two mortgage loans. It’s probably wise to re-look at your current existing home loan for your first property to make sure that you are maximising any savings you could have based on your circumstances. This can come a long way in helping you to manage your finances in serving two concurrent mortgage loans. I have written an article about how SmartRefi can help you in tracking your mortgage loan against the interest rates of applicable loan packages in the market. Do check it out.


The second pitfall is not confirming your loan eligibility with any bank before purchasing your new home. In times like this, it pays to be extra cautious and there's no harm in getting an In-Principle Approval (IPA) done to have full budget clarity. Imagine losing your option fees just because you misjudged your home affordability means and banks refused to provide you with the loan you need. All these could be easily overcome by getting an In-Principle Approval (IPA) done (which is usually free anyway). I'm sure no one wants to forfeit their option fees.


A very important thing to know about getting an In-Principle Approval (IPA) is that you should never try to have multiple concurrent In-Principle Approval (IPA) applications with different banks. This will inevitably affect your credit score as it provides a wrong impression that you are trying to apply for multiple loans. However, many of us might feel compelled to apply for In-Principle Approval (IPA) with multiple banks as we simply do not know which bank is the most suitable for us.


This is where PropertyGuru Finance can help you.


PropertyGuru Finance now offers a service where they can match you with a personal mortgage expert who can assist you in finding the right bank to apply for an In-Principle Approval (IPA) based on your mortgage needs. This personal mortgage expert will even help you deal with the paperwork that comes along in this process.


(Source: https://www.propertyguru.com.sg/mortgage/in-principle-approval)


Instead of going through all the trouble yourself, relying on this service provided by PropertyGuru Finance is a much easier and better option. And very importantly, this service is free! PropertyGuru Finance does not charge you for this service. In fact, they are accorded referral fees from the bank when a loan offer is accepted and such referrals have no bearing on the recommended loans. So, you'll be ensured that the service they provided you is unbiased too.


I couldn't think of any good reason why you should not give this a try if you are looking to purchase a new home in the coming months.


Honestly, someone providing free service to help you look for the right bank for your In-Principle Approval (IPA) application and deal with all the paperwork so that you can have full budget clarity before you make your home purchase so that you won't run into the risk of forfeiting your option fees? Why will anyone say no to that?


I'm looking to purchase a new home in the coming months, and I'll be sure to engage this service.


If you have the same thoughts, check out their service here.


Disclaimer: This post contains affiliate links for PropertyGuru Finance. However, all opinions expressed are my own.


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