How to prepare for property purchase?

Wealth and Income

Prepare for property purchase like you prepare for a war! It is not easy. Property purchase is a very important decision. It is often the biggest financial commitment in our life. However, we find it surprising that a lot of people do not ask themselves the question of “How informed I am about property?” or “How ready I am to purchase the property of my dreams?”.

Self-educate yourself about property

Firstly, we personally believe that investment in ourselves is the best investment we could take. Learning the ropes of property investing, reading articles like these and listening to show/programs about property is a great way to gain knowledge. Books, magazines and internet forums can also be a great source of information. However, it takes a lot of time to achieve the needed level of knowledge. We don’t think you could learn all the secrets from just reading one book or studying one subject.

It also takes a lot of energy. Sometimes when we read through property related information instead of answering questions, the article would create more questions to investigate.

Look into obtaining professional advice

For those who don’t have sufficient time to learn everything, or those who want to have an additional peace of mind, professional advice is a saviour. It is important to investigate and obtain an independent financial advice. Advisors can be provided by the bank, broker or investment firm. But are they independent? Do they have your best interest at heart? Often those advisors would be paid by respective bank or investment firm, which we think could create a conflict of interest.

Not all advisors are created equal.

Have a buffer in place

Purchasing a property is not a simple task. You can prepare for property purchase by having a buffer in place. A lot of cash is involved in obtaining a house. And we mean a lot! Often people overlook the need to have a cash buffer. There are significant initial costs associated with property purchase such as:

  • Stamp duty (see this calculator)
  • Legal fees (see costs here)
  • Search fees

However, people often forget that even after the property settle, there could be out of pocket expenses. For example, we could need to repair something, or maintenance costs could exceed a few thousand. That is why it is always prudent to have a cash buffer for unexpected expenses. See here for how to save for these expenses!

Want to learn more? Click here.

Leave a Reply

Your email address will not be published. Required fields are marked *