a Home - Viewings and Paperwork (Ep. 1)

12:15:00 PM

While we were involved in our wedding preparations, a popular question posted to us would be if we had already bought our home. In which we would reply that we were still looking around for our ideal place and would take it slow as we were going to move into Ben's place after the wedding. Butttttttttt... we would like to finally announce that...



WE WILL SOON BE HOME OWNERS!!! 
*pops confetti everywhere*

It has been a tiring few months and we experienced disappointments along the way (it truly wasn't easy). Most of our friends had applied for BTOs and ECs and even those who had bought resale flats had done so more than 5 years ago (some things have changed since then). To top it off, none of them were a self-employed couple so we had to rely a lot on our own research to get our answers. So to save any self-employed couples out there (or young couples getting a resale flat) who need help in this area, we're here! We hope to answer as many questions of yours as we can in our Mel Ben Gets a Home entries but should we not, feel free to email us at melbengets@gmail.com and we will be happy to help, as always :)


HOUSE-HUNT

It began in May 2014, shortly after Ben proposed. We participated in a Sale-of-Balance exercise for a 5 room unit in Pasir Ris. There were 7 units available but we were eyeing just 1 unit which was walking distance from Ben's parents and sister's place. It was below $400k for a huge unit of 128sqm because it was repossessed by the government. Even though our queue number was quite small at 14 out of 131, we chose to forfeit our chance as the unit we wanted had already been snapped up on the date of our appointment. 

We stopped house-hunting for quite some time and concentrated on our wedding prep instead. Our initial plan was to get married in June 2015 and move into our own home after the wedding. Property prices were dropping towards the end of 2014 and we had some time on hand and decided to source for a unit once again.

SAVE PAYING for AGENT FEE

To cut costs, we did not engage an agent and did the sourcing ourselves, which would have cost us at least $4,500 (1% of your transacted home value) as we were buying a 5 room HDB unit. We looked through the following websites, which comes with mobile apps as well, so it was easy to search for houses to view on-the-go. Here are the websites:


Things to note:

1. Do up a spreadsheet for comparison of the different units you have viewed according to the sqm, level of unit, no. of rooms, price, seller agent's name & contact, the web link where you found the details from, and also a remark column for you to fill up after viewing the unit. Trust us, after viewing many units you will tend to forget what you liked / didn't like about the place if you do not note it down somewhere.

2. Some sellers do not upload photos of their homes onto the website for several reasons. One of it could be because it's not in a "good enough state" and they are afraid that potential buyers would not be keen to view the place by looking at these photos.

The houses that we viewed mainly had photos uploaded with an exception of 1 or 2 that did not, but were situated at a location we preferred. If the price is lower than expected and you do not mind a full renovation upon purchase, feel free to go ahead to book a viewing.

3. You do not need to bring along anything for viewings and there is no need to bring along your cheque book either.

Although we do not follow fengshui practices, to respect Ben's parents, we brought along a fengshui compass to look at the direction our unit was facing.  

We understand that some agents would market the unit as HOT property, telling you that there has been a lot of people coming to view the unit and making their offers etc., so as to entice you to make your decision on the spot. We do not encourage that due to our next point...

4. Arrange for viewings for both daytime and nighttime.

During the day, you would want to observe if the unit feels stuffy or get hits by the morning/afternoon sun (although every few months that might change again) and also observe if the surrounding is noisy/rowdy (if you do stay at home during the daytime like we do whenever we work from home).

At night, you would want to observe if the flat and corridors are brightly lit (especially if you have children staying with you) and if your overall feel of the unit is similar to when you viewed it during the day.

People say that you should not feel cold or gloomy after viewing the unit and if you do, chances are that the house might not be suitable for you. It is an unexplainable feeling that you will have to discover yourself as you view more and more houses. Feel free to check with the sellers or agent on the reason for selling, how many owners did the unit have and any other history about the house.

5. Ask seller for permission to take photos / videos of the unit so that you can refer to it at a later date or show it to your parents / family members who are interested to have a look. Especially if the owner has knocked down several walls or added more partitions in the house, the photos would serve a better purpose as compared to the floor plan from the HDB website.






So what comes next?

A whole load of paperwork (and mini heart attacks every now and then).


GETTING YOUR HLE

It can be done prior to your house hunts but do remember that it is only valid for 6 months. This process was quite a rush for us as we only applied for our HLE during our house hunt week and got into a frenzy when we really liked a unit that we saw. It took us some convincing for the seller's agent to reserve the unit for us.

The HLE process is not so much of a problem if you are an employee of a company (just make sure you did not quit from your job or entered into a new job over the past 3 - 6 months, it's more risky getting a higher HLE that way). But because both of us are self-employed, we had to provide a lot more evidence of our savings, cash flow, earnings etc. while applying for our Housing Loan Enquiry (HLE) from the Government.


DOCUMENTS TO PREPARE

As a self-employed applicant, you'd need to prepare:

a) Valid Accounting & Corporate Regulatory Authority (ACRA) Computer Information (Business Profile) or Valid license of business / trade; and
b) Latest Notice of Assessment from IRAS or Certified Annual Statement of Accounts from an audit firm; and
c) Credit bureau report#; and
d) Latest 12 months’ bank statements/passbook.

Note: OCBC charges $20 per e-statement month. You can risk it (like we did) and download the transaction history (for free) instead (only past 6 months available). For POSB, your past 12 months e-statements are readily available via ibank at no charge.


It was simpler for Ben as he is a business owner and it was easier to retrieve the relevant documents. However as Mel is a self-employed private piano teacher, she had much more to prepare. Furthermore, she had problems proving her monthly salary statement.

Note: Most of Mel's students would pay her by cash instead of cheque or ibank transfer. Hence, it was difficult provide evidence of her earnings via her bank statements as it is not everyday that she would bank in the fees she had collected. Our advice for readers who hold similar jobs would be to always bank in the cash you've received and proceed to withdraw it back should you need to spend it. This way, they are able to see that there is a constant input of money into your account and will be more confident in granting you a higher loan.


MAKING VOLUNTARY CPF CONTRIBUTIONS

We are not 100% sure if this was a better way to show HDB that we were capable of paying up our loan in future but we felt that it was another good way to save up for the downpayment of the house anyway. So we proceeded to contribute a part of our monthly savings into our individual CPF accounts, and we did it diligently for more than 1 year. As Mel held a full-time job previously for 2 years, she also managed to save up quite a sum for our house.

Next, you wait for news on the loan you have been granted and while we were hoping for at least $350k (we were getting a unit priced at $490k by the way), we were only given...

THE LOAN: $260,600


It was quite disheartening because we both put in a lot of effort to save more than half of our salaries monthly and it was only between Dec 2014 - Jan 2015 that we had to pay up for most of our wedding packages, so we felt that it was quite unfair for us if they were basing on our recent bigger expenditure amounts to decide our loan. 

We filed for an appeal to the HDB officer and waited eagerly for news on a higher loan. More paperwork was needed, like Mel having to make a statutory declaration on her income, more backup documents on our savings etc. We also decided to write in to Mr Baey Yam Keng (MP for Tampines GRC) for help and was impressed with how swiftly he replied us a few hours later (via FB) that he will be more than happy to assist us in getting a higher loan. He emailed the CEO of HDB the same night and after more follow-up calls from HDB, Mel received a call that our loan amount had been increased to...

THE REVISED LOAN: $390,000 


It was such a blessing because it would be insane to have to fork out $200,000 in cash for this unit or any other similar priced units for the next 6 months (the period our HLE is valid for) and we can't be sure if we would even be granted a higher loan amount if we waited 6 months to re-apply for our HLE.


OPTION TO PURCHASE (OTP)

This would be quite a lengthy process to blog about so we do advise you to read OTP Steps & Procedures from the HDB website itself. They even have a FAQ page, which can be very helpful because you are bound to have questions if this is your first time applying for a house. But in short, here are the more important steps (and costs involved) before you get to book your 1st HDB Appointment:

1. You can start negotiating on a price during your viewing sessions if you are really interested in the unit. But when you're ready to purchase, this is when you Negotiate and Agree on the Resale price. To avoid any awkward moments (like if you have to check if your partner is agreeable to it yet you have to whisper in front of the seller), you should have this discussed with your partner or family members prior to meeting up with the seller.

2. After agreeing on the price, you Pay between $1 - 1000 as the Option Fee and the option period begins and lasts for 21 days. This fee that you've paid puts you in a safe zone whereby the seller is not allowed to sell the unit to another interested buyer within these 3 weeks. 

3. If you're really sure that you would like to buy the unit and would like to expedite the process, you can go online to look through the Resale Checklist, followed by Submitting your Resale Application (admin fee $40 - 80) and then proceed to Submit a Valuation Request (admin fee $140.40 - $199.25) the next working day and wait for the valuation of the unit.

4. A few days or a week later, you should receive news on the valuation amount. This is how it works nowadays. For instance,

- If the agreed price of your flat was $460,000 but the valuation came out to be $450,000, you will have to pay $10,000 COV (Cash-over-valuation) to the seller. But...

- If the agreed price of your flat was $460,000 but the valuation came out to be $460,000 or higher, you will not need to pay any COV.

So if you're unhappy with having to pay COV and that wasn't your idea, you can choose to forfeit the Option Fee you had paid for earlier. Otherwise, you can proceed to Pay another $1 - 4000 Deposit to the Seller. 

5. After both you and the seller have submitted your resale application, you can agree on your 1st HDB Appointment Date (which is usually 1 - 2 months later) and wait patiently.

TOTAL AMOUNT PAID BEFORE 1ST APPOINTMENT = $5,279.25


Special thanks to Mel's Dad for helping us with the cheques because we haven't gotten our cheque book, and for always asking us if we need any financial help. We are also very grateful for the support from both our Mums and Dads, and also to the ones who have guided us along the way (thanks Lizzy Lee I'm so glad we are in this together!) and prayed for us knowing how much effort we had put into getting our own home.

We will be back with more blog entries on our 1st and 2nd HDB Appointments, and also contacts on furniture and home renovation. 


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