Buying The Biggest House Possible
If you’re in your 20 to 30’s and looking to buy your first house, ignore the popular advice: “buy the biggest house possible.”
But why not? I am young, I have a good career and my pay will increase sizable in the years ahead, and giving the fact that I want to settle down and raise my family in the near future, why can’t I stretch a bit and buy a bigger house?
The true is, if you are not born with a silver spoon, buying a bigger house means taking a huge housing loan. Big house means big monthly loan payment and a lifetime of big maintenance cost, property-tax bills and insurance coverage. Moreover, if you carry a huge housing loan, you probably won’t have the spare cash for saving and other investment opportunities
Stop thinking of your house as an investment, and recognize it really is; an expensive installment loan purchase that gives you a hefty “free stay” down the line.
A wiser decision in buying that first home is to purchase a place that is a right size for you and your family, and that you can see yourselves enjoy staying in for a good long time. That means buy cheaper and smarter.
3 tips to better manage your house purchase
- Pay Extra
Making extra payment to your loan can save you a lot of interest. With just RM100 extra a month for a 30 years, 6.25%, RM300,000 loan, one can cuts the loans close to 4 years shorter and saves RM57,000 of interest. A smart way to do this is dump a portion of your yearly bonus to your housing loan.
- Share the burden
Consider rent out your unoccupied rooms for rent collection to subsidize your loan payment, or use the rent as an additional payment for the loan. This can help you rapidly pay off the loan, then you can have the option to sell the house and buy your dream home later. By sharing the burden, you will pay off the loan faster, have more money ready for the new home and use less of your monthly income for future housing cost.
- Be careful of the renovation
Renovate your house on areas that can increase your resell value such as kitchen and backyard extension, but do not stretch your budget. Taking loan to remodel your house is a no no. And when renovating your house, it is better to tune down your individual unique taste or preference in order to has a ‘mass appeal’ should you decided to sell the house latter.
Here is a quick look at the various housing loan type:
