4 Steps to Being A First Home Buyer

As you step into your 20s, you might start wondering ‘Will I be able to afford my own house before I’m 30?’. Well, nothing is impossible! With careful planning and determination, you just might get the home you’ve been dreaming of! Here are our 4 steps that will help you to get your own property, which includes preparation, research, finding & understanding mortgage, and going through the purchasing process;

1. Preparation

As a first-time homebuyer, you need to do several preparations.

• How much can you actually spare?
  You can roughly count this by deducting your income with how much you spend and save each month. The amount after deduction is how much you can spend on paying a home loan every month. Ideally, your mortgage payment doesn’t exceed 30% of your monthly income. Remember, you should also still have enough money to pay your bills, land tax, and property tax.
• Know your credit score
  A credit score is an important aspect in buying a house, it determines whether or not you are qualified to ask for a mortgage (also known as KPR in Indonesia).
• Start saving early
  There are costs that you need to consider when saving for a first home, such as the down payment and deposit of the property. Down Payment usually starts from 10% of the purchase price, while the deposit differs for each developer. Therefore, reassess your financial situation before deciding to buy your first home.

2. Research

Aside from securing funds for your new home, you need to actively do research to find the most suitable property for you. Here are the important elements you need to research.

• Location
  To know which location is best for you, take into consideration your everyday activities. The location of your office, usual hangout spot, and other places that you regularly visit. Also, research for essential public facilities including hospital, school, supermarket, public transportation route, and last but not least, accessibility. A house in a strategic location or a developing area can also become a smart investment in property.
• House Type
  Surely, the facilities needed for a newlywed, family with children, and bachelor/bachelorette are different. Starting from the number of rooms, bathrooms, as well as the size of the building and land. New establishment rarely has every facility you might need, so make sure you buy a property that could be further developed to suit your future necessities.
• Developer
  The next step is to choose a developer that could be trusted. Dig up information on their past project’s track records, are there any problems or any irregularities in other residential projects that they have done previously? Do a double-check whether the residential property from that developer is within your budget’s price range.
• Neighbourhood
  Already found your perfect house online? Then the next step is to go directly into the location to observe and study the home environment. Pay attention to the neighbourhood to know what to expect when you move in.

3. Get to know mortgage options

A mortgage is a long-term credit that is given on the basis of collateral in the form of immovable assets (property). Indonesians have a mortgage scheme known as KPR (Kredit Pemilikan Rumah / Home Ownership Credit).

There are 4 types of mortgages in Indonesia, they are Conventional KPR, Subsidized KPR, Syariah KPR, and in-house KPR. The difference between each mortgage type lies in the interest rate, lender, and loan repayment methods. You may consult a mortgage broker if you need to find a second opinion.

When asking for a home loan from the bank, you should have already done the previous steps listed above such as choosing the house you want, count how much monthly instalment you can afford and how much you need to prepare for the deposit and down payment.

4. Purchasing your very first home

So now you have done all your research and have found your perfect first home. Before you agree on buying the property and sign the contract, follow these tips to ensure you made the best deal.

• Do an Inspection
  Inspect every corner, wall, and ceiling. If you notice any damage, ask for the developer or previous owner to fix them on the contract. You could also ask for a deduction on payment if they refuse to repair the damage.
• Visit your Property
  If you purchase an establishment that is still under construction, you could try to visit the construction site and estimate the completion time. Visit the site every now and then while keeping in contact with the developer. Therefore, you would know if there’s an issue with the construction.
• Understand the Contract
  Purchasing your very first home is very exciting, especially when you’re about to sign the contract. Pause for a moment and take a breath, read the contract thoroughly page by page. Many property scams occur when buyers fail to notice incongruity in the contract. Take your time and don’t feel pressured!
• Get Homeowner Insurance
  Lastly, do not forget to secure homeowner insurance for your property. House insurance is essential, there are some lenders that will require you to have home insurance. Home insurance covers the cost to repair or replace your home and belongings if they’re damaged by an incident that is covered in the policy (i.e. fire, natural disaster, theft). It also provides liability insurance if you’re held responsible for an injury or accident. Spend some time to find the best policy for your current situation.

Buying your own home is surely thrilling. However, there are numerous things that you need to find out and think about before making a decision. This overview should help you determine which step you need to take in buying a home. The more you educate yourself about the process beforehand, the less stressful it will be, and the more likely you will be to get the house you want for a price you can afford.

Remember, don’t get carried away by emotion when buying a home. Stay rational and cool-headed so you don’t make any decision that you’ll regret!