Age has nothing to do with owning property. Sure, you might think that the older you get, the wiser you are about your investment choices. Or you might think that being older means having more purchasing power. However, keep in mind that you never too young to buy a your first flat (either hdb bto in Singapore). There are numerous benefits to buying young, and it might just be the perfect way for you to spend your money wisely. Read on for some of the benefits that you might be able to take advantage of if you buy your first flat at a young age.
You qualify for more grants
Many people put off buying a home due to a lack of finances. They usually save until they have enough, and then only start the journey of looking for a flat. However, buying a home when you’re young (and broke), can provide you with a big, big advantage. You will qualify for more government grants due to your income range and age. But, as saving up takes time, once you have enough money, your age and income level may automatically disqualify you from a number of government grants.
For example, if you have an income range of $4001 to $4500, you will qualify for $50000 worth of housing grants. This can be used to your advantage well. You can apply for a modest BTO flat at around a $100,000 price range, and you will only end up paying half the amount for your entire flat. However, if you take your time to save and wait to purchase, your income will rise as time passes by. When you are at the point where your income is between $8001 and $8500, the total amount of housing grants you will qualify for becomes $5000, which is a ten-time reduction of what you would have qualified for were your income level lower.
Capital gains
While the property market might be in a bit of a slump, remember that the nature of real estate is cyclical. It is bound to go back up sometime. This means that although the value of a property now may be low, it will experience appreciation in time. Thus, buying a BTO flat at a younger age will put you at an advantage for capital gains. These flats are all priced lower than what their value will be when the property is built and completed. By buying earlier and younger, you will be putting yourself (and your purchased flat) in a position to appreciate in value.
We don’t necessarily mean that you should just run out and buy a flat today. What you should do, however, is to be vigilant and watch out for a good deal that just might come your way. This could be in the form of a new sales launch, or resale flats being sold off at a good price. Keep your eyes out for a good deal as early on as possible. As real estate is tangible, it is unlikely that property prices will be cheaper than it currently is ten or twenty years from now.
You’ll be closer to the five year MOP
The five-year Minimum Occupation Period (MOP) put in place can be a headache and roadblock if you are thinking of buying property primarily to make gains or returns out of it. The MOP prohibits you from renting out the flat in its entirety, or selling it, until the five year time frame is up. If you buy when you have saved up enough, you might have to face waiting periods that can seriously put a dent to your capital and return generating plans.
This is where buying early can put you at an advantage. The earlier you buy your first property, the earlier you’ll be able to rent it out or to sell it at a higher price point that you initially bought it. What’s better is that if it is a BTO you bought, you very likely bought it when it was uncompleted. The time it takes for a BTO to be completed is included in the MOP period. So, when the flat is finished, the time that has passed can put a significant dent in that five-year period.
You’ll be closer to financial freedom
Singaporeans may have a relatively high GDP, but that doesn’t mean the average person is any much closer to financial freedom. Almost every young Singaporean will have to deal with home loans and car loans, enslaving their financial freedom and spending power.
Taking advantage of generous government grants will enable you to get a bang for your buck and enable you to pay off your loans much faster. By being fully paid up, you will be much loser to being debt-free and achieving financial independence, which puts you in the perfect spot to make more capital gains.
Cultivate good spending habits early
Social media and peer pressure has cultivated a culture of spending and materialism. The shortsighted spending habits of young Singaporeans has been called into question. Today’s generation seem much more intent on padding their Instagram accounts with OOTDs filled with designer labels, and fancy restaurant meals, when the money that goes into these things can be better saved for the future. Of course, most of these people have not had to face the reality of life and contend with the burden of loans and mortgages yet.
Buying property earlier and younger on in life will force you to mature financially. You will need to take good grips of your financial situation and cultivate good spending habits much earlier on than those who’ve never had to experience any sort of financial crunching. Although this might mean that you will amass a tad fewer items of designer clothing and less limited-edition shoes (yes, we’re talking about those Yeezys), this might not necessarily be a bad thing at all.
