You probably don’t need to be told that home ownership may represent one of the biggest endeavours in any person’s life.
You may be in for a rude shock if you watch a lot of television and have an idealistic picture of what home ownership looks like. There’s some work involved, there are rules to follow, and you may not be able to afford an insta-worthy mansion on a basic salary. These are some of the myths of home ownership.
Myth #1: I can renovate as I wish
Your house, your way
Homeowners cannot indiscriminately renovate their houses. Changes and modifications made to housing units are subject to building codes, township regulations, and zoning guidelines. Care should also be taken to ensure that your renovation does not obstruct or cause inconvenience to your neighbours, as according to the law.
You can always design your renovations in accordance to your dreams, but if the renovations don’t adhere to the standards of the Uniform Building By-Laws (1984), you may have your renovations demolished and the costs billed to you by City Hall.
All home improvements add value
Home improvements do not add value on a dollar-for-dollar basis as the utility of renovations is subjectively perceived by others. Transforming most of your first floor into a wet bar or a home gym might sound appealing to you, but others might not approve of the lifestyle or may view the renovations unfavourably.
If you are planning to sell the home, any improvements should take into account the needs of your prospective house buyers. Traditionally safe improvements are kitchen remodels, conversions of extra space into additional rooms, and new front doors.
Myth #2: I have to do everything
You have to do your own work and repairs
Owning your own home opens you up to become a plumber, electrician, lawn-mower, gardener, and more. If the idea of being a jack of all trades does not appeal to you, there are ample service providers to help you maintain your house – for a fee of course. Hands-on individuals, however, might enjoy the exertion. Consider it a step outside your comfort zone and an opportunity to cultivate new talents.
New homes are maintenance-free
Wrong, the workmanship of a developer determines the quality of the building and defects in newly made houses are not uncommon. Cracked walls, uneven floors, doors with missing hinges, scratches on countertops are just some of the common defects. Professional building inspectors can be hired to seek out these problems, which can then be rectified by the developer.
If you’re not entirely happy with the home you’re getting, or if you believe some parts of your home may not have met the specifications, put that sledgehammer down, list the defects, get a professional building inspector to back your claims, and provide the developer with a written notice detailing the defects within the liability period.
Building inspectors will find every problem
The best building inspectors may be unable to examine every inch of your home. Prudent house buyers should supplement these professional investigations with their own observations during the walkthrough with the inspector. It is advisable to be present during the home inspection.
Latent defects – the less obvious kind that may only become evident after some time has passed – will be more difficult to spot, which necessitates the trained eye of a professional building inspector to ensure that you get your new home in the best possible condition. Prevention is better than the cure.
Myth #3: To buy or not to buy, that is the question
You’re always better off buying than renting
There is no one-size-fits-all solution as the reality of economics is volatile. If the monthly mortgage payment is way higher than the average rental in the market, then you are better off renting and saving the extra cash to be invested elsewhere. Other factors to be considered include the capital appreciation of the house owned, and your ability to cover the interest on a loan.
From a preference perspective, some might enjoy the nomadic lifestyle of hopping from house to house while experiencing a new environment under a new roof. Others prefer to be firmly rooted in a spot, where family and friends can gather for generations.
Homeownership is a good investment
Unlike during previous generations, capital appreciation is not a guarantee – especially in the current property market and with the increasing property overhang. High-rise units can sometimes perform poorly relative to landed properties when it comes to capital appreciation. Considering the current market, renting out a home may be an equally challenging endeavour. However, critical factors such as location play an important role in making a home rentable. Do your homework.
Myth #4: I can’t own a house
Feeling down from your down-payments
It isn’t easy to fork out the necessary amount of cash to fund your down-payment, especially at current price levels. However, some developers offer zero down-payment plans for their units, so look out for them.
You need perfect credit
Not necessarily. The better your credit score, the easier it is for you to get your loan approved. There will also be more loan options available at your disposal. Here are some ways to improve your credit rating:
- Never be late on your payments and pay up in full.
- Keep a steady job with a company that has been in business for a long time.
- Maintain an extensive credit history with a particular bank (banks want to know that you are a reliable bill payer).
- Maintain a diverse list of accounts in your credit score, such as mortgages, car loans, personal loans, and credit cards.
Interest rates are a pain
Interest rates fluctuate over time. Choose the right loan packages that offer favourable interest rates according to your situational needs.
You will lose your house if you miss a loan repayment
Banks do not enjoy foreclosing on a property and disconnecting themselves from a paying customer. They are reasonable and usually open to negotiation. Late payments incur penalty interest rates and one-off penalties which differ from one bank to another.
If you fail to regularise the arrears by the end of 60 days, banks typically reserve the right to revise the interest rate accordingly. If you are prompt in your future payments, the revised interest rate may be reverted to the original rate – or it may not.