By: Ron Knox, Executive Manager, RussTini Real Estate
(As published in the Borneo Bulletin, Saturday 5th Aptil 2008)
BUYING a house is not only the most expensive purchase most of us will ever make; it's also one of the best investments we will ever make.
We provide a home for ourselves mid our family and an asset for future generations as well. It's probably the best investment we can make for our own security and to help our children.
There are several steps to take before you actually start looking around to buy a house. The first thing many people do is to go out and look at a tot of houses. This is putting the cart before the hone.
The first step is to make an appointment and sit down with a real estate agent. He will be able to provide you with a lot of free information and give you sound advice about buying a house. The agent can also help you take the next step - to arrange a loan.
FINANCE: Very few people are able to pay cash for a house or land. Banks are the most common source of finance for a house purchase.
First, you must find out how much you can borrow. There is little point in looking at houses costing say, $300,000 only to be told later that you can only borrow $200,000. This may seem obvious but many people start looking around without knowing how much. or even if, they qualify for a loan.
BANKS: Banks offer loans called 'mortgages' for property purchases. Mortgages differ from personal loans in that they we secured by the property being purchased. That means if you fail to make the loan payments, the bank can take the house or land 'mortgaged' as security for the loan.
GOVERNMENT LOANS: If you have a government loan, USE IT. They are a fantastic bonus. Borrowing money isn't cheap! Not many people realise just how expensive it is to borrow money. Government loans are interest-free. Your government low is worth tens of thousands of dollars!
That's how much money you will save by buying a house with a government loan instead of a bank loan. Government loans are best for people who already own land. They can use their government low to build a house on their own land.
It's not easy to use a government loan to buy other properties. This is partly because the seller has to transfer the house to the new owner first. Properly transfer in Brunei can easily take six months or even a year, and many sellers can't wait that long for payment.
But if you are a landowner and have access to and have access to a government loan use it. It will save you a small fortune.
Okay, you've spoken to a bank and you know approximately how much you can borrow. What's the next step? Well, go back to your helpful real estate agent and find out what houses are available in your price range.
What kind of house can you buy?
There are several different kinds of houses. The most popular is the detached house. A detached house is an individual house built alone on a single piece of land. A detached house may be the most popular, but it is also usually the most expensive option. Not everyone can afford a detached house.
If you really want a detached house but don't want to break the bank, consider the traditional Malay-style-stilt house.
It is less expensive to build than a double-storey house and you can build in the ground floor later when you can afford it. The stilt house is an excellent starter home for people on a limited budget.
Another low-cost option is the single-storey house or bungalow. They are popular for small families and inexpensive to build in comparison to a double-storey house.
The next style of house to consider is the semi-detached house. It is two houses joined together. Because less land is used and they share a common wall, semi-detached houses we usually cheaper than detached houses.
Last but not least, we have the terraced house. A terraced house is one of a number of houses joined together in a 1 me. You can build build more terraced houses on a piece of land and they share common walls, so terraced houses arc often the cheapest option available.
But that doesn't mean that they lack amenities. Modem terraced houses we well designed to make the best use of available space and they can also offer excellent value for money.
Buying a house is serious business. There are a few things that the first-time buyer should be aware of First of all, you will have to pay a booking fee to reserve the house while you process the bank loan.
That means that the owner has to take the house off the market and hold it exclusively for you. A booking fee is not refundable, so before you take that step, make certain that you have decided to go ahead.
Secondly, there are several other expenses involved in buying a house. The bank will charge you for a valuation of the properly. This usually costs about $300 to $500, depending on the value of the house.
They will also charge you a fee for setting up your Ioan. This will cost about the same as the valuation. Occasionally banks have special offers such as free valuations and loan charges. It's worth shopping around and finding out which bank is offering the best deal.
You will also have to pay for a Sales and Purchase Agreement drawn up by a lawyer. These are very expensive in Brunei, in comparison to Australia, for example. A typical S&P agreement in Australia will cost about $500. In Brunei, it can easily cost three times that amount! Lawyers, just like other businesses, we in competition. You can haggle with a lawyer just like any other trader and you can usually get a discount.
So a summary of the house buying process includes the following steps:
1. Talk to a real estate agent and get some advice first. It em save you a lot of wasted time later.
2. Check with your bank to find out if you can get a loan. Many Bruneians already have substantial personal loans so this may reduce the amount that you can borrow for a house. Your real estate agent can help set up an appointment for you with a bank loan officer.
3. The government loan is a fantastic bonus. Use it if you em.
4. When you know how much you can borrow to buy 'a house, return to your real estate agent and find out what is available in your price range.
5. Bear in mind that you will have to pay a booking fee to reserve the house. You will have to pay the bank for a valuation and loan set-up. And you will have to pay for a sale and purchase agreement.
6. And you will also need money for furniture, curtains, air-cons and all the other things that make a house into a comfortable home. Sometimes a bank will allow you to increase your borrowing to cover these furnishings.
Buying a house is a complex procedure and it's very important to get good advice right from the start to make the process as easy as possible.