Wednesday, 25 April 2007

Shopping for a house...

Today, the family and I went to look for a new house. Not a new house as different house from where we are living, but a brand new house as in the we will be the first people to live in it.

That is a big process from many perspectives, emotionally, financially, logistically, everything has to be done right.

Let's take a look one some aspects of this process and how we can save money. Any advices from the readers would also be welcome..

To save a little bit on logistic problems, we are going to sell up before buying. This make financial sense.

  1. More money available when borrowing. We are going to have to borrow money for the new house, however as we have just sold the old house, there will be a big wad of cash sitting in the bank that we can use as a deposit on the new house.
  2. Save on mortgage insurance. This would be dependent upon how much cash you have. A good rule of thumb is to avoid mortgage insurance, you will need at least 20% of purchase price of the house in cash. Banks are really nasty on this as the insurance is really for them in case you default on your mortgage repayments.
  3. Less pressure on synchronising settlement dates. If the two properties settlement dates are not in sync, you may have a logistical nightmare. One of our friends' settlement date was out of synch by about 1 week, so he had to put all of his furniture into storage and live in a hotel for 1 week while his new property is being settled.
  4. The financial aspects are better managed. With a big wad of cash in the bank, you will be able to gain a better appreciation on what you can borrow from the bank.
We have just selected an agent for the sale of the house. I wonder if there are ways of minimising the cost of the sale...

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