4 tips to help home owners avoid money problems
4 tips to help home owners avoid money problems. Normally, purchasing a new home is a joyous and happy event, but for a group of homeowners in this community, it turned into a nightmare after they lost a considerable amount of their hard-earned money.
The 30 or so homeowners had the misfortune of employing dodgy home renovation contractors who lately vanished with their deposits ranging from $20,000 to $30,000.
It’s tough for these consumers to get their money back because many of the dodgy contractors put up dummy companies with no assets.
If you’re thinking about buying a house soon, keep these four tips in mind to avoid financial problems caused by unforeseen situations.
The importance of hiring only licensed renovation contractors
Some of the victims hired the illegal builders after seeing gorgeous and well-designed homes advertised on the internet. They regarded these advertisements as proof of the advertisers’ validity without further investigation.
These checks would have revealed that these contractors were not on the list of licensed renovators maintained by the Housing Board.
Some of the victims were HDB residents who could face penalties if they engaged unlicensed contractors to renovate their homes.
It’s a good idea to study the HDB list even if you’re improving your own property. While doing business with a legal firm may not guarantee perfect satisfaction, doing so with an unregistered firm puts your property and money in jeopardy.
Licensed contractors are required to take public housing restoration courses to guarantee that they do not advocate anything that could be illegal. They must also have at least three years of renovation experience and be actively involved in the industry; this alone will clear out con artists who frequently change their names to avoid detection.
Large reno deposits should never be made.
After being misled into paying more than half of the total restoration costs up front, some of the owners lost around $30,000 each.
Many qualified contractors have never encountered a situation like this.
Most homeowners are requested to pay 10% of the total expenses when they sign the contract. You should then receive your renovation plans as well as a complete project timeline.
The second payment of 20% or 30% is due only once construction on your home begins and the contractor delivers the building materials to the job site.
To be honest, as a customer, you have the right to request a reasonable progressive payment schedule, such as a 10% deposit, two payments of 20% each for two agreed-upon stages of the project, a 40% payment when carpenter work begins, and the final 10% when the key is returned to you.
If your contractor insists on collecting half of the money before starting work, you’re better off dealing with someone else.
Get a home insurance.
As part of the application process for a house loan, you will almost probably be requested to pay for “fire insurance.”
If there is a fire, the insurance will pay to restore the property to its original state so that it can be sold to repay the debt if you default.
According to SingCapital chief executive Alfred Chia, an experienced insurance broker, all owners should obtain their own home insurance to protect the interiors and goods. For added protection, he recommends getting a “all-risk” policy, which starts at $100 per year.
“These policies will protect you in the event of a fire or water damage from broken pipes. If the residents are injured at home, certain insurance providers will compensate. Make sure your insurance policy covers personal liability so you don’t have to pay your neighbors out of pocket if your house burns down and spreads to theirs “he adds.
Higher borrowing costs
Remember the Monetary Authority of Singapore’s caution about being over-leveraged with a hefty mortgage before signing on the signed line for a new property.
Global borrowing prices are projected to rise as a measure to contain runaway inflation, forcing homeowners to pay more for their mortgages each month.
You don’t have to wait to buy your dream home; just make sure you have enough extra cash to meet any loan payment hikes. Depending on the loan amount and rate adjustments, your monthly outlay could increase by a few hundred dollars or even $1,000 or more.
Because rate rises are usually gradual, relying on your credit cards as a backup plan for other household expenses is not a good idea. Existing mortgage borrowers who are already stressed should begin lowering their household expenses.
Owning a home is challenging, but it can be made easier if you plan ahead.
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