4 tips to help home owners avoid money problems
4 tips to help home owners avoid money problems. Buying a new home is normally a joyful and happy experience, but for a group of homeowners in this town, it turned into a nightmare after they lost a significant portion of their hard-earned money.
The 30 or so homeowners had the misfortune of hiring shady home renovation contractors who disappeared with their deposits of $20,000 to $30,000 each recently.
Because many of the shady contractors created shell firms with no assets, it’s difficult for these people to get their money back.
If you’re planning to buy a house soon, keep these four ideas in mind to avoid financial difficulty due to unforeseen circumstances.
The significance of only working with licensed renovation contractors
Some of the homeowners who were harmed hired the rogue builders after seeing web adverts for attractive and well-designed homes. They accepted these adverts as confirmation of the advertisers’ legitimacy without conducting any additional checks.
These checks would have showed that these contractors were not listed on the Housing Board’s list of licensed renovators.
Some of the victims were HDB residents, who may face penalties if they hired unregistered builders to refurbish their apartments.
Even if you’re upgrading your own home, it’s a good idea to consult the HDB list. While doing business with a legal company may not ensure you complete happiness with the results, doing so with an unlicensed one puts your property and money at danger.
Licensed contractors must take public housing rehabilitation courses to ensure that they do not recommend anything that could violate regulations. They must also have at least three years of renovation experience and be actively involved in the profession; this alone will weed out fraudulent operators that frequently change their names to avoid discovery.
Never make large renovation deposits.
Some of the owners lost about $30,000 each after being duped into paying more than half of the entire restoration costs up front.
This isn’t the typical situation for many certified contractors.
Upon signing the contract, most homeowners are asked to pay 10% of the entire expenditures. Following that, you should receive your renovation drawings as well as a full project timeline.
Only after work on your home begins and the contractor delivers the building materials to the job site is the second payment of 20% or 30% payable.
To be honest, as the customer, you may always 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.
You’re generally better off working with someone else if your contractor insists on collecting 50% of the money before any work begins.
Purchase home insurance.
If you’re getting a home loan, you’ll almost certainly be asked to pay for “fire insurance” as part of the application process.
This policy is for the bank, not for you: If there is a fire, the insurer will pay to restore the property to its previous condition so that it can be sold to repay the loan if you default.
All owners should obtain their own home insurance to cover the interiors and goods, according to SingCapital chief executive Alfred Chia, an experienced insurance broker. He advises owners to get a “all-risk” policy for enhanced protection, which starts at $100 per year.
“Such plans will cover you in the event of a fire or water damage caused by damaged pipes. Some insurance companies will pay if the inhabitants are hurt at home. Make sure your insurance includes personal liability coverage so you don’t have to pay your neighbors out of pocket if your house catches fire and spreads to theirs “he adds.
Higher borrowing costs
Before you sign on the dotted line for a new property like Lentor Modern, remember the Monetary Authority of Singapore’s warning about being over-leveraged with a large mortgage.
As a strategy to rein in spiraling inflation, global borrowing costs are expected to climb, forcing homeowners to pay more for their mortgages each month.
You don’t have to put off buying your ideal home; just make sure you have enough extra income to cover any increases in loan payments. Your monthly outlay could climb by a few hundred dollars or possibly $1,000 or more depending on the loan amount and rate increases.
Because rate increases are usually long-drawn events, the last thing you should do is rely on your credit cards as a backup plan for other family necessities. Existing mortgage holders should start cutting their household spending if they are already stretched.
Owning a home is difficult, but it becomes easier if you prepare ahead.
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