Preparing for your first house.
For those with income and ready to buy a house, here are 10 things to know to prepare for house purchase, ensuring a worthwhile and informed understanding of the process.
Buying a house is a big decision for many, as houses are expensive and require a large sum of money. Without proper preparation, it can create long-term problems in life.
Therefore, there are several things to understand before making a purchase decision, to make first-time houseownership easier and help you find your ideal house.
For those with income and ready to own a house, here are 10 things to know to prepare for house purchase, ensuring a worthwhile and informed understanding of the process.
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1. Assess your readiness to buy a house
The first thing to consider is your financial readiness. A house or condo can start from hundreds of thousands to millions of baht, depending on the desired location and the method of purchase. Most first-time houseowners choose to take out a loan from a bank and make monthly payments until the full amount is paid.
Therefore, the first thing to prepare for is the increased monthly expenses, which will include mortgage payments and interest.
Good financial preparation and planning will help maintain financial liquidity each month and avoid creating excessive financial burdens.
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2. Choose a Suitable House Price
Following on from the first point, the expenses will largely depend on the house price. The higher the house you choose, the greater the financial burden.
Therefore, choosing the right house price is crucial. First, consider your manageable monthly payment. You can calculate your monthly payments using the loan calculator tool.
If, after calculating, you find that the desired house price is higher than your budget, consider looking for a lower-priced option. This might be in a nearby location or slightly further away, where you might find a house with a better price that suits your budget.
Techniques for Buying a Lower-Priced House:
- Buy during the pre-sale period, when housing projects are under construction and prices are usually promotional.
- Make a high down payment. If the house you want to buy is too expensive and you have a lump sum that can be used as a down payment, you can finance the remaining amount with a bank loan. This will lower your monthly payments.
- Buy a pre-owned house. This is another option that can save you more money, as pre-owned houses are often priced lower than new houses in the same location. You can also apply for a loan to buy a resale house or a loan for house renovation.
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3. Things to do before deciding to buy your first house
When choosing your first house, you often first search for information about houses or housing projects online. This provides a general overview of the location, photos, and the project's surroundings. The next crucial step is:
Visiting the actual property.
Thoroughly inspecting the location and surroundings is essential before making a final decision. Even if the housing project isn't yet completed, you can still view sample residences to see if they meet your needs.
Check the environment.
Another essential step is surveying the surrounding environment, from within the project to the exterior. Consider nearby amenities, transportation options, accessibility, and potential long-term impacts on your living situation, such as proximity to polluted water, factories, garbage dumps, or air pollution.
Additionally, visiting several housing projects before making a final decision will help you find your ideal first house in a location that best suits your needs.
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4. Purchase and Sale Agreement Essential Documents for Buying a house
For first-time housebuyers, in addition to choosing a house with a suitable price and desired location, the necessary documents are crucial. These documents help prevent problems during the purchase process and guarantee that the sale will actually take place.
The most important document is a "Sales Agreement," a formal agreement between the seller and buyer detailing all aspects of the sale, including the agreed price, title deed number, names of those involved, and any other terms and conditions.
This document serves as legal proof of the sale and can be used for various procedures during the purchase, such as:
- Applying for a loan with a bank.
- Transferring ownership at the Land Department.
- Legal enforcement in case of breach of contract by either party.
It is essential to carefully review the agreement before signing to avoid any disadvantages in your first house purchase.
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5. Choosing a Bank for a house Loan
Even if you don't have enough money to buy a house outright, you can still apply for a house loan from a bank and make payments until the contract is completed.
Each bank offers different house loan programs with varying benefits, making it difficult to decide which bank to choose.
To choose the best bank, focus on the interest rate. A lower interest rate means more of your monthly payment goes towards the principal, allowing you to pay off the loan faster.
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6. Loan Amount Provided by the Bank
The price of the house you choose from a developer or from the previous owner is determined by the developer or agreed upon with the previous owner. This price is not the amount the bank will lend you.
The loan amount will be based on the appraisal price. After submitting your loan application, a bank officer will conduct a detailed appraisal of the house, considering various factors, to determine the loan amount. This prevents bad debts or lending excessively more than the house's value.
The bank will then compare the price from the sales contract with the appraised value to see which price is lower, and will use that amount to approve the loan to the applicant.
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7. Obtaining a 100% house loan
From the previous point, you may wonder what to do if the appraised value is less than the agreed-upon purchase price in order to obtain a loan for the full value of the house.
To obtain a 100% house loan, the following conditions apply: the house must be a new house or a house from a new project purchased directly from the developer. You can inquire with the project staff or the bank you wish to borrow from.
In addition, banks also consider the repayment ability of the co-borrower. If the borrower has a large amount of existing debt, the chances of obtaining a 100% loan will decrease. Therefore, to obtain a 100% loan, existing debts must be paid off first.
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8. Interest on a house loan
When taking out a house loan with a bank, in addition to the principal that must be repaid each month, interest will also be added to the monthly payment.
Regarding interest rates... It's essential to know and understand this well, because choosing a house loan with a low interest rate will allow you to pay more on the principal and less on interest.
In addition, most loan interest rates are low during the first 1-3 years of repayment, and in subsequent years they become variable, increasing the interest rate. Therefore, you need to plan ahead whether to request a retention loan with your current bank or refinance with a new bank to save on long-term repayment costs.
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9. Expenses to Prepare for When Buying a House
When buying a house, there are expenses you need to prepare for to cover various procedures. These expenses include:
1. Expenses before transferring ownership of the house
- Contract fee or reservation fee to secure the right to the desired house. The amount depends on the project's promotion or the agreement with the houseowner.
- Down payment, which ranges from 10-20% of the house price. For projects under construction, you may be able to choose to pay the down payment in installments to the developer according to the amount specified by the project.
2. Expenses on the Day of Transferring Ownership Payments required at the Land Department (for buyers):
- Transfer fee: 2% of the appraised value of the land including buildings. The seller and buyer will each pay 1%, or as agreed upon.
- Mortgage registration fee: 1% of the loan amount for house purchases with a house loan.
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10. Documents to prepare for loan application:
To own your first house with a loan, prepare the necessary documents to ensure quick approval on the first attempt. Required documents include:
- National ID card / Government employee ID card / State enterprise employee ID card
- Copy of marriage certificate / divorce certificate / death certificate (spouse) (if applicable)
- Copy of name change certificate (if applicable)
- Copy of spouse's National ID card (if applicable)
- Salary certificate / Welfare entitlement letter
- Payslips or proof of salary for the past 3 months
- Copy of bank statement for the past 6 months
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Thank you for the valuable information from GHB (Government Housing Bank).
