Buying a used house
Owning a house is a dream for many, but often, attractive projects or locations are sold out, or the preferred house style is too expensive to buy new. Buying a second-hand house is therefore an attractive alternative, as it's more affordable than a new house. You can also choose your desired location, set your budget, and even inspect the house in person before making a decision. In this article, Kasikorn Bank has compiled all the information you need to know about choosing a second-hand house.
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Things to Know Before Buying a Second-Hand house
Before deciding to buy a second-hand house, you should assess your financial readiness. Buying a house, whether new or second-hand, is a long-term expense, so you should calculate the mortgage payment to fit your monthly income.
For those considering buying a second-hand house, it's important to understand that the process is quite complex, involving the application process, signing the purchase agreement, and inspecting the house. Therefore, thorough research is crucial before making a decision.
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Assess Your Financial Situation
First and foremost, evaluate your financial capabilities to determine what price range of second-hand house you can afford. Plan your spending carefully, including allocating your monthly income. Calculate your essential expenses and thoroughly research the costs of buying a second-hand house. Without proper financial planning, your daily expenses could be severely impacted, or in the worst case, you might be unable to continue paying your mortgage, leading to foreclosure. Therefore, it's recommended to roughly allocate your spending beforehand, such as:
• Assess your current savings. Buying a second-hand house requires a security deposit of at least 10% of the house price. Therefore, your current savings should exceed the security deposit amount, along with emergency savings.
• Assess your daily expenses. Naturally, commuting to work or, for those self-employed, daily expenses include food, transportation, and life insurance. Calculate your average monthly expenses.
• Existing expenses and debts. Everyone's expenses and debts vary. Some may have family responsibilities, credit card debt, or be paying off multiple mortgages simultaneously. Therefore, include your current monthly debt payments to determine if you can afford an additional loan for a second-hand house.
• Future expenses you are considering. For example, if you plan to buy a car or a condo, you need to calculate the loan term. This includes assessing your financial capability to ensure you can afford all of these expenses.
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Inspect the housing project you intend to buy.
Review the project details, including any additional common area fees, the history of the house, and inspect the surrounding land for any risk of expropriation. Is the house mortgaged? Most importantly, when choosing a second-hand house, ensure the house is not located on public land or private land donated for public use, as this could be revoked later.
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Know the important legal provisions.
Thoroughly study the relevant laws regarding the purchase of a second-hand house. Typically, a formal written purchase and sale agreement must be in place, specifying the purchase price, deposit, and remaining balance. If the buyer fails to pay the remaining balance on time, the seller has the right to retain the deposit. Once the loan application is complete and approved, both the buyer and seller must finalize the purchase and sale agreement in the presence of an official at the Land Department to ensure legal binding status. There will also be additional costs such as transfer fees, mortgage registration fees, specific business tax, etc.
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Inspect the house thoroughly before transferring ownership.
Inspect the house thoroughly before transferring ownership when purchasing a second-hand house. A thorough inspection of a pre-owned house is recommended before taking ownership. This inspection should cover the following areas:
• The house structure, including walls, fences, floors, balconies, stairs, and beams, should be in good condition with no signs of decay or cracking exposing the internal structural steel.
• Interior hallways, starting from doors and windows, should be in good working order. Ideally, doors and windows should not slam shut when opened, and there should be no leaks.
• The house itself, including ceilings, floors, and walls, should be free of leaks or cracks.
• The electrical system should be in good condition with no damaged wires or outlets.
• The plumbing and drainage system should be free of leaks or cracks. The water pump should function properly, gutters should be free of cracks, and sanitary fixtures should be undamaged.
• The exterior of the house and surrounding area should be in good condition, starting with the fence. The house itself should not be significantly subsiding compared to the surrounding area.
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(Thanks to K-Property for this helpful information.)
