I bought my first home in my mid-40s, here's what I went through

We've all had different circumstances in life, and some of us begin our home ownership journey a bit later than 35.

This week we spoke to KS, who "married later" and only bought his first home in his mid-40s. He says there are definitely some drawbacks, as well as advantages, to buying your first home later in life.

For those of you who are starting your home ownership journey a little later than the norm, you may find this useful:

A long wait before buying the first flat

KS says the reason for waiting so long, before buying a flat, was due to his family's circumstances:

"My parents split when I was still in Primary school, and I and my sister stayed with our mother for a while. But my mother had depression and couldn't work, and right after NS I went to work to support her and my sister; so I never got beyond my O-levels. It's tough to get a good job without a diploma or a degree."

KS adds that, as a freelancer, his income was often variable; a lot of it also went toward paying for his mother's flat, although he has no ownership of it.

In his mid-30s, KS was dealt another blow when his sister was diagnosed with a medical condition, which prevented her from working full-time. This also caused him to further delay plans to settle down with his girlfriend.

By the time he got married, KS was 43 years old; and he bought his first home — a resale four-room flat in Sengkang — about three years later.

"My wife is a homemaker as we just had our first child, but she contributed to the downpayment with her CPF, and she plans to return to the workforce in a year. In the meantime, I have to hold the fort."

Picking his first home

KS says that ideally, he would have balloted for a BTO flat; but as his child was already on the way, he decided to buy a resale flat that the couple could quickly move into.

"Sengkang was not our first choice, but flat prices were high," he says, "And in Sengkang, prices were still reasonable. Also, we would get the proximity grant as my mother's house is just 12 minutes walk from our place."

In addition, KS likes that Compass One mall (next to Sengkang MRT station) is just three bus stops away, and the stop is just outside his block.

The couple also briefly considered a four-room flat in neighbouring Hougang, which would have been closer to his wife's parents.

While the pricing was close, KS ultimately decided against it as it was "much older, needed more renovation, and the coffee shop downstairs was not as good".

Financial challenges of home ownership

KS says age definitely had an impact on financial planning:

"I feel those who buy in their 30s definitely have a big advantage. Once you are past 45, your loan tenure is a lot shorter. So you need to pay a higher amount every month, and then you still got to meet the MSR."

For an HDB loan, the loan tenure is capped at whichever of the following is shortest:

• 25 years
• Up till the applicant is 65 years old
• Remaining lease of the flat minus 20 years

In KS' case, he was already 46 when he bought the flat. This left him with a loan tenure of 19 years, rather than the 25 years a younger borrower may have had.

While KS doesn't want to disclose his finances exactly, we can use a simulated loan calculation, with a loan amount of $250,000.

At HDB's floor rate of three per cent per annum, someone with a 25-year loan would pay about $1,186 per month. But shorten the loan tenure to 19 years, and the amount increases to $1,440; over 20 per cent more each month.

In addition, note that the loan amount is capped at 30 per cent of your monthly income; this is the MSR limit.

So at 25 years, you could meet the MSR if you earn $3,953 per month. But at 19 years, you'd need to earn around $4,800 per month to qualify.

While KS has no plans to upgrade, we'd also note that — if you aspire to own a private property — it's much tougher if you start later.

If you're 46, then by the time you can resell the flat you'll be 51 years old — and the subsequent home loan for a private property will be just 14 years.

(Note: You can take a home loan that goes beyond the retirement age of 65 for private properties, but the required down payment might be 45 per cent or higher.)

Other life circumstances add to the challenge

KS says that: "Before I provided for my mum and sister, now I have to provide for them plus my own family. If I got the choice, I would rather have started paying off my house earlier, when I had fewer obligations."

This is coupled with fears of declining income, as KS gets older. KS says: "I don't even dare to think about taking it easy when I'm reaching 60, because I got started late. That's not just about the house, but the house is one big reason."

Ideally, KS would have liked to pay off the flat before 55 years old, as he has seen some friends manage it; but this is easier if you start being a homeowner sooner.

Starting late does have a handful of advantages however

KS feels that older homeowners have a better grip on certain realities:

"I think age makes you more practical, you don't go out and 'cheong' so often, you don't feel a need to waste money on things like cars and watches, so in a way that also helps."

He feels that even transport needs are diminished, as you feel less need to "go gallivanting all over Singapore" when you're older, and tend to focus on lifestyle activities within your neighbourhood.

KS also says there's less concern over the "99-year time bomb":

"When you are 40 or 50 or older, you don't worry so much about the 99-year lease. How many more years are going to live? So you are still safe even if you buy older flats. The only thing is the state of the maintenance, not the remaining lease."

Future plans for the flat

KS says the flat is likely to be their forever home; but if things go well, he's not averse to upgrading.

He says: "If I have the money to, I don't mind buying a bigger flat so my mother and sister can stay under the same roof. But it's not a priority, it's just nice to have."

His advice to homeowners who are starting later is: "Look 10 years ahead, and ask yourself if certain lifestyles you have now are going to be as important when you're 50 or 60 or older. Some of our activities, we cannot keep doing at that age. This is where you can compromise, and go for lower costs."

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This article was first published in Stackedhomes.