1. Busting the renovation budget
Whether you’re buying a resale flat from the open market, or a brand new apartment, you’ll want to make some customisations to your new home. And that means signing on a renovation package that costs tens of thousands of dollars.
You’d think that the large upfront sum would be enough to cover everything but busting the renovation budget unfortunately happens more often than not because of careless mistakes or miscommunication on the part of your contractor, to finding out you need extra hacking due to unexpected modifications. For older flats, the need for electrical rewiring to prevent blowouts, and re-waterproofing to prevent bathroom leakages could significantly bump up your final bill.
How to avoid
Set your renovation budget according to the work discussed with your contractor or interior designer, then put aside an extra 20 per cent on top of that to cover any extra expenses. Another tip is to ask your bank for a separate furniture loan package (i.e., a secondary loan, to be used only for furniture purchases) which gives you more flexibility in catering to the needs of your new home.
2. High utilities bills
Having your own home is rewarding in many ways. It’s where you can literally kick off your shoes, have a long hot shower, then sit back and enjoy Netflix on your 40’ HDTV while cooling off under the aircon. But unbridled enjoyment of your abode could bring your utilities bills to unexpectedly high levels, so moderate aircon usage for long-term cost savings.
How to avoid this
When it comes to high utilities costs, the number one culprit is the air-conditioning. Make sure you invest in a high energy efficiency-rated model to enjoy a cool and comfortable home without getting all hot under the collar when your utilities bills come around. You might also want to set a timer on your air-conditioning — get it to turn off at 4am so it’ll still be cool when you get up at 7am.
Another culprit is the clothes dryer. If you must have one, make sure to limit its use to rainy days only. Also, be sure not to run it longer than until your clothes are sufficiently dry. Otherwise, all you’re doing is wasting energy and money, while subjecting your clothing to greater wear and tear.
3. Appliance replacements
One of the biggest nightmares in tropical Singapore is to wake up in the middle of the night soaked in sweat, realising the aircon has broken down. Say what you will about #firstworldproblems but after two stuffy, sleep-deprived nights, you’ll be ready to sell your firstborn in exchange for a working aircon.
And if you don’t have the money on hand to replace the aircon (or fridge, washing machine, stove, shower heater etc) you may very well have to do just that.
How to avoid this
As far as possible, buy essential appliances only from reputable brands and remember to register your product to be applicable for its warranty. More than a good quality product, you’ll want excellent after-sales service with fast repairs and turnaround times.
Yes, this usually means splurging on higher-end models. But if your budget can’t quite cover expensive brands, consider buying extended warranties on cheaper models. This way, you’ll be covered in case your budget appliance breaks down.
Another way to avoid unplanned expensive replacements is to call for regular servicing by professionals. This can keep your appliances working smoothly until you have the money to replace them.
4. Mortgage fluctuations
This next item can be particularly dangerous because of the way it creeps up on you. If you apply for a home mortgage from a bank, you may be offered a package with attractively low interest rates in the first three years, with the “real” rates kicking in only from the fourth year onwards. This may sound attractive to homeowners with tight finances, but it’s simply a marketing tactic and may not actually be good for your bank account.
5. Home accidents
Despite our best efforts, accidents do happen. And if they happen at home, homeowners can find themselves saddled with an unexpected debt that could end up in the thousands.
For example, if a fire breaks out in your apartment, your neighbour’s units — along with common areas such as corridors — may be affected, suffering heat, smoke or soot damage, which you will have to pay for. If your relatives, tenants or friends should suffer an injury while in your home, you may be liable for damages or medical bills.