HOUSING MATTERS
8 Must-Know Abouts When Buying A Resale Flat
You and your partner have decided that you will opt for a resale flat instead of a BTO. Maybe due to the fact that a resale flat will require lesser time for you to own property or maybe you just do not like the idea of a BTO.
No matter whatever the reason is, it might be one of the biggest purchase in your life and you do not want to make a rash decision on it. We are talking about a six-digit price tag. Therefore, it would be smart for you to be aware of the 8 things you should know prior to settling down to a decision.
Your Budget
Let’s start with the most important one of them all; your budget. We can simply put it as your affordability to buy the property. For you who plan to take a HDB housing loan., the HDB will issue you a HDB Loan Eligibility (HLE) letter. In that letter, you would be informed of how much you are able to loan, and the expected amount of monthly installments.
To a certain extent, HDB is helping you by informing you of the limitations of your loan amount. And with that, it helps you to not over borrow. Majority of people fall into financial difficulties due to the fact of borrowing too much and eventually being unable to pay it back.
Even if you are able to take a larger amount of loan, it would be wise to refrain from doing so. Larger loan equals to larger interest payable. You do not want to pay extra, no one does.
The other thing is, it will affect your credit score. Meaning that will reduce your inability to take another loan. Your mortgage loan might not be the only loan you will be taking. You might need to take in a renovation loan, or even maybe continue studying and take an education loan. Due to the fact that you took a large mortgage loan, it will hinder you from taking any other loan that you equally need.
With that, it will bring us to the next point:
Your Credit Score
A credit score is a four digit number that will indicate how likely are you able to repay your debts and the probability of you not paying back a loan. It will let financial institutions make a faster decision when lending money to any consumer
Your credit score will determine whether you will be able to take a loan. Unless you have a lot of spare cash, you should always be aware of your credit score. Even if you have a lot of spare cash, you might still need to take in a loan to manage your cashflow better.
After buying a home, you might need to take other loans as well, therefore, it will be wise to check on where you stand when making borrowing decisions. Not everything will be taken care of the HDB or CPF, they assist you in purchasing your home, not assist in your life financial decisions.
Remaining lease of the flat
When buying a BTO, you will have a remaining lease of at least 99 years. But when it comes to a resale, it will definitely be a lease of lesser than 99 years. So what does it mean to you as a buyer?
If you a paying for the resale flat with you CPF monies, there will be limitations on how much of your CPF monies you are able to use. You can refer to the graphic below.
That is why you should know the remaining lease, it will give you a picture of how much of your CPF you are able to utilize. You do not want to be growing old and find out that you have to top up cash due to the fact that you have reached the limit. At that stage, your main intention is to focus on retirement, not mortgage payment.
One more thing, if the remaining lease is too short and you outlive the lease of the flat, you might need to find other options on where to live. Basically, if the full 99 years are over, your flat will not be yours anymore. It will return back to the rightful owner.
History of the flat
It might be a disturbance from a spirit or the frequency of the area being a victim of arson. This will come in as the history of the flat.
Reasons for selling a flat may vary. Say, for example, upgrading to a condominium, need the money for healthcare or migrating to another country. Well, those are considered valid reasons. But we would not really know the whole truth as well.
It is quite difficult to find the full history of the flat but nevertheless, you should do just enough to convince yourself that the flat is safe for you to move into.
The surrounding amenities
This is sort of a no-brainer. One of the biggest reason why people would opt for a resale flat is due to the fact the surrounding amenities. The school, transportation service, the shopping malls or even the community center, all of these does play a part in choosing a resale.
But keep this in mind, the amenities do not have an obligation to be there forever, they can move and relocate anytime they wish to. As a result, the surrounding amenities should not be the main reason why you will choose that particular flat. You will be in full disappointment and anger if you find out that your favorite store or coffee shop moves out.
It can be one of the reasons why you chose that resale flat. If it makes your life easier and save you on certain costs all the more you should factor in as of the reason why you are buying that resale.
The Ethnic Integration Policy (EIP)
The more common word for this is the racial quota. The EIP is used to preserve the multi-racial image that Singapore has. It is used to control the racial quantity of the area and to prevent overcrowding of any race.
You are able to check it on the HDB resale portal. So before being too obsessed with a certain HDB resale flat which is in the market, you should check the EIP prior to committing to it. This is basically to avoid any disappointment.
The physical condition of the flat
If the pair of jeans has a defect, you can return or maybe exchange for a new one. But when it comes to property, unfortunately, it does not work the same way.
You should do your due diligence to check if the flat is in a good condition. Uneven flooring, holes in the walls or damaged ceilings, those are some of the few things that you should be aware of.
If there is indeed certain defects after you have bought the flat, unfortunately, the payment for the damage will be on you. The seller has no obligation to pay any part of it and neither will HDB be involved in the financial damage. After spending money on the house, you do want to pay extra for something that could have been avoided.
Knowing the seller
You should know who are the buyers and also find out if there is anything suspicious about the flat. Indeed you are not able to find out the full details of the buyer but at least know enough for you to have a transaction with.
It is the same as buying something on Carousell, you would want to know the seller first. For example, this will help you in refraining from buying an ex-criminal flat whos’ residence is a place of bad interest. You do not want to be a victim of any sorts of crime.
Due diligence when buying your home
By finding out this important information, it would certainly help you by not regretting on the decision that you have made. It might even help you save a few dollars and you may spend it on other important things. Therefore, do your due diligence and help yourself.
That is the end of the article and hope the information is useful. Do share it with your friends and families. Till next time.
Disclaimer:
I am a financial adviser but I am not your financial adviser. Therefore, what is posted on this website, are my opinions and NOT to be taken as financial advice. Information provided might be relevant at this period of time but may be irrelevant due to alterations to rules, regulations or policies. The information provided is true to the best of my knowledge, but there maybe omissions, errors or mistakes.
