Buyers cannot use their CPF savings to purchase houses with less than 30 years left on the lease.
Before purchasing older residential units, prospective buyers are advised to consider the potential downsides of such properties.
1) Financing issues
For properties with shorter remaining leases, buyers may need to fork out more money from their own pocket as banks may provide a lower mortgage quantum or loan-to-value. You are also not allowed to use your Central Provident Fund (CPF) savings when buying HDB flats and private homes with a tenure of less than 30 years.
To be able to use it, the buyer’s age plus the remaining lease should be equal to at least 80 years. Also, the maximum amount that can be used from the Ordinary Account is capped based on the buyer’s age and the property’s remaining tenure.
2) Cracks and repairs
Over time, a home’s walls and floors may suffer from cracks, but among the most serious issues are damages to the foundation and support beams.
Given that the cost of repairing such important structures can cost tens of thousands of dollars or more, it’s advisable to check for these damages before committing to buy a property. Preferably, engage an expert or an engineer. If you still want to purchase despite the existence of such defects, consider negotiating for a lower price to offset the repair costs.
3) Outdated features
Properties built many years ago may come with obsolete electrical wiring and corroded plumbing, which can cause fires and water leaks respectively. Hence, it’s advisable to check for these problems and get a quote on how much it would cost to update these features and ensure they conform with existing safety regulations.
4) Pest problems
An old house may have unwanted guests like rats and termites. The former is a health hazard, while the latter destroys furniture and wooden structures of a property. Before signing the purchase agreement, check for the tell-tale signs of pests. If the infestation is serious, you will need to hire an exterminator.
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