With the new and updated property regulations as released by the government, many are relooking at what are the prospective investments they can make in the property scene. WIth the income ceiling for ECs revised to $16,000, many eyes are turning towards the Executive Condominiums (ECs) in Singapore as a possible commitment. However, for those of you that are unsure of whether if EC is the right choice for you, here are 5 simple steps to follow through before making the big ticket purchase!
Step #1: Check the eligibility criteria for ECs
Just like HDB flats that enjoy certain subsidies or exclusive price rates that are lower than market rates, executive condominiums enjoy a price rate and facilities that are worth the investment. As such, restrictions are put in place for only some to enjoy.
For one, you have to buy the EC under one of the available HDB schemes, which is either one of the following:
- Public Scheme
- Fiance / Fiancee Scheme
- Orphans Scheme
- Joint Singles Scheme
In addition, the main applicant will have to be a Singapore Citizen that is 21 years old or older. As for the co-applicant, he or she can be either a Singapore Citizen or a Singapore Permanent Resident (PR). That being said, for the Fiance / Fiancee Scheme, do note that applicants have to be at least the age of 18 and with the written consent from their parents or legal guardians. As for the joint singles scheme, do note that both of you will have to be Singapore Citizens that are above the age of 35 years instead.
Next, do note that the income ceiling for ECs is revised to $16,000 – meaning that your household income must not exceed that figure or you will not be eligible to purchase an EC. In addition, you are also refrained from owning any local or overseas residential property, or to have disposed of them within the past 30 months. In addition, both applicants’ previous purchase history should only have up to one HDB, DBSS S (Design, Build and Sell Scheme) or another EC.
If any of the above restrictions are not adhered to, you can then look into other property options like private condominiums or landed private properties.
Step #2: Establish your Financial Plan to support your purchase
As a prudent buyer, you would want to know what is the maximum price you can afford with your current income. If you are unable to fork up the down payment or the monthly installments eventually, you may risk dealing with an unsound investment choice instead.
Do note that a downpayment for an EC is slightly different as it is at a higher rate of 25% of the total EC price. In addition, while buying a HDB can be processed through a HDB loan, EC loans will have to go through banks. That would mean that you will have to conduct due diligence and ensure that you check the property loan rates across the banks before committing to the right one for you. Do note that some of these interest rates may change overtime, and it would be best for you to check regularly if you have an interest in buying an EC soon. Otherwise, you can also consult our property agent team through a non-obligatory consultation to have a better idea of how to proceed.
Another notable mention would be the MAS limits, where the Mortgage Servicing Ratio (MSR) in place states that an individual’s monthly mortgage repayment cannot be more than 30% of your combined monthly income, while the Total Debt Servicing Ratio (TDSR) states that an individual’s combined monthly loan repayments (including other loans like personal loans, car loans, university fees etc.) cannot exceed 60% of your combined monthly income.
Other property costs will also include the buyer stamp duty (3% of the purchase price, or up to 4% if the EC price is more than $1 million in value).
Step #3: Have a selection of ECs to consider
With the eligibility and the finance matters out of the way, look into your preferred districts and location that is the most convenient and amenable for your job and your family’s needs. Other things to consider would be the government’s master plan for property developments and new MRT lines being constructed, which could be taken into consideration for your EC choices. Shortlist the ones you like, and you can always opt to check with our property agent team to get more in-depth analysis or first-hand information on the respective ECs as well.
Step #4: Proceed with an Option to Purchase and the Downpayment
To indicate your interest in getting an EC unit, proceed to secure an Option to Purchase (OTP) to ensure that your chosen unit stays exclusive to only you for the stipulated period of time. However, do also note that the OTP will also be charged at a rate of 5% of the purchase price (either in cash or cheque), and that no CPF or grants can be used for this.
Once your application for the EC is approved, you will receive the Sales and Purchase (S&P) Agreement from the developer, where you can exercise your right to purchase within 21 days before it is nullified. With the agreement signed, you will then have to pay the remaining downpayment of 20% and the additional costs mentioned above (e.g. the Buyer’s stamp duty etc.).
Step #5: Post-Purchase Procedures
As per your finance plan, your remaining EC cost (approximately 75% of your EC cost) will be paid through a series of your savings, HDB housing grants, CPF monies, bank loan and such. Do note that there are two payment schemes you can opt for, which are namely:
- Normal Payment Scheme – home loan disbursed to the developer through a payment schedule set by the developer as the construction reaches certain milestones. Do note that this will commence your home loan repayments much earlier.
- Deferred Payment Scheme – home loans disbursed only when the EC receives its Temporary Occupation Permit (TOP) and residents collect their keys.
With that, get ready to collect your keys and embark on a new journey at your new dream home!
Check out the upcoming Executive Condominium that will be launching in 2020: