You heard about Executive Condominium (EC) and thinking of buying a new launch EC directly from developers. This article will have information on the eligibility, financing, and process to become the proud owner of an EC in Singapore.
Before you dive into looking for the best EC development, you have to check your eligibility to purchase an EC. As EC is considered a hybrid of public and private housing types, it is still subject to certain eligibility criteria set by the Housing and Development Board (HDB). At the time of writing, to be qualified to purchase an EC, you must be under one of the 4 schemes. They are Public Scheme, Fiancé/Fiancée Scheme, Orphans Scheme, or Joint Singles Scheme.
In brief detail, the main applicant must be a Singapore Citizen and at least 21 years old. The other applicant has to be either a Singapore Citizen or Singapore Permanent Resident. However, all applicants must be Singapore citizens and at least 35 years old when applying under Joint Singles Scheme.
There is also a restriction on the incoming ceiling. The total household income of the applicants cannot be higher than $16,000. Besides the limitation on the income ceiling, you do not own any property locally or overseas or have not sold any property within the last 30 months. Another important requirement is you have only bought up to 1 BTO, DBSS, EC, or received a CPF Housing Grant to be eligible.
It is always a good practice to know your budget before starting to look for your dream home. It is the same for EC. We suggest you look for your best banker to get an Approval-In-Principle (AIP).
The main purpose is to know what is your maximum loan quantum so that you are aware of the price tag that you can afford and manage the risk of overcommitting better.
Here are some pointers regarding EC Home Loan, although EC is subjected to HDB approval, you are not able to take HDB concessionary loan. Bank Home Loan is the only way to go for EC.
You have to prepare a 25% fund outlay for the property (excluding Buyer Stamp Duty) as the maximum Loan-to-Value (LTV) is 75% for EC. With the Monetary Authority of Singapore (MAS) regulation, Mortgage Servicing Ratio (MSR) and Total Debt Servicing Ratio (TDSR) are applied to EC Bank Home Loan. You can check out our Property Calculator to have a rough idea of the numbers to finance an EC.
One of the best parts of purchasing an EC is that you are not subjected to the Additional Buyer Stamp Duty (ABSD) of 17% even if you currently own an HDB unit. Although Buyer Stamp Duty (BSD) is still applicable, EC is an excellent vehicle for HDB owner to fulfill their dream of staying in a private property. However, a resale levy is applicable for HDB owners when they sold their HDB units after moving into EC.
3.1 Visiting Executive Condominium Sale Gallery
After verifying your eligibility and understanding your budget, it is time to visit the EC sale gallery to understand the developments.
At the time of writing, there are 3 new ECs available in the market. They are Provence Residences which is located around 500 meters from Canberra MRT Station, Parc Greenwich along the junction of Fernvale Drive and Yio Chu Kang Road, and North Gaia in Yishun Avenue 9.
There are also 3 more upcoming new EC – EC at Tampines street 62, Tengah Garden Walk EC, and Bukit Batok West EC which are expected to launch 2nd half of 2022 or 1st half of 2023.
3.2 Booking an EC unit
After understanding the development, you can check with the developers on the required documents like NRIC, Payslips, CPF Statements, and proof of relationship with the co-applicant if you want to book your dream unit.
You also need to prepare 5% of the purchase price (cheque or cashier order) and the developer will prepare a legal document called Option-to-Purchase (OTP) for you.
At this stage, the chosen unit will be reserved for you and the next important thing to do is to engage a conveyancing lawyer to represent you in the sale and get your best banker to finalize the Home Loan package.
3.3 Sales and Purchase Agreement (S&P)
HDB will take around a month to approve your EC application. The developers will send the S&P Agreement to your conveyancing lawyer and you will have around 21 days to exercise the option.
To exercise the option, you can use cash, CPF OA monies, and CPF Housing Grant (if you are eligible) for the 15% down payment, the BSD, and the remaining 5% payment (depending on the progress of the development).
Your conveyancing lawyer will facilitate the whole process and make sure all the timeline is met.
Under NPS, the payment schedule will be disbursed by the bank according to certain construction milestones.
Under DPS, the bank will only disburse the loan after the EC achieve the Temporary Occupation Permit (TOP). This means that your monthly installment will only start after TOP.
There are certain important things to take note of if you go for DPS. The purchase price for choosing DPS will normally be 3% higher than NPS. This will impact your initial 5% booking fee, 15% exercise fee, and BSD.
However, Bridging Loan is available for DPS if your initial fund outlay is not enough to cover the initial payment.
To understand how a bridging loan can work to your benefit, please do not hesitate to contact us or WhatsApp us for a free and non-obligatory consultation for you to understand how all these various schemes work.
After you collect the keys, congratulation on owning your first condominium, and a whole range of wealth creation methods through our wealth creation road map will be open to you.