In this chapter, I would like to share with you how do you go about qualifying and buying an Executive Condominium (EC) in Singapore. Historically, ECs has a high potential for a profitable resale value due to factors such as government grants for first-time buyers and generally, ECs are generally 10-13% less expensive as compared to normal private condominiums in the same estate and date of completion. If you are considering buying an EC from a developer, here are the steps you have to take in order to successfully purchase a unit.
Step 1. Check your Eligibility
ECs are part of the government’s attempt to cater to the needs of the “sandwich” class, whose household income exceeds the ceiling for public housing, but falls short of comfortably affording a private property. This is also the reason why at least 70% of units on sale will be reserved for first-time homebuyers.
Besides the income ceiling of $16,000 and having or disposing of any property be it local or overseas in the last 30 months, you need to meet the requirements of the following schemes.
- Public Scheme
- Fiancé/Fiancée Scheme
- Orphans Scheme
- Joint Singles Scheme
The easiest and most accurate way to find out which scheme you fall under would be to have a look at HDB’s EC eligibility conditions.
💡 Pro tip: Speak with a property agent, most of them are highly familiar with qualification requirements and will also advise you on financial calculations.
Step 2. Do you need financing?
After you have checked that you qualify to buy an EC, next is to consider if you can truly afford one. Buying an EC isn’t just about the purchase price; there are other costs and taxes that you need to factor into your decision such as,
- Booking Fee – 5% of the purchase price (In Cash)
- Conveyancing Fee – Around $2500-3000
- Buyer’s Stamp Duty – works out to be around 2.3 – 2.5% of the purchase price (CPF or Cash)
Get an Approval-in-Principle (AIP) for a bank loan
Speak to a banker and get yourself an AIP – that’ll set out how much the bank will loan you, and your monthly mortgage payments.
Your loan’s going to be subject to regulations like Total Debt Servicing Ratio and Mortgage Servicing Ratio (capped at 30% of a borrower’s gross monthly income), so depending on your existing loans and lines of credit, your total loan might be lower than you expect.
💡 Pro tip: Not all banks offer the same packages, start off with banks you are already a customer of and explore other options to make comparisons.
Check your CPF OA Balance
If you wish to use your CPF Funds, log into your CPF Account via CPF website to check your statement.
The exercise option fee of 20% can be paid by CPF OA and Housing grants. Here is an example of the cost break down of a $1,000,000 unit.
Option Fee (5%) : $50,000 (Cash)
Exercise Fee (15%) : $150,000 (CPF, Grants and Cash)
Buyer’s Stamp Duty : $24,600 (CPF, Grants and Cash)
If you have previously bought a flat from HDB or received a CPF Housing Grant, you may also have to pay an additional resale levy of $55,000 when purchasing your new executive condominium.
Step 3. Look for available EC in the market
Visit HDB’s website for a list of all available and upcoming executive condominiums.
Shortlist the ones you’re interested in and contact the developers to get more information about the flat. Unlike regular HDB flats, an executive condominium is bought directly from the developer.
💡 Pro tip: Consult a property agent and you probably get the most up to date list of available units and also have valuable insights on which EC most suits your lifestyle or budget.
Step 4. eApp Submission
E-Application is an electronic submission to HDB to purchase of New Executive Condominium. HDB will assess applicants eligibility and approve/reject the application. Hence, it is important to do your eligibility pre-assessment before submitting for E-Application to avoid disappointments during the balloting day.
Why do you need to do E-Application?
Basically, to obtain a booking queue number and time slot. If you decide not to proceed with EC purchase after submitting an E-Application, there is no penalty and no further action required from you.
What documents do you need to do E-Application?
- NRIC of both applicants
- Marriage Certificate (applicable for Fiancé/Fiancée Scheme)
- Latest income statements
- Latest 3 months original payslips
- Letter from employer certifying salary for the last 3 months
- Latest 12 months salary based on Notice of Assessment from IRAS (NOA)
- Latest 12 months commission statements or payslips as at the date of application.
💡 Pro tip: Drop us a message and our lovelyhomes consultant will gladly give you a pre-assessment. No obligations for you to purchase we are just happy to help. 😊
Step 5. Book a unit
On the launch day, applicants who submitted eApps will be invited to an exclusive opportunity to view the show flat and book a unit if they wish to.
The developer may choose to do this by way of ballot such that applicants are invited to view and book in the order of the ballot number. This means the lower your ballot number, the greater the choice of units you have and the higher your chances of getting the unit of your choice.
💡 Pro tip: You might want to shortlist a few unit types just in case your choice units are taken. This is a very likely scenario as in recent EC launches, units get sold out pretty quickly.
PDI – Property Details Information
After you have successfully selected a unit a set of documents called the “PDI”, will be handed to you. It is usually many pages as it will depict very specifically every single detail of the property that you are purchasing such as floor plans, site plans, fact sheets, share value, material specifications etc. You will be required to initial on every page to acknowledge that you have understood what you are purchasing.
The application, along with the supporting documents, will then be reviewed by HDB for its approval, which usually takes between 3 to 4 weeks.
If you intend to use your CPF monies (including any CPF Housing Grant that you’re eligible for) to pay for your unit, be sure to complete and send the CPF Withdrawal Form RPS/1A (Residential Properties Scheme) directly to the CPF Board for processing once you’ve booked your unit.
Step 6. Conveyancing Lawyer and Obtain Bank LO (letter of offer)
Contact your banker for a LO by showing them your Option to purchase of the unit you have selected and the bank will process your loan. You will also need to hire a solicitor to handle the conveyancing matters.
💡 Pro tip: Do not sign the LO until you have successfully had your application approved for a unit. Otherwise, you might run the risk of cancellation fees.
Step 7. Sale & Purchase Agreement
Once your application is approved, expect to receive your S&P documents soon. After you have all the documents well-received, you will have 3 weeks to exercise. If you decide to proceed, you’ll have to pay the 15% Exercise Fee (i.e. the remainder of the down payment). That’ll be due at the point of signing the S&P, or within 9 weeks from the date of the Option, whichever is later.
You’ll also need to pay stamp duty on the S&P within 2 weeks of signing it. If however, you decide not to go through with the purchase, be prepared to forfeit a portion of your Booking Fee (usually 25% of the booking fee or depends on the terms).
Step 8. Pick a Payment Plan
There are currently 2 different payment plans available for the purchase of EC, Normal Progressive Scheme (NPS) or Deferred Payment Scheme (DPS)
Normal Payment Scheme (NPS) – buyers make instalment payments each time the developer hits certain pre-set milestones in its construction. This usually works out to a payment of about 5 – 10% of the purchase price of the property every 6 months or so
Deferred Payment Scheme (DPS) – buyers need only pay the 20% down payment of the purchase price at the outset (this is the Booking Fee and Exercise Fee that you’ve already paid), while the remaining 80% is paid once the project is completed (about 3 years after).
💡 Pro tip: DPS sounds like a pretty sweet deal to hold off payment further payment until completion (about 3 years later). However, developers usually will charge a premium for this scheme (about 2-3% more)
Step 9. Collect Keys on date of TOP
It takes quite a while but finally, you collect keys to your brand new home. Before you take photos of your new apartment to brag on social media, the first thing you have to do is start scrutinizing every aspect of the home for any defects. Go through every touchpoint of the house, from ceiling to the floor, test out if everything functions normally. Developers normally give a period of warranty for owners to check if anything in the house needs rectifying.
💡 Pro tip: For a professional defect check by a qualified contractor, contact us and we will be able to hook you up absolutely free of charge!
Are you still searching for your dream EC? Contact our team at Lovelyhomes. We have E-brochures, floorplans and pricelist of currently launched ECs.
Our team at Lovelyhomes is committed to assisting homeowners and tenants with all their real estate needs, we are dedicated to providing you with the highest level of service as we value you, our lovely clients!