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Executive Condo, or ECs, are a unique and increasingly popular housing option in Singapore. To put it simply, ECs are an affordable middle ground between public Housing and Development Board (HDB) flats and fully private condominiums.
Catering to the rising aspirations of Singaporeans who desire private property but may find private condominiums too expensive, that's the reason why EC are gaining traction in the market.
They are well-known as the “best investment property for Singaporeans”.
Why Get an EC?
If you are looking for more privacy while also not burning a hole in your wallet, ECs are basically the opportunity for Singaporeans to look into.
The Singapore government subsidizes the price of ECs and allows the use of certain CPF housing grants, making them more affordable for the average Singaporean. ECs are primarily targeted at households who earn between 16,000 per month, with an income ceiling of $16,000.
Why are they different from Private Properties?
EC are considered HDB properties for the first 10 years. Therefore, they are governed by certain HDB rules, similar to HDB flats.
These rules include a 5-year Minimum Occupation Period (MOP) before the property can be sold or rented out, an income ceiling of $16,000 per month, and restrictions on property ownership within the last 30 months.
Why are they more Affordable?
ECs are generally more affordable than private condominiums due to their subsidized land prices and less accessible locations, often situated further away from existing MRT stations and malls. They are typically located in the Outside Central Region (OCR) and are about 25% to 30% cheaper than similar private condominiums at launch.
While that may seem like a negative point about owning an EC, many investors typically don’t mind that since they are looking for a more peaceful environment.
Eligibility & Rules for Buying an EC
The rules for buying any EC are a lot stricter since it’s more premium than owning an HDB. To purchase an EC, potential buyers must meet certain eligibility requirements. These include:
Citizenship: At least one applicant must be a Singapore Citizen, while the other applicants can be Singapore Citizens or Singapore Permanent Residents.
Age: Applicants must be at least 21 years old.
Family Nucleus: Applicants must form a family nucleus, either as a family, a couple, or a single person.
Income Ceiling: The combined gross monthly household income of the applicants must not exceed $16,000.
Property Ownership: Applicants must not own or have disposed of any property in Singapore or overseas within the last 30 months and must not have bought an EC, HDB, or DBSS flat or received housing grants before applying for an EC.
Since ECs are considered more exclusive, it is harder to get also for couples since the price of an EC can be a lot steeper.
Financing an EC
When buying an EC, buyers must consider the various financing options and restrictions that apply.
Bank Loans Only
While ECs are considered HDB properties in the first decade, they can only be financed through a bank loan. This means that the Loan-to-Value (LTV) limit, or the maximum amount that can be borrowed, is capped at 75% of the property price.
Downpayment
With a bank loan, EC buyers are required to pay the remaining 25% as a down payment, with 5% being paid in cash and the other 20% being paid using CPF Ordinary Account savings or cash.
Debt Servicing Ratios
For EC purchases, both the Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR) apply. The TDSR limits the amount of income used to pay for all debts, while the MSR caps the proportion of monthly income used for mortgage repayments at 30%.
CPF Housing Grants for EC
EC buyers may be eligible for CPF housing grants, such as the Family Grant and the Half-Housing Grant. However, the applicant's monthly gross income must not exceed $12,000 to qualify. The amount of grant received also depends on the applicant's citizenship and income range.
How Much Does an EC Cost?
With the rise of inflation and property marketing expanding, the cost of a 1 bedder ECs starts at 1.2 million whereas a 1 bedroom HDB can cost from $150,000 up to $400,000.
While the cost may greatly differ, many young Singaporeans still prefer to own a 1 bedder ECs since it offers many amenities and the opportunity to own a condominium.
How Much Do You Need to Earn to Buy an EC?
To afford an EC, potential buyers must consider their income, debt servicing ratios, and available financing options. In general, it is possible to afford an EC with a monthly income below $10,000, especially if the buyer chooses a smaller unit in a more budget-friendly area.
Application Process for EC
The application process for ECs involves the following steps:
Check eligibility and financing options.
Research and shortlist EC projects based on location, budget, and preferences.
Submit an application for the desired EC project, along with the necessary documents and application fee.
If successful, book the desired unit and pay the down payment.
Secure a bank loan and finalize the purchase agreement.
Complete the legal and financial procedures, including payment of Buyer's Stamp Duty and other taxes.
Collect the keys and move them into the EC.
Second-Timer Considerations: HDB Resale Levy
Second-timers who have previously purchased an HDB flat and are upgrading to an EC must take into account the HDB resale levy. The resale levy is payable when a buyer sells a subsidized home and buys another subsidized flat or EC. The amount to be paid depends on the previous housing type.
Our Take
EC offer an attractive and affordable housing option for Singaporeans who desire private property but find private condominiums too expensive.
With a range of projects available and various financing options, ECs provide a viable alternative for those looking to upgrade their homes. By understanding the eligibility requirements, financing options, and application process, potential buyers can make informed decisions and find the perfect EC to suit their needs and preferences.
Want to Know More?
Finding the perfect home can be really difficult when there are so many to choose from and people to work around. That’s why many first-time buyers approach me to get the best deal in the market for their property!
If you are interested to know more about the property market or want to work with somebody, be sure to reach out to me!
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