The Consumers Step-By-Step Guide to: Buying an Executive Condominium (EC)
Maybe you have read my article about ECs and their benefits, and you are thinking of owning one yourself. However, you are new to the process and are unsure of what to expect. Here is a simple infographic explaining the steps towards owning your first EC!
Step 1: Check your Eligibility
ECs were created to allow the "sandwiched class" to be able to progress to a condominium. Therefore, ECs just like HDBs are subject to certain criteria.
Your average gross monthly household income must not exceed $14,000.
You must not own or dispose of any private property within 30 months.
You must not bought directly from HDB Twice (include resale flat with CPF Housing Grant).
You must form a proper family nucleus - via the HDB eligibility schemes
Joint Singles Scheme
Step 2: Manage your financing options
Please take note HDB does not provide housing loan to EC buyers. EC buyers need to obtain loan from banks or financial institutions.
If you are eligible to obtain 80% loan amount, the initial 20% downpayment is a combination of cash and/or funds from CPF.
According to MAS regulation, the 5% of the initial 20% downpayment must be in the form of cash only. The balance 15% can be in the form of cash and/or CPF.
5% (cash) + 15% (cash and/or CPF) = 20%
Get an Approval-in-Principle (AIP) for a bank loan
Approach a bank 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 (TSDR) and Mortgage Servicing Ratio (MSR), so depending on your existing loans and lines of credit, your total loan might be lower than you expect.
*Tip: not all banks offer the same deal, so shop around to get a package that works for you.*
Check your CPF Funds
If you intend to use your CPF Funds, log into your CPF Account via their website to check how much you’ve got in your account.
For your first property, you should be able to use all the savings in your Ordinary Account up to the Valuation Limit (which is the lower of the purchase price or the value of the property at the time of purchase).
But if it’s your second or subsequent property, you’re required to set aside at least the current Basic Retirement Sum (presently that’s $85,500) in your Ordinary Account and only use any savings in excess of that.
Check for Resale Levy
If you’ve previously purchased 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: CPF Housing Grants
Good news for some of you, you might actually qualify for grants for your purchase. Below is the breakdown of the CPF housing grants available.
Source: HDB website
Step 4: Time to Shop!
Here comes the fun part! Shopping and selecting a suitable home for your family. We, at Teoduoproperty, have the latest updates for many new EC launches.
And we will provide a free consultation analysis for you as well!
Step 5: e-Application Submission
Nowadays, developers have now changed their approach in launching their EC. EC buyers have the project model to view before making the decision to submit the e-Application. The viewing of the show flat unit can only be done after the e-Application submission is closed.
Once you are happy with what you see, you can fill-up the e-Application form with your personal details, contact number, declaration of income and an authorization for us to submit your application on your behalf. You will need to provide a copy of NRIC of each of the occupiers and the income statement.
At any point in time, if you need any assistance, please feel free to contact us!
Step 6: e-Application Results
The system will collect all the e-Apps until the end of e-Apps period - usually opened for slightly more than a week.
The developer will announce the results of the e-Apps after they have processed all the submitted applications. The ballot numbers are part of a queue system to ensure an orderly selection of EC apartment units.
Which also means you will have priority! When the ballot numbers are assigned to a particular buyer, the date and time slot is also given - to select your unit and to make the purchase.
Step 7: Book Your Unit
If you have received the opportunity to book the unit, great! Its time to proceed for booking day. Up to this point, you can still decide NOT to proceed without getting penalized if your preferred unit is no longer available.
Once you have confirmed your selected unit, you will need to pay the booking fee by presenting a cheque payable to the developer project account with an amount equivalent to 5% of the selling price.
Step 8: Sales & Purchase Agreement (S&P)
If your application’s successful......Congratulations!
The developer will send you the S&P documents shortly, from which point you’ll have 3 weeks to decide to exercise it or not.
If yes, you’ll have to pay the 15% Exercise Fee (i.e. the remainder of the downpayment) - usually due at the point of signing the S&P, or within 9 weeks from the date of the Option, whichever is later.
If no, be prepared to forfeit a portion of your Booking Fee (usually 25 percent, though it depends on the terms of the Option).
You’ll also need to pay stamp duty on the S&P within 2 weeks of signing it.
Step 9: Wait to collect your keys
Once the S&P has been exercised, sit back and wait while your EC is being built.
Depending on the bank that you select, a lawyer will be appointed and they will arrange to proceed with the conveyancing work.
If you own an existing HDB flat currently, you have to make plans to sell off your current HDB when the EC is about to receive the Temporary Occupation Permit (TOP). Once you received the keys to your new EC, you are required to sell the HDB within 6 months.
In 9 easy steps, we have summarised the process towards owning an EC. But are you still unsure or slightly confused?
Do not worry, we are experienced and familiar with EC purchases throughout the years will be valuable to you now. If you are unfamiliar with any of the processes, please reach out to request for help.
And in case you are wondering, you DO NOT have to pay us a commission for the assistance of getting you a brand new EC for you and your family!