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Executive Condo (EC)
Things to know when buying an EC
EC is part public, and largely private. In the first 5 years, it is restricted to MOP, so it is for own stay only. Thereafter, it is like any other private condo.
It is much cheaper as there are government subsidies, but that comes with restrictions – your total household income cannot exceed $16,000 (as of 2024)!
It also has special privilege whereby you can continue staying in your HDB until you collected the keys to the new EC.
1st timer
If you never own a HDB before, this is a good subsidized housing to begin with.
You can still apply CPF Housing Grant.
2nd timer: Upgrading from HDB
Existing HDB owners often choose to upgrade to a new EC. But there many things to take note of:
- Resale Levy applicable (see below section) which can be up to $55k!
- Ballot quota: Max 30% of the units are reserved for 2nd timer. After initial booking day, there will be another round of balloting for the balance units.
Can you stay in your HDB until the EC is ready to move in? YES, you can. This is one big difference between EC and private condo. You can dispose your HDB after you moved into your new EC. For private condo, if you want to sell your HDB after moving in, you will have pay the hefty ABSD first (though you can get refund later).
But selling your HDB later comes with it’s own difficulty – you cannot unlock your cash proceeds nor your CPF for the EC purchase.
Eligibility
HDB has the details, namely:
- Married: SC + SC/PR
- Singles: Jointly with at least 2 person, all must be SC above 35yo
- Total household income must not exceed $16,000
Working out the finances
Similar to private condo, you need to be able to afford the 25% Cash/CPF downpayment, while the max 75% . Dovered by housing loan.?
Aut it gets more complicated with the different scenarios. Do you sell HDB first? Should you going to use deferred payment scheme? Do you need bridging loan?
I will cover the topics in later sections.
But if you need someone to help work out the finances, you know who to look for.
Deferred Payment Scheme (DPS)
This is available for EC when it comes to buying a new launch. A few private condos might offer DPS too.
The normal payment scheme is Progressive Payment Scheme (PPS), that is the loan amount is slowly disbursed while construction is ongoing. The effect is that before TOP, your mortgage is a much smaller amount.
DPS is different from PPS such that the loan amount is only needed upon TOP. The effect is that you will start paying the full mortgage only when you get your keys.
What’s the catch? Your purchase price will be (usually) 3% higher. You can treat it as a the mortgage interest that otherwise would be incurred by PPS.
Why most choose DPS?
Most choose DPS because
- You will escape paying mortgage for a few years, until TOP. You can raise cash during those years, and also a easier cashflow especially if you have an outstanding mortgage for the HDB.
- PPS requires you to take up a 2nd mortgage, which is subject to 45% LTV (instead of 75% for the 1st mortgage).
Payments & Mortgage for DPS
- Sign S&P: 20% (including 5% cash for booking)
- Upon TOP: 5% + max 75% loan
The LTV for the loan will have to deduct the “benefits”. Instead of the max 75% LTV, it is 75% less (80% of purchase price x Singapore Government Securities rate).
This is because the “benefit” is deferring paying 80% of the purchase price, and a fair interest rate has to be applied.
This will reduce the LTV, therefore a higher downpayment. If full 75% LTV, the downpayment is 5%. With a reduced LTV, you will need to pay that back in Cash/CPF.
It is also important to note that your loan is applied later, and your financial situation may be different. There is a risk eg. you lose your job/income and failed the TDSR requirement.
Bridging Loan
Bridging loan is a short term loan to help you “bridge” during your transition from HDB to the new EC. It is especially useful when used together with DPS.
For example, you might have a mortgage shortfall to apply for a loan at max LTV. If you have extra cash, then you can pay it off and take a smaller loan. But if you don’t have that extra cash, you can take a bridging loan first.
You can take up to the proceeds from your HDB sale, including CPF.
When you eventually sell the HDB, you can repay the bridging loan with the cash and CPF proceeds.
The max tenure of the bridging loan is 6 months (which is also the max time to dispose your HDB). You can also repay early, once you sell the HDB, without any penalty.
Resale Levy
Take Note: You may need to pay a levy if the EC is your 2nd subsidized housing; 1st being your HDB. The levy amount is based on the HDB type.
| Based on 1st flat type | Households Levy Amount |
|---|---|
| 2-room | $15k |
| 3-room | $30k |
| 4-room | $40k |
| 5-room | $45k |
| Executive Flat | $50k |
| Executive Condo | $55k |
For singles, the levy is half.
If you sell the HDB after you get your EC keys, then you pay the levy after you sell the HDB, with deduction from the proceeds of the sale. If you sell the HDB before you get your EC keys, then you pay upon collecting your EC keys.
You cannot use CPF to pay for the levy. Only Cash.