For those who wish to stay in a chic condominium that comes with facilities like swimming pool but are a bit tight on their budget, then they could consider buying the executive condominium (EC). This article will is about the steps and the guide to buying Executive Condominium.
These ECs are the middle between the private condominiums and the public housings. ECs will comes with all the facilities and the frills of private condominiums and are sold through private developers but they are subjected to the rules and regulations of the Housing Development Board (HDB). Buyers will be also able to leverage on the CPF housing grants applicable.
The good thing is that after 10 years from the key collection date, these ECs will be total become private housings which means that the owners will be able to sell to anyone inclusive of foreigners.
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Below will be the Guide to Buying Executive Condominium
First and Foremost before going into the guide to buying executive condominium is to check on the HDB Rulings and Eligibility Schemes for ECs
Before proceeding with anything, the first thing for any potential buyer will be checking on their eligibility for purchase. To purchase an EC unit, buyer will have to abide by the rules of HDB which means that they must fall under any of the schemes in order to qualify.
The buyer which wishes to buy under this scheme must form a family nucleus that comprise of one Singapore Citizen with at least another Singapore Citizen or Singapore Permanent Resident. The members in the family nucleus can be spouse, child, parent or sibling. For those widowed or divorced buyers, it can be their children who are under their legal custody.
Fiance/ Fiancee Scheme
Singapore Citizen buying with fiancé/fiancée who must be a Singapore Citizen or Singapore Permanent Resident. Those applying under this scheme will need to get their marriage certificate ready before they take possession of their EC unit if they have also applied for any CPF housing grant, or no more than 3 months from taking possession of the unit.
Joint Singles Scheme
Buyers comprise of at least 2 Singapore Citizens (up to 4) with all at least 35 years old.
Singapore Citizen buyers who are orphans and must include at least one of their single siblings (widowed, divorced or unmarried) who are a Singapore Citizen or Singapore Permanent Resident with at least 1 of their deceased parents who has been a Singapore Citizen or Singapore Permanent Resident.
Other than eligibility schemes, there are also limitations on the household income and also property ownership.
Income Ceiling for EC
The gross monthly include of the total household must not exceed more than $16,000 regardless of whichever scheme the buyer is applying under.
Rules on Property Ownership
Buyer must not own any overseas property and/or private property. If they do have, then they can only apply for EC 30 months after they have disposed their overseas and private properties.
For more rules for EC eligbility, please visit HDB’s website.
Also Read: Eligibility for EC
The steps to the guide to buying executive condominium are summarized below:
Things to Do
Before Opening of Showflat
Preliminary meeting with agent
Opening of Showflat
Viewing of showflat
Submission of E-Application
Outcome of Application
Find out if application is approved or rejected
Booking of unit
Signing of documents
Submission of application form for CPF housing grant
Option Fee 5% in cash
Sale and Purchase Agreement
Sign and return of Sale and Purchase Agreement, submission Letter of Offer (applicable for bank loans)
Stamp Duty payable by cash first then withdraw from CPF account if any.
Exercise Fees 15% in cash/CPF
Legal Fees in cash/CPF
Wait for construction of the development
Balance 5% cash/CPF upon completion of foundation stage
Collection of Key
Book dates to collect keys
Once the potential buyers have cleared the above requirements, they will need to go through the below steps.
Step 1: Understand the Project and Preliminary Assessment
Buyers can contact us and arrange with a no obliged meeting to find out more of about the development. At this time, our sales member will also help to do the preliminary assessment before submitting their online application.
Step 2: View the Showflat and Bring the Required Documents
Once the showflat is opened, buyers will then be invited down for to take a look at the mock up suites and model to have a better visualization of the finished EC units. At this instance, buyers can also bring down their required documents such as NRIC, marriage certificates, birth certificates, etc. For those who are applying with their siblings and parents, the income proofs are needed. The proofs are usually pay slips for the entire year. For those who are self-employed the IRAS Notice of Assessment and ACRA registration are also needed.
Be sure to check with the property agent which documents are needed before going down as the requirements may be different from different developers.
Once the documents are all in place, they then can submit their online applications known as e-applications at the showflat if they are interested in the development. The HDB will then assess the potential buyers’ eligibilities which then the potential buyers will know if their applications have been approved or rejected. For those rejected their only choice to upgrade might be to go for private condominiums.
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Once the application is approved, the next step will then to wait for the preview date to be confirmed. This date is usually 2 weeks from the date of the showflat opening. The buyers will also be issued with a balloting number for the exercise.
Step 3: Balloting Day and Booking Unit
On the preview day, those with successful applications will be invited to the showflat. The buyers will then go through a balloting exercise which the developer will draw out the queue number for the buyers to select and book their choice units at the booking counter.
Those buyers who book their units during the balloting exercise will usually enjoy Early Bird Discount which will not be available after the public launch.
Step 4: Acquire the Option to Purchase and Make Payment for the Booking
Upon booking the choice unit, the developer will then issue a set of document which is named the Property Details Information (PDI) to the buyers.
The PDI will contain detailed information about the development such as floor plans, approval plans, specifications, etc. The buyers will have to go through the PDIs and once they are agreeable, they will need to initial on every page of it.
Once the PDIs and signed and return to the developer, the developer will then grant the Option to Purchase to the buyers. This will be deemed that the buyer has officially secured the unit. During this time a 5% booking fee in cash will have to be paid to the project account of the development.
Note for those first time applicants, they will have higher chances of securing an EC unit during balloting day as they have privileges. For all EC developments, 70% of the units are set aside during the initial launch period for those families who are first timers.
First Timers are those who have not bought any HDB flat directly from HDB, have not bought any Design Build and Sell Scheme (DBSS) unit, have not bought any EC unit, have not taken any CPF housing grant and also have not taken other housing subsidies such as privatization of HUDC estate or Selective En-Bloc Redevelopment Scheme (SERS).
Step 5: Secure the Financing for Housing Loans
In order to financing an EC unit, buyers can only get a bank loan as they are not eligible for the HDB concessionary loans. Comparing to the HDB loan, getting a bank loan will requirement a higher down payment. Other than the 5% booking fee paid earlier during the grant of the Option to Purchase, buyers will also need to prepare another 20% in cash/CPF.
Note that the amount of loan granted by the bank will be subjected to the Mortgage Servicing Ratio which cannot be more than 30% of the household incomes. This will mean that only 30% of the combined gross monthly income will be only be used for mortgage repayment.
The housing loan amount will also be subjected to the Total Debt Servicing Ratio (TDSR) which only 60% of the total gross monthly income after minus off all the loan liabilities such as credit cards, personal loans, car loans, etc can only be used to servicing the monthly repayments of the home loan. The bank will grant the loan money base on the lower of the 2.
Step 6: Exercise the Sales and Purchase (S&P) Agreement, Make Payment for the Exercise Fee As Well As Stamp Duty
Once the purchase is approved by the HDB, the developer will then send to the buyers their S&P agreements. Upon receiving, the buyers will then have up to 3 weeks to consider whether to go ahead with the purchase by signing and returning the S&P agreement to the developer.
Should the S&P agreement, for any case, was not signed and return, there will be forfeiture on the 25% of the booking fee paid earlier. If the buyers go ahead, they will then need to prepare payments for the stamp duty and also the 15% exercise fee. The buyer will need to pay their stamp duty 2 weeks within the signing of the S&P agreement. For the 15% exercise fee, it will be within 9 weeks from the Option to Purchase Date.
The stamp duty is usually by cash upfront 1st then can later withdraw the amount for it from the Central Provident Fund (CPF) Ordinary Account if there is sufficient. For the 15% it will be in cash/CPF. During this time, those buyers who fall short of the 15% exercise fee will be able to use any CPF housing grants that are granted to them to offset some of the amount.
At this phase, buyers should have already appointed a conveyancing lawyer to handle all these matters to ensure them that the deadlines are not missed.
Step 7: Wait for the Construction of the EC
Once all the procedures and payments are done in the earlier stage, buyers just need to waiting for the construction of the development.
Buyers, at the meantime, will also need to prepare for the payment for the balance 5% (bank loan only up to 75%). This 5% is payable upon the completion of the foundation stage which is usually 9 to 12 months after the balloting exercise (depending on the building progress of the development). The 5% can be paid in cash/CPF.
The developer will inform the buyers’ conveyancing lawyers on the completion of the foundation stage and buyers will be informed when to make the payment.
For ECs, there are 2 payment schemes, the Normal Progress Payment Scheme and the Deferred Payment Scheme. Those buyers who opt for the Normal Progress Payment Scheme usually get buy their units cheaper but once the completion of the foundation they will need to start to service their monthly housing loan repayments. The repayment amount will be progressively increasing with the completion of each stage. You can read out on the progressive payment here.
For those who opt for Deferred Payment Scheme, they will only start their housing loan repayment after their EC units have been completed.
Step 8: Collection of Keys
This will be the last step to the guide of buying executive condominium. Once the developer has the estimation of when the Temporary Occupation Permit (TOP) will be granted, a notice will be served to the individual buyer. The developer will also inform the buyers on the date of the keys collection. The keys collection is usually distributed out in batches.
When this day finally touches, buyers will then get to pick their keys up and do an inspection on the units. It is usually good at this time to engage in a surveyor to make sure that all things are intact.
Before buyers start to hurry to engage in their contractors to have their renovation started, it is advisable to have their defects of the units rectified by the contractor as there is still defects liability period from the developer.
After all the defects are done, buyers can then start to renovate their units, start their furnishings and then move into their new homes of their dreams.
That is the complete guide to buying executive condominium. Thinking to buy an EC unit but not sure if you are eligible? Talk to us now and we will help you assess on your eligibility.