So you want to live in a swanky apartment with a swimming pool, without having to pay ridiculous private property prices? Then an Executive Condominium (EC) might be for you.
ECs are a cross between public and private housing. You buy them through the HDB and are subject to their restrictions (sorry, singles), and can also apply for grants.
Yet they look just like private condos with all the frills and facilities.
But best of all, 10 years from the date of the TOP, ECs become private property, meaning you can sell them to foreigners and singles.
Sounds good? Here’s how to buy your very own EC.
Before you start, check your eligibility
To buy an EC, you will unfortunately have to play by HDB’s rules. For most people, that means being one of the following to qualify:
- One citizen and at least one other citizen or PR applying as a family nucleus, meaning spouse and kids (if any), parents and siblings (if any), or children under your legal custody (only for widowed/divorced applicants)
- Fiancé and fiancée, and prepared to register your marriage before taking possession of your EC if applying for additional or special CPF housing grants, or within 3 months of taking possession of the flat.
- A group of 2-4 single citizens, all aged over 35.
In addition, you must not own any property overseas or locally. If you do, you’ll have to dispose of it within 30 months of applying for an EC.
There is also an income ceiling of $14,000 per household, no matter what scheme you’re applying under.
1) Visit the showroom and apply for an EC, or apply online
How you apply to buy an EC depends on the developer. Many developers now require you to first submit an e-application before you can be invited to visit the showroom.
2) Bring your required documents
When you do visit the showroom, make sure you bring along your IC, proof of marital status as well as birth certificates if you’re applying with parents and siblings, and proof of income—this usually means 12 months’ worth of payslips or, for self-employed people, your Notice of Assessment from IRAS and ACRA registration.
Always check with the developer ahead of time what documents you need to bring along, as requirements may differ from developer to developer.
At the showroom, you can apply for a flat. The developer will select the buyers via ballot, and much like in the BTO process, the lucky ones will be notified based on their queue numbers to select a flat.
3) Book your unit
So you’ve been selected to purchase an EC. Congrats! The developer will tell you when you can book your unit.
4) Get the Option to Purchase and pay booking fee
When you head down to select your unit, you’ll be required to secure an Option to Purchase (OTP) so that the developer can’t sell your unit to anyone else before it expires.
You’ll have to pay 5% of the purchase price in order to get your hands on that OTP. This 5% payment has to be made in cash.
Then you wait for HDB to approve the purchase, which usually takes 4 to 5 weeks.
Get a bank loan
It’s a good idea to start researching your loan options the minute you’ve secured the OTP.
EC buyers aren’t eligible for HDB loans, so your only option is to apply for a bank loan.
Use MoneySmart’s home loan wizard to compare loans so you know what to apply for.
Do note that EC buyers’ Mortgage Servicing Ratio cannot exceed 30% of their incomes. That means you cannot be paying more than 30% of your combined income in home loan repayments.
And of course, you are also held to the Total Debt Servicing Ratio (TDSR) rules stating that your total loan liabilities (including car loans, credit card debt and so on) cannot exceed 60% of your income.
5) Exercise the Sales and Purchase Agreement and pay balance of downpayment and stamp duty
When HDB has approved your purchase, the Sales and Purchase Agreement (S&P) will be sent to you.
You now have 3 weeks to exercise the option by signing and returning the S&P. You also have to pay the 15% balance of the downpayment and buyer’s stamp duty, either on the day you exercise the option, or within 9 weeks from the date of the OTP, whichever is later. This 15% has can be paid using cash and/or CPF.
Before you die of shock at the balance of downpayment amount, which should be 15% of the purchase price, know that you should be able to use your HDB Housing Grants, if any, to pay for it.
By the time you get to this step, you should have already appointed a lawyer to handle the matter for you. The lawyer will make sure you don’t miss the deadline for exercising the S&P.
See also: LOAN REPAYMENT CALCULATORS FOR NEWLYWEDS
Once the S&P has been exercised, sit back and wait while your EC is being built.
If you’re on the Normal Progressive Payment Scheme, you’ll have to start repaying your home loans before picking up the keys. You’ll be notified when your home loan repayments must commence.
Those on the Deferred Payment Scheme will only have to start repaying their home loan after picking up their keys.
7) Collect your keys
You should already have been informed by the developer of the estimated date for the release of the Temporary Occupation Permit (TOP).
When that day finally arrives, you’ll get to pick up your keys, move into your new home and start furnishing or renovating it.
This article was orignally published in MoneySmart.