Guide for First-Timers Looking To Purchase An Executive Condo In Singapore
Last month condo rents in Singapore inched up after declining in the past two months with Housing Board flats rent remaining relatively steady. The property markets are in Singapore is lucrative with the number of units sold for both HDB and condos increasing month-over-month. If you are interested in living in a posh apartment where you won’t pay exaggerated private property prices, then you should consider the executive condo that is sold through HDB. You can realize your dream by first understanding issues to deal with eligibility, financing, and the pros and cons of owning an executive condo, among other things.
Eligibility for buying an Executive condo
The first thing to consider is your eligibility to purchase an executive condo because there are HDB rules that govern the qualification of one. The HDB ha schemes under which you can make a purchase, and they are public scheme, orphans scheme fiancé/fiancée scheme and the joint singles scheme.
The public scheme requires married people in a nucleus family or parents and children or for widowed and divorced applicants with children under their custody. For the fiancé and fiancée, you should make your marriage official before possessing your executive condo, especially if applying for special CPF housing grants.
The applicant has to be a Singaporean Citizen above 21 years, and in case of a co-applicant, he must have permanent residency in Singapore. For the Joint Singles Scheme applicants have to be citizen above 35 years. For fiancé/fiancée, applicants have to be 18 years with legal consent from parents or guardian.
The household income ceiling for applicants is set at $14,000 and should not own any residential property. You should also have to purchase only one HDB, DBSS, or EC scheme in the past. If you do not meet the eligibility criteria, then consider purchasing a private condo.
Financing purchase of an executive condo
When shopping for an EC always consider the maximum price that you can easily afford. It is pointless to try to uncover a condo with the best value or possible price appreciation when your finances do not permit.
Unlike an HDB flat where the down payment is around 10% buying an EC requires a 25% down payment. You can finance your purchase through a bank loan because you will not be eligible to apply for an HDB credit to purchase an EC. Check interest rates of various financial institutions for you to get the best loan deal. You should not worry because the Monetary Authority of Singapore has set limits to cushion homeowners from being overwhelmed about serving the loan.
According to the Mortgage Servicing Ratio, the monthly mortgage repayment should not be more than 30% of the combined monthly income. Equally, the Total Debt Servicing Ratio indicates that the combined monthly loan servicing, which includes car loans, education, and personal loans should not be more than 60% of the combined monthly income.
Besides the purchase price, you will be required to pay around $2,000 in legal fees and a valuation fee of around $200. There is also a buyer stamp duty of about 3% of the purchase price, or if the purchase price exceeds $1 million, you are charged 4%.
If you meet the eligibility criteria and you have prepared how you will finance the purchase, then you can look out for your executive condo. The latest executive condo launches include the 800-unit Piermont Grand at Sumang Walk by City developments limited and the 628-unit Rivercove Residences at Anchorvale Lane by Hup Sunway.
It is easier for you to find one by easily visiting a showroom to ascertain, which the current executive condo projects are. For some projects, you may have to book an appointment before visiting them. After identifying the condo, you want to buy; you will need to secure an option to purchase, which is a legal document that bars the seller from selling the unit. You will secure your unit by paying 5% of the purchase prices in either cheque or cash.
Pros of purchasing an executive condo
When you purchase an executive condo, you get to benefit from available CDF housing grants. In case you are eligible for several grants, you can as well stack the subsidies. For instance, first-timers can get a flat in a non-mature estate, and you might qualify for the special CPF housing grant and additional CPF housing grant.
Executive condos are cheaper than real condos, and with housing grants, even low-income earners can own one. First-timers applying as a couple can get a CPF housing grant between $10,000 and $30,000 that is if their combined income is below $12,000. EC is also priced lower than real condos.
After ten years, the executive condo becomes private and reselling rules change. Executive condos can be seen as an investment because once they become private after the tenth year, you can resale because they are not bound by HDB.
Cons of purchasing an executive condo
Since the houses are subsidized, the only people who qualify are low-income earners. The income ceiling is $14,000, and therefore if you are rolling in riches, you won’t be eligible. It, therefore, tends to be appropriate for young couples.
The other downside is that you need to fall into any of the four schemes specified unlike in private housing where you can purchase provided you have money. There is the fiancé/fiancée scheme, public scheme, joint single applicants, and orphans.
A five-year minimum occupancy is a requirement for purchasing the flat. You can’t game the system by buying and then letting it because you must live there for at least five years. However, you can rent a room or two but not the whole condo.
Therefore it is pretty easier to own an executive condo if you are a Singapore citizen and provided you meet the eligibility criteria. With financing, you can start shopping for your executive condo today. The good thing is that after ten years you can still resale it because it will have changed to private property. You also get to enjoy CPF housing grants, among other benefits.