Thinking of getting an executive condominium, but unsure of the process? Rest assured, you’re not the only one.
Take a load off and let us do the heavy (intellectual) lifting for you with our step-by-step guide to purchasing your very own executive condominium.
Before you delve in, just a quick note: this article deals with purchasing an executive condominium from a developer. If you’re buying from an owner in the open market, the process is identical to buying a private condominium (though restrictions apply if you’re buying as a foreigner).
STEP 1: CHECK YOUR ELIGIBILITY
An executive condominium is often described as a type of hybrid housing – think of it as the government-sanctioned offspring of a HDB flat and a private condominium that’s’s inherited the sleek features of a condominium (such as shared facilities like a swimming pool and gym), but with the ownership restrictions of its second parent, the HDB.
Eligibility Conditions & Schemes
To qualify, all applicants need to be at least 21 years old (35 years if you’re applying under the Joint Singles Scheme). One of you must also be a Singapore Citizen, with at least one other applicant being either a Singapore Citizen or Permanent Resident.
In addition, your combined gross monthly household income cannot exceed $14,000, plus, you’ll be required to fall under one of the following HDB eligibility schemes:
- Public Scheme
- Fiancé/Fiancée Scheme
- Orphans Scheme
- Joint Singles Scheme
Other Bars to Ownership
You’ll also be prevented from purchasing an EC if you or your co-applicants:
- own non-HDB property (overseas or locally), or have disposed of such property within the last 30 month.
- own/have owned more than 1 of the following: (i) flat bought from HDB; (ii) EC/DBSS flat bought from a developer; or (iii) HDB resale flat bought with a CPF Housing Grant
- haven’t met the minimum occupation period on your current subsidised flat. If it’s an executive condominium, you’ll need to wait a further 30 months from its date of disposal, before you can apply for a new one
- are a divorcee – for 3 years from the date of divorce, only 1 party of the divorce can own a subsidised flat
- have previously cancelled an HDB application or terminated the Sales & Purchase Agreement (S&P) for a DBSS flat/EC using a CPF Housing Grant, in which case you’ll be barred for 1 year or 5 years respectively.
STEP 2: GET YOUR FINANCES IN ORDER
Now that you’ve determined you’re eligible to buy an executive condominium, it’s on to the trickier question: can you afford one?
Focus on evaluating your financial situation so you know what you can afford. Buying a home isn’t just about the purchase price; there are other costs and taxes that you need to factor into your decision.
If you’re in need of some guidance, be sure to check out our article on the costs involved in buying an EC.
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 and Mortgage Servicing Ratio (read more about those here), so depending on your existing loans and lines of credit, your total loan might be lower than you expect.
Pro-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 $80,500) in your Ordinary Account and only use any savings in excess of that.
Consider miscellaneous fees and resale levy
Unfortunately, you won’t have the option of an HDB loan if you’re getting an executive condominium, so you’ll have to secure a loan from a bank.
You can use your bank loan to cover, at most, up to 80 percent of your purchase price. Legally, you must pay for at least 20 percent of the property (referred to as the down payment) in a mixture of cash or CPF savings (this includes a 5 percent Option Fee and a 15 percent Exercise Fee).
Not only that, you should factor in incidental costs like legal fees and Buyer’s Stamp Duty (BSD), all of which can come up to quite a sizeable sum.
Let’s take the example of a property worth $600,000. You can expect to pay:
Option Fee (5%) : $30,000
Exercise Fee (15%) : $90,000
Buyer’s Stamp Duty : $12,600
You can use your CPF savings to pay these costs, but if you don’t have enough to cover the total amount, you’ll need to pay the balance out of pocket.
Be warned that 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.
Also, if this isn’t your first property, or you’re a Singapore Permanent Resident applicant, you’ll be liable to pay an Additional Buyer’s Stamp Duty as well.
STEP 3: SHOP AROUND
Finally, it’s the fun part.
Go on to HDB’s website for a list of all available and upcoming executive condominiums.
Shortlist the ones you’re interested in and contact the developers to get more information about the flat. Unlike regular HDB flats, an executive condominium is bought directly from the developer, not through HDB.
STEP 4: SUBMIT YOUR APPLICATION
The application process depends on whether or not the development has officially launched.
If it hasn’t, the developer will have you make an electronic application known as an eApp if you’re interested in the property.
This by no means obligates you to purchase the flat; it’s more a registration of your interest.
The benefit of completing an eApp is that when the development is officially launched, you’ll be given priority to view and book a unit.
STEP 5: BOOK YOUR FLAT
On the development’s launch, applicants who submitted eApps will be invited to an exclusive opportunity to view the show flat and book a unit if they wish to.
The developer may choose to do this by way of ballot such that applicants are invited to view and book in order of the ballot number. This means the lower your ballot number, the greater the choice of units you have and the higher your chances of getting the unit of your choice.
Depending on how high your ballot number is, you might want to have a few shortlisted units in mind, just in case your first few choices get snapped up by those ahead.
Once that’s over, the launch is officially open to the general public.
If there’s a chance you’ll be booking a unit, be sure to bring along the following documents. You’ll need them to make the booking:
- Proof of identity/citizenship
- Proof of relationship/marital status
- Proof of income
- CPF Housing Grant application form (if eligible). These must be submitted to the developer within 1 week of the booking or you risk not being able to use your grant to pay your down payment
Check out HDB’s website for more details on the exact documents needed.
To book your flat and secure your Option to Purchase, you’ll need to fork over the 5 percent Booking Fee. You’ll then receive a set of Property Details Information (or ‘PDI’) documents – this is a set of all the floor plans, rules and regulations, offered items and other documents relating to your unit. You’ll be asked to read and agree to the terms and details in the PDI documents by initialling on all the pages.
The application, along with the supporting documents, will then be reviewed by HDB for its approval, which usually takes between 3 to 4 weeks.
If you intend to use your CPF monies (including any CPF Housing Grant that you’re eligible for) to pay for your unit, be sure to complete and send the CPF Withdrawal Form RPS/1A (Residential Properties Scheme) directly to the CPF Board for processing once you’ve booked your unit.
STEP 6: HIRE SOLICITORS AND FINALISE LOAN
While you’re waiting for HDB’s approval, this is a good time to appoint solicitors to act for you in your purchase, as well as contact the bank to finalise the details of your loan.
If you’re taking a bank loan, the bank will usually have a panel of firms for you to choose from, or you can shop around for your own firm. Again, try to get as many quotes as you can to secure a competitive deal.
On the loan front, get the terms of the loan ironed out, and have your bank issue a Letter of Offer (LO). You’ll need to provide the bank with the usual documents, along with a copy of the Option.
Once issued, be sure to just hold onto the LO – don’t sign it until your application’s been officially approved.
STEP 7: SALE & PURCHASE AGREEMENT
If your application’s rejected, sorry man. I feel for you. The good news, however, is that your Option Fee will be returned to you in full, so hang in there and try again!
If your application’s successful, CONGRATULATIONS!
You can expect to receive your S&P documents shortly, from which point you’ll have 3 weeks to decide to exercise it or not. If you do, you’ll have to pay the 15 percent Exercise Fee (i.e. the remainder of the down payment). This’ll be due at the point of signing the S&P, or within 9 weeks from the date of the Option, whichever is later.
You’ll also need to pay stamp duty on the S&P within 2 weeks of signing it. If however you decide not to go through with the purchase, be prepared to forfeit a portion of your Booking Fee (usually 25 percent, though it depends on the terms of the Option).
STEP 8: MAKE YOUR PAYMENTS FOR THE EXECUTIVE CONDOMINIUM…MAYBE
It’s time to pay the piper. Or maybe not just yet. You’ll have 2 payment schemes open to you at this point:
- Normal Payment Scheme (NPS) –buyers make instalment payments each time the developer hits certain pre-set milestones in its construction. This usually works out to a payment of about 5 – 10 percent of the purchase price of the property every 6 months or so; or
- Deferred Payment Scheme (DPS) – buyers need only pay the 20 percent down payment of the purchase price at the outset (this is the Booking Fee and Exercise Fee that you’ve already paid), while the remaining 80 percent is paid once the project is completed (about 3 years after).
While the DPS looks attractive, there’s usually a 2 – 3 percent premium on the purchase price so we recommend we recommend going with the NPS to avoid paying more for your home.
Read more about the EC payment schedules here.
STEP 9: COLLECT YOUR KEYS!
3 years later, collect your keys and step into your new home.
It’s as easy as that.
Buying your first home or investment property? We’re here to help. Find out how to make your property purchase safe as, well, houses. Our panel of experts are ready to answer your questions, and provide clarity on any property issues.
Consult them at Property Investing for Non-Millionaires, on 25th May 2019, at the HDB Hub Auditorium (Toa Payoh). Tickets are just $20, and early birds get a 50 per cent discount.