Treasure Crest – Which Home Loan Is Best for EC Buyers in Singapore?

Treasure Crest – Which Home Loan Is Best for EC Buyers in Singapore?

Sengkang is fast becoming a damn happening place with so many malls. I recently heard that there are two new malls coming up next to Compass Point – 1 Sengkang Mall and Compass One! Huh? They’re actually the same mall? Just changed name… twice? Uh… okay. I suppose it’s still better than putting up a large pentagram like a certain shopping centre in Tampines.

But it would seem like if you’re getting a new home, Sengkang is the place to be. At least, it would seem so when 72% of the units at the Treasure Crest executive condominium showflat were booked last weekend. It’s clear the location was important – Treasure Crest is next to two LRT stations and about 15 minutes’ walk from Sengkang MRT. However, the relatively low price definitely played a factor as well – at an average of $742 per square feet, it is significantly cheaper compared to the other two executive condominiums (ECs) – Bellewaters and The Vales – situated across the road.

But that said, if you’re buying a unit at Treasure Crest, you can still expect to fork out at least $677,000, which is not a small sum of money. You see, ECs are supposed to be the best of both worlds between public and private housing in Singapore, but initial sales are restricted by public housing requirements.


What are the requirements to buy an EC in Singapore?

Firstly, you have to be a family (as defined in Singapore). That means, you apply with your spouse and children, or with your parents and siblings, or, if you’re widowed or divorced, with your children. You can also apply with your fiancé/fiancée. At least one of the applicants must be a Singapore Citizen, and at least one other applicant must be a Singapore Citizen or PR.

Alternatively, if you and your friends are single and at least 35 years old, you can also apply together. In this case, all of you need to be Singapore Citizens.

Secondly, your average monthly household income cannot exceed $14,000. This upper limit generally makes it difficult for most EC buyers. Earn too little, and you can’t afford an EC unit, since the current Mortgage Servicing Ratio limits you from paying more than 30% of your monthly gross income as home loan repayment.

What’s more, ECs are not eligible for HDB concessionary loans, so you’ll have to go with a home loan from the bank. So since you’re making such a big financial commitment, it’s best that you understand what home loan packages are currently available on the market, and which one is best for you.


1. SIBOR-linked home loan packages

The SIBOR is currently so unpredictable, I think I just might win 4D before it ever goes up again. Since there’s a pretty clear connection between the SIBOR and the US Fed interest rate, we expected SIBOR to continue rising once the US Fed interest rate hike happened in June. Except, that never happened, thanks to a tiny decision called Brexit. Today, the SIBOR is the lowest it’s been this year, though still higher than what it was between 2009 and 2015.

Some banks are also beginning to offer 1-month SIBOR-linked home loan packages with no lock in period. This essentially means that there’s almost nothing to lose by going with these options since there’s no penalty of refinancing once the SIBOR starts to climb, when it starts to climb.


2. Fixed deposit-linked home loan packages

If you’re looking for a home loan package with a bit more stability compared to SIBOR-linked packages, there’s also the option of fixed deposit-linked home loan packages. These are home loans with interest rates linked to a bank’s fixed deposit account rates.

Of course, each bank tries to differentiate their fixed deposit-link home loans – DBS uses their 18-month fixed deposit interest rate, OCBC uses their 36-month fixed deposit interest rate, while Standard Chartered uses their 48-month fixed deposit interest rate – but essentially, all three work pretty much the same way. The two things you need to watch out for are how likely an increase in these fixed deposit rates are, and what is the spread or mark up by the individual bank.


3. Exclusive Fixed Deposit-linked home loan package

For buyers of EC units at Treasure Crest and Lake Grande, another EC in Jurong West, banks are offering an exclusive fixed deposit-linked home loan package rate. Because it’s only offered to buyers of these 2 ECs, we can say that it’s the lowest fixed deposit-linked in the market. For more information, speak to our mortgage specialists.


Just a point to note about fixed deposit-linked home loan packages…

You may have noticed I didn’t mention any variable rates, also known as board rates, in the above options. That’s because those don’t simply make sense in the current home loan market. If the SIBOR is low but volatile, why would you want to go with an even riskier option like a variable rate? This is a rate where there’s no transparency how it’s determined, and should a bank decide to change their rates, they only need one month’s notice to screw with your life.

Now, fixed deposit-linked home loan packages are technically variable rates, but there’s a certain level of transparency. Yes, a bank can change its fixed deposit rates whenever they feel like it, and raise your monthly home loan repayment amount, but by doing so, they will incur some costs (in the form of paying out interest to their fixed deposit accountholders). Presumably, that means that it won’t happen often.


If you’re still confused which home loan package is best, compare all the current home loan rates with our home loan wizard. It’s absolutely free and it will give you a better picture on which home loan to take based on your own financial needs.