You’ve probably heard your friends or read somewhere that buying an EC (Executive Condominiums) is a great idea – the development will become privatised after 10 years and the value of your flat is likely to go up substantially.
Or perhaps you’ve no choice because you belong to the “sandwiched” class who cannot buy a HDB BTO anymore as both you and your co-applicant’s salary exceed $10,000. Yet at the same time, a regular-sized condominium unit is out of reach for you.
You may be considering buying an available unit at an EC project or balloting for upcoming launch. With all the changes made in the past year to the EC scheme and financing eligibility, you may be wondering if you qualify to buy one. Or even afford one in the first place.
Moneysmart has compiled a list of criteria for eligibility to buy an EC:
1. Family Nucleus
As with purchasing a BTO, you need to form a family nucleus with your fiancé, spouse, parents or children under your custody if you are divorced or widowed. Or you may apply with another joint single if you are above 35 years old.
You will be eligible to buy a dual-key unit if you form a multi-generational family unit comprising of either your parents or grandparents.
2. Income Requirements
Your average gross monthly household income cannot exceed $12,000. If you are employed, “salary” is determined by your latest 3 months’ payslips or a certified letter from your employer. Bonuses are excluded and IRAS NOA cannot be used.
If you are self-employed, “salary” is determined by your latest IRAS NOA.
If you work part-time or are commission-based, “salary” is determined by your latest 12 months’ payslips or a certified letter from your employer.
3. Waiting period
If you have bought a HDB BTO, DBSS or resale flat before, you will need to fulfill the 5-year minimum occupation period from the date of taking possession of your flat before you can apply for an EC.
If you have bought an EC before, on top of the 5-year minimum occupation period, you will need to wait out another 30 months after the sale of your EC before you can apply to buy another EC.
In the above 2 instances, you will be considered a second-timer and will have to pay a resale levy, ranging from $15,000 to $55,000 depending on the type of flat you had owned previously.
If you have owned a private property or HUDC before, the same 30-month waiting period applies.
4. Mortgage Servicing Ratio of 30%
Since Dec 2013, the 30% MSR cap was extended to apply to ECs. This means that a maximum of 30% of your gross monthly income can be used towards repayment of your monthly mortgage instalments. Given the prices of ECs, this is also will mean that you’re going to need a sizeable amount of cash for the downpayment.
In order to buy a $750k EC at an 80% financing quantum with a 25-year mortgage, your combined income needs to be about $10,500. And if your combined monthly income is at the maximum of $12,000, you can only purchase EC units with a price tag below $950k, which means that the bigger 4 or 5-room available EC units from past projects will be out of reach for you.
Quite a bit of mental gymnastics are involved in figuring out if you are eligible to buy an EC. If you are a first-time property buyer with a combined income of less than $12,000 monthly, chances are you should be able to buy an EC without much problems, provided you earn enough to meet the MSR requirement for your ideal unit, and have enough cash on hand for the downpayment. If your case isn’t so straightforward, you will need to scrutinise the details or consult MoneySmart for the best housing loans in Singapore.