If you’re planning to take that next big step and get a home loan for an EC, you’re going to have to know what to prepare for, and amongst other things, if you even qualify for one in the first place. This middle ground between HDB properties and fully private properties may be alittle tricky for some to navigate, so we’re going to make it easier on you with this step by step guide!
Here’s a brief overview of how to buy an EC:
1) Find out when the EC is launching and head down to the showroom to apply.
2) Remember to bring along all the required documentation which is primarily:
- Proof of Identity/Citizenship – For Singapore Citizen: Identity Card – For Singapore Permanent Resident: Singapore Blue Identity Card – For Non-citizen: Passport
- Proof of Relationship and Marital Status – Birth Certificates (to prove relationship between parents/children, siblings etc.); and/or – Marriage Certificate
- Proof of income:
- To play safe, bring along your 12mths worth of payslips if you are an employed person
- For self employed person, your latest Notice of Assessment from IRAS
- It is best to check at the website of the developer what specifically they will need for proof of income as this may vary with each development
- Documents for your application of the CPF Housing Grant should you want to take this up
3) You will be notified approximately 1 week from your time of application as to whether you are successful. The developer will conduct a ballot to shortlist all buyers. Buyers will be notified by the developer. The shortlisted buyers will be invited to select an EC unit based on their balloted queue positions in the balloting exercise
4) Pay the first 5% of the purchase price to secure your Option to Purchase. HDB will take about 4-5 weeks to approve the purchase. Upon HDB approval, the developer will send across the Sales and Purchase agreement to you
5) Get your Sales and Purchase Agreement, which you have 3 weeks to exercise. Generally, buyer(s) are required to pay the balance of the downpayment for the EC unit on the date the Option is exercised or within nine weeks from the date of the Option to Purchase,whichever is the later. If your HDB Housing Grant is applicable, you can use it here to pay for the rest of the downpayment. (15%) When exercising your S&P, you will also have to prepare the Buyers Stamp Duty at this time.
6) Payment scheme begins depending on what you selected. (Progressive Payment or Deferred Payment)
7) TOP and Key collection! (When the building is completed)
Other Things To Take Note Of
Changes to the buying regulations for ECs were implemented in December 2013 and one of the most significant new rules was the imposition of a 30% Mortgage Servicing Ratio (MSR). What this means is that ECs now follow the same loan restrictions as other public housing flats in only allowing the buyer to use 30% of his/her monthly income to service the loan repayments for their EC.
This essentially means that now, not everyone can just pool together some money to buy an EC, and finances need to be planned more carefully in order to qualify for the necessary loan. Thankfully, you can get some free help on that from MoneySmart at their Home Loans section.
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