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Upgrade to EC before selling your HDB

upgrade-to-ec

This is one of the most popular trends nowadays and commonly happens when we are reassessing our current lifestyle, pondering about property investments, and having the desire to provide a better quality of living for our loved ones – now that we can afford to.

So, let me bring you through the upgrading process to EC (Executive Condominium) before you hurry into selling your HDB.

This is especially useful for HDB owners who are uncertain about financing the various down payments, who are still staying in their HDB flat while the new EC is being built.

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Table of Contents

Introduction to ECs (Executive Condominium)

ECs (Executive Condominium) were introduced in 1995 as a public-private hybrid housing with the aim of providing private housing at affordable prices, catering to the sandwiched income group.

In today’s context, these are households with incomes up to S$16,000.

Like Condominiums, ECs are designed, constructed and sold by private developers. And comes with a full suite of condominium facilities and are physically indistinguishable from private condominiums in terms of design and physical outlook.

Like HDBs, buyers of ECs are entitled to CPF housing grants; executive condo eligibility checks and EC grants can be found on HDB website.

With an EC, you won't have to pay the Additional Buyers Stamp Duty (ABSD)

absd

ABSD is applicable for all HDB upgraders who buy a private property. It is payable within two weeks of signing the purchase agreement.

Owners can then apply for a Matrimonial Home Additional Buyers Stamp Duty(ABSD) remission upon selling their first property – do check if the required conditions are met (Read more).

For example:
One of the conditions to qualify for ABSD remission is that the couple will have to sell their HDB within 6 months from Option Acceptance of their 2nd property (For resale properties) or 6 months from TOP (For buildings still under construction).

However, ABSD will not apply if you are upgrading from an HDB to an EC. This make it easier for buyers to buy EC before selling theif HDB.

EC (executive condominium) payment scheme

To pay for your EC, there are currently two payment schemes available that you can choose from.

The first payment type is referred to as the Normal Payment Scheme (NPS), which may also be referred to as the Progressive Payment Scheme (PPS).

Under the Normal Payment Scheme (NPS), take note that you will have to service the mortgage loan for your EC while continuing to service the current home loan repayments for your HDB flat.

So, if you choose this option, your finances must be carefully planned as it can be financially straining to service two mortgage loans at the same time.

Another interesting fact is that the initial NPS payments can start off being pretty affordable during the early days of construction and this repayment amount will gradually increase over time.

Normal Payment Scheme (NPS)

There are 10 stages you need to take note of while adopting the Normal Payment Scheme (NPS);

We are using a typical case of buyers who uses 5% cash, 20% CPF and takes a 75% maximum mortgage loan, over the course of a Normal Payment Scheme.

Note: all CPF payments can also be paid for using cash.

Stage 1: Option To Purchase (OTP)

Payment – 5% in cash

Stage 2: Sale & Purchase Agreement and Buyer Stamp Duties

Payment – 15% through CPF, at completion of the purchase. This is usually within 8 weeks from OTP.

Buyer Stamp Duty must be paid within 2 weeks of exercising the Sales & Purchase agreement – to be paid in cash first and you can submit for reimbursement from your CPF at a later stage.

Stage 3: Completion of Foundation Work (approx. 6 months after)

Payment – 5% in CPF or Cash, and another 5% disbursed from your Home loan (your Mortgage repayments will begin from this stage)

Stage 4: Completion of Reinforces Concrete Framework of the unit (approx. 12 months after)

Payment – 10% disbursed from your Home loan (your monthly Mortgage repayments will start to increase from this stage)

Stage 5: Completion of brick walls of the unit (approx. 18 months after)

Payment – 5% disbursed from your Home loan (your monthly Mortgage repayments will increase further)

 Stage 6: Completion of roofing / ceilings of the unit (approx. 1 year and 9 months after)

Payment – 5% disbursed from your Home loan (your monthly Mortgage repayments will increase further)

Stage 7: Completion of electrical wiring, internal plastering, plumbing & installation of door & window frames of the unit (approx. 2 years after)

Payment – 5% disbursed through your Home loan (your monthly Mortgage repayments will increase further)

Stage 8: Completion of car parks, roads, & drains serving the development (approx. two years and three months after)

Payment – 5% disburse through your Home loan (your monthly Mortgage repayments will increase further)

Stage 9: Notice of Vacant Possession (Temporary Occupation of Permit – TOP) – developer will give an indicative date for TOP. It is usually 3 – 4 years later for a brand new EC.

Payment – 25% disburse through your Home loan (your monthly Mortgage repayments will increase further)

Stage 10: On Certification of Statutory Completion (CSC), usually 12 months after TOP

Payment – Remaining 15% disburse through your Home loan (your monthly Mortgage repayments will increase further)

Deferred Payment Scheme - A much more affordable payment option

The second payment type is the Deferred Payment Scheme (DPS).

A popular choice for HDB owners who finds it financially straining to be servicing a second home mortgage loan  while they are still paying for their existing flat.

The deferred payment scheme is much straightforward:

Payment – You pay 5% (in cash) to secure the unit, and 15% to complete the sale and purchase agreement (in CPF or cash) – similar to NPS above.

You will also be required to pay the buyer stamp duties within 2 weeks of completing the purchase agreement – also similar to NPS above.

After that, you don't have to worry about financing your new EC mortgage loan until after it receives its TOP.

Yes: if your TOP happens to be 3 to 4 years later, you won’t have to service any mortgage loan for the EC over those 3 to 4 years.

Deferred payment scheme gives you ample time to accumulate your cash and CPF, and then sell your HDB flat closer to your EC key collection date.

Upon TOP, you will then start paying 65% of the mortgage loan, and the rest is paid at around the time of CSC, which is usually 12 months after TOP.

Now, this seems too good to be true?

Well, there is also a downside for DPS - there will usually be a 3% increase in property purchase price for this option.

Nevertheless, it remains a popular choice as upgraders do save a few years of interest repayments and buy themselves a lot more time without the added financial stress, since you will not servicing any bank mortgage loan until you collect your keys.

Why upgrade to EC - The Profitability of EC (Executive Condominium)

ec price

ECs are popular choices amongst many and ever wondered why this is so?

Well, they are practical and well-suited for owners who are looking for an upgrade in lifestyle while at the same time, committing to a lower monthly mortgage repayment because of its attractive pricing model.

Best of all, it is a fact that over the past 10 years EC prices have increased significantly at 48.22%, making it an attractive option as a stepping stone for property asset progression.

Questions to ask yourself

Some food for thought:

What is the purpose of upgrading your flat?

Is new EC or resale EC more suitable for you?

Are you familiar with the latest marketing trends?

Have you work out the pros and cons of buying or selling first?

Do you have a step by step action plan?

Conclusion

If you are looking to embark on this journey to upgrading to a executive condominium, I hope this will be a useful guide for you to kick-start your process.

If you feel that it is best to speak with a professional agent first before starting on your property journey, or perhaps you would to gain access to my specialized skills set and strategies, feel free to reach out to me for a non-obligatory discussion.

Bonus for my readers

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My readers can request a 1-time free 30 min Dynamic Property Planning consultation. 

Please tick the option(s) most applicable to you.

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Testimonials

I have successfully helped hundreds of homeowners just like you since 2010

Mr Ang
Mr Ang
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As a investor interested in taking advantage of the booming property market in Singapore, I needed a realtor with in-depth knowledge of the local market. Using his understanding of the various sectors of the market, Rick generated a investment progression report and we decided to buy a condominium in a choice area with huge potential for multiple returns in the future. Thanks Rick, I will definitely be doing business with you for a long time!
Ms Claire
Ms Claire
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I am writing in to compliment Rick Huang for his invaluable service, for the sale of my Esparina Residences. The process was complicated but he was able to empathize with my situation and also provide brilliant advices that ensue the smooth transaction. In all, I am appreciative with his professionalism and human touch in this journey. Thank you!
Ms Ho
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I was sceptical about engaging a friend to sell our house. However, Rick has put himself out on so many levels just to ensure everything went smoothly, promptly and correctly at every stage. I trust Rick and would surely recommend him to anybody seeking to buy or sell a home! I do not usually post reviews but this is worth investing my time. Thanks once again..
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His service is beyond my expectations. Always going the extra miles to serve his clients.
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My husband and I started our home-search by ourselves but was met with issues soon enough as we were unsure of the important things and areas to look out for and we were also not experienced in the negotiation process with the seller’s representing agent. Soon after hearing our problems, I was introduced to Rick by a friend. The entire buying process quickly became swift and smooth; Rick understands our needs, puts our personal interest first, seals us a good deal and educated us along the way about the important things and areas to pay attention to. Thumbs up to Rick and we will recommend him to anyone for their home-search
Mr Eddie
Mr Eddie
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"In short, Rick did an amazing job. He sold our house at a higher than initially discussed price and got us a good deal for our purchase. Both my wife and I are impressed with his professional yet friendly approach. We will definitely work with him again and recommend him to anyone."
Mr Liew
Mr Liew
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Rick is a very down to earth person. No hard sell or pushy technique. He helped us in planning for upgrade and showing us how to invest in property with in depth property analysis report.
Miss Chong
Miss Chong
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His service is superb. With his property mkt analysis skill, I managed to purchase my first property in Singapore. He is always patient and helpful whenever I have any query about property purchase procedure, especially the computation part of the downpayment. In nutshell, I am really grateful and appreciate for his support.
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Self Introduction

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Rick Huang, Associate Deputy Group Director of OrangeTee & Tie, has been in the Real Estate industry for a decade.

He is driven, committed and is enthusiastic about real estate investments.

Today, he leads Team Youhome.sg, and together, he aims to provide his clients with the best experience in their property journey.

The team focuses on understanding the client’s finances and needs and is determined about delivering the best solutions and results for them.

Amidst the hustle and bustle, Rick enjoys quiet time and indulge himself in the intricate art of tea-brewing and teapot appreciation.

He would also take this chance to energize himself and reflect on his personal development and areas of improvement.

Related Articles:

Should you sell your EC after 5 years? – Read more (Selling EC)

Does your potential purchase has a growth story? – Read more (Understanding Growth Plans For Singapore Investment Property)

Ever wonder if you are suitable for Sell one buy two investment concept? – Read more (Sell one buy two)

Is buying new launch or resale condo have better returns? – Read more (New Launch vs Resale condo)

Looking to upgrade from Hdb to condo? – Read more (Sell Hdb buy condo)

What to take note when selling Hdb resale flat? – Read more (Hdb Resale Process)

Buying another Hdb flat, and using the fund from current home? – Read more (Hdb contra)

Why do some Hdb flat price depreciate so much? – Read more (Hdb depreciation curve)

What is one of the most common reason for property negative sales? – Read more (Cpf accrued interest)

Financial calculation for selling a Hdb flat? – Read more (Hdb resale calculator)

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