Upgrade to EC before selling your HDB
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.
New EC Launches and how to buy an executive condo in 2024
Request a session for EC information and check if you are eligible for an upgrade.
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 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 the 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) – the 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 more 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 prices have increased more than 78% from 2015 to 2024.
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, making it an attractive option as a stepping stone for property asset progression
New EC Launch in 2024
Get in touch for more EC updates.
Conclusion
Upgrading to an EC could be the key to unlocking greater value in your property.
With more space and modern amenities, EC offers everything today’s homebuyers are looking for.
So why settle for less when you can upgrade to an EC and reap the rewards?
While you’re busy trying to time the market, your friends might already be reaping the rewards of their investment profits.
A Special Invitation for My Valued Readers
This moment could be the turning point where your HDB flat blossoms into an incredible opportunity. Imagine transforming your current home into a dream Executive Condominium (EC) that’s not just a residence but a stepping stone to greater wealth.
The journey from HDB to EC is filled with potential, ready to elevate your lifestyle and financial future.
If you’ve been contemplating the leap, let today be the day you take the first step. Whether you’re nearing the end of your Minimum Occupancy Period, dreaming of a more spacious home for your growing family, or eyeing the smart investment that an EC represents, I’m here to illuminate the path forward.
Don’t wait another day to explore the possibilities of upgrading to an EC and maximizing your profits when selling your HDB flat.
Let’s schedule a discussion on your options together.
Who should apply?
- HDB flat owners in Singapore
- Approaching the end of their Minimum Occupancy Period (MOP)
- Considering upgrading to an EC before selling their HDB flat
- Young families looking for a larger home
- Savvy investors looking to make a profit on their property
- Interested in the benefits of EC living, such as modern amenities, spacious layouts, future value
- Seeking guidance and insights from a real estate professional
Topics I will cover during the discussion
Understanding Executive Condominiums (ECs)
Financial Considerations and Planning
The Minimum Occupancy Period (MOP)
Market Trends and Investment Potential
Selecting the Right EC
The Application and Buying Process
Lifestyle Benefits
Resale and Long-Term Investment Value
Next Steps
Awards and Accolades
Testimonials
I have successfully helped hundreds of homeowners just like you since 2010
Have you learned something New Today? Please help to share.
Self Introduction
Greetings! My name is Rick Long, and I am proud to serve as the Associate Division Director of Huttons Asia Pte Ltd, with over a decade of experience in the real estate industry.
My passion for helping clients find their dream homes has grown exponentially during my tenure in the field. As a graduate of Singapore Polytechnic, I have always valued the importance of hard work and determination.
My prior experience serving in the airforce instilled in me the value of teamwork, perseverance, and discipline.
Over the years, I have been privileged to receive several accolades for providing exceptional service and dedication to my clients.
My ultimate goal is to ensure that each individual I work with has the best possible experience, whether they are buying or selling a property.
One of the most rewarding aspects of my work is receiving glowing five-star reviews from satisfied clients.
Knowing that I have positively impacted someone’s life is truly humbling, and it motivates me to continue striving for excellence every day.
When I am not working, I enjoy spending quality time with my loved ones, indulging my passion for sports, and exploring the rich and diverse culinary landscape of Singapore.
Amidst the bustling pace of life, I relish moments of calm by immersing myself in the art of tea-brewing and teapot appreciation.
Thank you for taking the time to learn a little more about me. I look forward to the opportunity to work with you.
Additionally, Rick is a proud fur daddy to two rescue kitties and loves spending his free time with his wife and furbabies. He believes in giving back to the community and volunteers his time to animal welfare causes whenever possible.
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)
