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.
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)
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).
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).
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.
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.
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.
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?
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 30% from 2017 to 2021.
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.
New EC Launch in 2022
There will be 3 EC launches in 2022.
The first launch will be North Gaia in April 2022.
The other 2 EC launches in 2022 will be in tampines and Tengah.
Get in touch for more EC updates.
Questions to ask yourself
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?
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.
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Rick Long, Associate Division Director of Huttons Asia Pte Ltd, has been in the Real Estate industry for more than 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.
Well-equipped with expertise in residential properties, Rick often impressed his clients with knowledge of market trends, advising on timelines, financial calculations and best options for his clients.
Amidst the hustle and bustle, Rick enjoys quiet time and indulges 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.
He is also a proud fur daddy to 2 rescue kitties and loves spending his free time with his wife and furbabies.
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)