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  • Writer's pictureWilliam Lee

Want to upgrade your HDB to an EC? Some financial knowledge that you need to know!

Updated: Nov 6, 2020

Photo By Erwin Soo from Singapore - Dover Parkview.

It is not impossible for us to sell our current flat and purchase a new executive condominium. Where the challenge lies, are in the process of having to make deposits, and financing.

While this occurs, there is a need for us to have a roof over our heads until the Executive Condominium (EC) is completed. Below are some possible ways to simplify this if you’re looking to move into an EC:

But before that, let’s look at the financial challenge

If you have purchased an HDB flat using bank loans, you may skip this part; it’s something you probably know already.

But if you purchased your HDB flat through a concessionary loan, this is important for you.

Those times when you bought your flat through an HDB loan, it wasn't a complicated process. You received up to 90% of the loan and got the other 10% from either cash or CPF. Most times, many Singaporeans do not even have to pay cash at all.

Nevertheless, it is entirely different with regards to an EC. For ECs, the only option you have is a bank loan. HDB loan is not applicable. Hence, the highest financing you can get through a bank loan is 75% of the property worth. Another 20% of the property value can be paid in either cash or CPF. But it is compulsory to deposit the remaining 5% in cash.

For example, in a case where your intended EC is worth $1,000,000, you must be able to pay at least $50,000 in cash. You cannot borrow this amount from any bank.

For EC, the good news is that you do not have to pay for the Additional Buyers Stamp Duty (ABSD) even you are still currently owning your HDB flat.

For those moving from an HDB to private condominiums, they have no option but to pay the ABSD within two weeks of making the purchase.

Now, there are two methods to pay for your EC:

1. Normal Progressive Scheme (NPS)

The NPS allows you to sustain the EC loan, while you work towards repaying any loan for your flat. Thus, it can be financially challenging if you do not have a reliable income source.

The advantage is that it offers a lesser price (about 3%) to those who decide to pay through the NPS. Another merit to consider is that it is easier to pay during the early phase of construction. This is because the NPS monthly instalment increases with time.

2. Deferred Payment Scheme (DPS)

If you cannot bear the cost of repaying a second home loan, while you’re still servicing that of the existing flat, DPS is your best option.

DPS offers a more straightforward approach:

First, you make a cash deposit of 5% upon your booking, and another 15% (either by cash or CPF) to finalise the purchase agreement.

Afterward, you do not have to bother about payment for the EC until it gets the TOP, even if the TOP comes after 2 years. Once it’s time for TOP, you have to pay 65%, while the remaining 15% can be paid during CSC.

The disadvantage of the DPS method is that the property may be about 3% higher in price when compared to paying using NPS. But then, DPS gives you more time to gather enough cash, without any financial pressure of loan servicing, and then sell the flat closer to the TOP date.

Do you want more advice and information regarding the best choice between a private condo or EC?

Kindly leave a message now, and I will contact you personally!

William Lee / Eileen Au

Ideal Home is well-liked by both local and international clients for their friendly yet professional approach in the way it goes about helping them with their real estate goals in Singapore. They welcome the opportunity to have a no-obligation chat with you to see how they can help you to achieve your real estate goals in Singapore.

Contact us today @ +65 8666 4333 (William) or +65 8686 4333 (Eileen).

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