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 Frequent Asked Questions on Executive Condominium

 

Section B: Finances FAQs

   1.     We are 2nd timer applicants, do we need to pay resale levy for ECs? If yes, what is the amount and is it based on my first
          direct purchase HDB flat that I bought and sold years ago or on my last resale flat.
 

For 2nd timer applicant, resale levy is not payable if you

a.     Buy another HDB resale flat 

b.    Buy private property. 

c.     Buy an EC where the site was sold before 9 Dec 2013.
The Yuan Ching site will be the last EC where 2nd timer need not pay resale levy 

2nd timer will need to pay resale levy from the Westwood Avenue site onwards.   The resale levy amount depends on when the first direct purchase flat was sold (see Table below) plus accrued interest (if any). 

 

2.   Can we pay the 5% cash first for downpayment and pay the remainder 15% with the CPF refund only after selling our flat? 

No, the developer cannot wait indefinitely for you to sell your flat (see related Qn 3). 

In general, you need to your financial planning before you consider an EC and generally you need a minimum of 23% of purchase price in cash/CPF to start with (see related Qn 4).

  

3.     I have just sold my existing HDB flat and I need to use the CPF from the sale to pay for the 15% downpayment.  When is the earliest timing that is safe for me to book an EC without forfeiture worry? 

To be on the safe side, it is advisable to set aside 2 weeks for the fund to be returned into CPF account before being used again for your next purchase.   

For EC purchase, the earliest timeline to pay the 15% downpayment is 9 weeks from the booking date or 3 weeks after HDB approves your application and the SPA delivered.    

For HDB resale, the general timeline to 2nd appointment (completion) is 6 weeks after the 1st appointment.   

So, logically speaking, it is safe to book the EC once HDB had confirmed your second appointment date for the resale.

 

4.     We are first timer applicants, both SCs, currently 35 year old, with combined household income of $10.5k.  Base on the current ruling/restrictions, how much cash/cpf do we need in order to buy an EC of $1.0 million.  

1 st  time SC buyers with household income between $10,000 - $11,000 will be eligible for a $20,000 CPF housing grant that can be used for the downpayment  . 

Based on current ruling/restriction, assuming you have no big debt, based on 30% MSR ruling and 30 years tenure, the allowable bank loan, 80%, is estimated to be about $800K.  Assuming with $800Kloan for your purchase, the calculation as follows: 

a.     5% booking fee                             : $ 50,000  cash 

b.    CPF Housing Grant                        : $ 20,000  CPF                      (Dependent on total income) 

c.     Remainder 15% downpayment        : $140,000 cash and/or CPF

d.    Stamp Duty                                   : $ 24,600  cash                    (3% purchase price - $5400)

e.     Legal Fees                                    : $   3,000  cash                    (Approximate) 

                         Total                   :  $ 207,600 cash/CPF          (exclude CPF housing Grant)

 

 

5.     We are first time home buyer interested in EC.  Both SCs, our age is 38, combine salary is 12k and we have about $150K in CPF OA.    So if the house is 1.1million dollars, and if I max out our CPF,  how much cash upfront that I need for the downpayment ? 

With the 30% MSR ruling, the estimated bank loan for $12K income about $753K @ 27 years tenure.   There is a 1st timer CPF housing grant of $10,000 for salary between $11,001 - $12,000.

For cash upfront calculation, other than the CPF housing grant amount, the usage of CPF monies is calculated backward from bank loan amount (not forward from 15% downpayment). 

Below is a partial screenshot of the financing estimation report that I created for my client. From the computation below, the cash needed for the downpayment and fees (exclude legal fee) is about $111,600. The CPF monies used for the downpayment is $103,000 with another $47,000 for the next progressive payment stage.  

 

 

6.  We are both 40 yrs old, combine income of 10k. We bought our current HDB flat at $250K and the outstanding housing loan is $100K. We have about $80K in our CPF Ordinary Account and $150k cash. The CPF amount used for our current housing with accrued interest is about $250K. We looking at a EC unit that cost about $1 million. How is the payment schedule and how we can afford it? 

At 40 yrs, the allowable loan tenure is 25years. For $10K income at 30% MSR ruling and no big debt, the estimated bank loan is $590K.  

Besides the 20% downpayment amount, you still have a shortfall of $210K ($800K-$590k) that we need to cover before the bank loan kicks in.    

Below is a partial screenshot of the financing estimation report for the Normal Payment Scheme (NPS) that I created for my client. With the $80K CPF being reserved for the shortfall, the full downpayment amount will need to be paid in cash.  As your $150K saving is below the $224,600 needed for downpayment, you will not be able to afford the $1 million EC unit under NPS.

 

In order to afford an EC,  

a.    You should consider ‘right-sizingyour expectation to a smaller or lower priced unit that cost $800K. The revised calculation shows $178,600 (excl legal fee) is needed at the downpayment stage. This is probably more workable as the amount of cash needed is $148,600 vs your cash saving of $150K.  

 

 

b.   Another option that is open to applicant with existing that has not been sold is to opt for the Deferred Payment Scheme (DPS).  Typically, there is a 3% cost differential between Deferred Payment Scheme (DPS) and Normal Payment Schme (NPS) and the  same $1 million unit will cost $1.03 million under DPS.

The computation for CPF monies usage under DPS is similar to NPS, i.e after setting aside the CPF monies for the loan shortfall, the balance (if any) can be used for the downpayment.  

      However, lately there is one particular bank that allows the CPF to be used upfront for the 15% downpayment with conditions that the CPF refund from future sale of existing flat is more and be plegded against the shortfall amount. 

      So assuming that your existing flat can fetch $500K in the resale market, minus the outstanding housing loan of $100K and $250K that needs to go back your CPF, you stiill have a gross cash proceeds of $140K. 

The revised screenshot for a $1.03 million EC unit is below.  As the CPF refund monies ($250K - from future sale of your existing flat) is pledge against the $234K shortfall, your exising CPF monies $80K can be used at the downpayment stage.  As such, your $150K cash saving is about right to pay for $151,500 cash amount that will be needed at downpayment stage.  Under this scenario, you can afford the $1.0 million EC unit if opt for the DPS 

 

 

 

7.     Our combined salary is about $9K per month. Based on current 30% MSR, we can probably stretch for a 2 Br EC unit around $600K.  We have some shares and fixed deposit, can these be pledged to increase the loan so that we can afford a bigger unit.   

In general, the loan quantum can be increased if you have assets to pledge to the bank.  It is best that you speak to a bank officer with regards to the type of assets that can be pledged and how much the loan quantum can be increased.   

If you are looking for a rough estimation of loan increment for EC, for every $100K asset, the ball park estimate is $130K for secured asset and 90K for unsecured asset.      

 

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 Testimonial

"Thank you for patiently taking your time to show us the mock-up flats, explaining the orientation of the scale models and providing us with valuable insights into the project and financing options.

Both myself and my wife really appreciate your effort."

 -- Hairul
 

"Among the agents I have come across so far, you are one of those few whom I feel at ease and comfortable speaking to. This is my frank and sincere opinion.   You truly live up to your words “Honesty and Integrity”

-- Chee Kin

"Thanks for your very kind and helpful adivce.  The testimonials were very true indeed. Another agent from xxxx is trying to make me appoint him as sole agent for EC, but did nothing much to advise like you did.  I really appreciate it"

-- J Ong

From a satisfied client who was referred by his friend. 
Read full transcript

"He gave us good advice based on our requirements. ....
He paid details to every single stage of the process and returned all phone calls, texts and emails the same day.  We never felt neglected or unimportant."

-- Sean Lee

 

 

 

  

 

  

 

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