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To EC or not to EC? (The tales of EC vs BTO/Resale)

21 June 2017

To recap, in order to purchase a BTO/Resale flat, the household combined monthly gross income must not be more than $12,000. For EC, it should not exceed $14,000. We are assuming that your monthly household income is not more than $12,000 thus you are here reading this article as you are eligible for both BTO/Resale and EC.

Now, let us take a look at the pros and cons of an Executive Condominium.

DISADVANTAGES

    • Cost much more than BTO flats. Could be double the price.
    • Usually located at the non-matured area; not near the MRT station. Accessibility to public transportation could be a problem.
    • Only eligible for bank loan of up to 80% of the price of the house.
    • 20% downpayment, of which, at least 5% has to be cash.

ADVANTAGES

    • Fully furnished unit. You do not need to do any renovation. It is ready to move in.
    • Shared amenities like gym, clubhouses, swimming pool and etc…
      (Oh, did we mention security guards too?)
    • It might have a higher resale value after 10 years. EC will be converted to a private condo after 10 years, which means there will be more buyers.

Who doesn’t love the idea of comfort living and those awesome amenities? But before you jump in the semi-luxury wagon, it pretty crucial to ask yourself the following few questions.

1

Do I
have cash on hand?


The first thing you need to ask yourself, do you have cash on hand? For the purchase of Executive Condo, you will not be entitled to HDB concessionary loan. You will have to take a loan from the bank, which means, you are required to pay at least 5% (of the purchase price of the house) in CASH. Read here for the comparison between Bank Loan vs HDB Loan.

In addition, if you do not have sufficient money in your CPF OA account, this 5% could increase to 15%, which translates to a whopping $90k CASH!


2

Am I able to finance the monthly repayment?


Next, are you willing or can you afford to pay almost double the price of a BTO flat? Yes, you can save on the renovation cost of the house, which could amount to more than $60k. But will financing this house subsequently be an issue for you and your spouse?

Bear in mind that a four-room BTO flat in a non-matured estate cost averagely about $350k. With the same unit size in the same housing estate, an Executive condo could cost more than $700k. The monthly CPF repayment of you and your spouse might end up be more than $2,500 in total.


3

Am I okay if the house is located at the outskirt area?


Executive condominiums are usually located further in the non-matured estates. It could be a problem if you do not drive as it is not very convenience when it comes to the accessibility of public transportation.

No doubt that these areas will be developed in the matter of time. But it could take a decade before things improve. The time to commute to-and-fro from your work place could increase substantially so it is important that you factor in the inconvenience for staying in these areas.


4

Am I buying this for investment or for staying?


Either or, you will have to be aware that nobody can guarantee that the price of EC will jump after 10 years as the introduction of these housing scheme is relatively new to the market.

Some will argue that the quality of the EC will be different from private condominiums despite the fact that it is built by the same developer, especially in consideration that these EC are subsidized by the Government. Hence, some Singaporeans might not be willing to pay the same price as a private condominiums for these EC.


At the end of the day, it is definitely ideal to have a fully furnished house where you can move in immediately. The amenities are also a plus point especially if you are someone who exercise regularly (Swimming pools and gym). However, ultimately it still voices down to whether if you and your spouse can afford the house.