How much do you need to earn to buy a new or resale Executive Condo (EC)?

Thinking of upgrading from an HDB flat, but find that buying a condo is too expensive? Your best bet is to get an Executive Condo.

A hybrid of public and private housing, Executive Condominiums (EC) come with condo facilities, but are cheaper than condos as they’re subsidised. Just like HDB flats, you can take CPF Housing Grants to buy a new EC.

And the best part about getting a new Executive Condo? You don’t have to pay the Additional Buyer’s Stamp Duty (ABSD) upfront when you’re upgrading. The caveat is that you have to sell your flat within six months. After 10 years, the EC becomes fully privatised like condos, allowing you to sell it to foreigners.

On the other hand, since they’re considered public housing, new ECs have a few restrictions similar to HDB flats. This includes the five-year Minimum Occupation Period (MOP), income ceiling of $16,000, and Mortgage Servicing Ratio (MSR).

MSR restricts the property loan amount you can take for an HDB flat or a new EC. So you can only borrow up to 30 per cent of your monthly income for your home loan.

At the same time, you can only take up a bank loan to pay for an EC, meaning you can only get 75per cent financing. So what’s the minimum income to afford an EC?

The estimated minimum income to buy a new Executive Condo in 2021

You can calculate this by working backwards. Based on the price of the EC, you can find the maximum loan amount you can get. After that, calculate the monthly instalments using 99.co’s mortgage calculator to derive the minimum income you need to buy an EC.

For illustration purposes, we’ll use the average price derived from three-bedroom transactions for new ECs in the first half of 2021. The new ECs are:

(We don’t include Parc Greenwich here as it’s just launched over the weekend. Prices started at $1.05 million for three-bedders.)

Estimates are based on the following assumptions:

• The full 75 per cent financing is taken to maximise the loan-to-value (LTV) ratio
• The loan comes with a 30-year tenure
• The loan comes with a medium-term interest rate of 3.5 per cent, as advised by MAS
• There are no other housing loans to be paid
• CPF grants are not taken into account

Average price of a three-bedroom new EC (from 99.co’s Researcher): $1.133 million

Loan amount: 75 per cent of the property price or value = $849,750

Downpayment: 25 per cent of the property price or value = $283,250

Estimated monthly instalment: $3,815

Min. gross monthly income to meet the 30 per cent MSR: $12,717

(Curious about how much you need to earn to buy other types of properties? We’ve crunched the numbers on the estimated monthly income to afford an HDB resale flat or a condo previously.)

ALSO READ: 4 reasons why resale condos may be more popular in 2021

How about resale ECs?

We consider resale Executive Condos as those that have passed the five-year MOP and entered the resale market, but they haven’t passed the 10-year mark yet. As mentioned earlier, these units can only be sold to Singaporeans and PRs, like resale flats.

But unlike new ECs, resale ECs don’t have as many restrictions, such as the MOP and having to dispose of your existing flat. Find out more about the differences between new and resale ECs here.

More importantly, you’re not subjected to the 30 per cent MSR requirement. Instead, you’ll have to meet the total debt servicing ratio (TDSR) , which limits the total amount of loans you can service in a month. Currently, the TDSR is capped at 60 per cent. So compared to the MSR, it gives you more affordability to buy a resale EC.

The estimated minimum income to buy a resale Executive Condo in 2021

We calculate it the same way as the new EC, but based on the transactions of three-bedroom resale ECs in the first half of 2021. So this would include ECs that have TOPed from 2012 to 2016, such as:

Estimates are based on similar assumptions:

• The full 75 per cent financing is taken to maximise the LTV ratio
• The loan comes with a 30-year tenure
• The loan comes with a medium-term interest rate of 3.5 per cent, as advised by MAS

But instead of the MSR, you’ll be subjected to the 60 per cent TDSR. So for illustration purposes, let’s assume that there are no other loans to service, including property loans, car loans, personal loans and student loans.

ALSO READ: 4 reasons why HDB upgraders prefer executive condos to private condos

Average price of a three-bedroom resale EC (from 99.co’s Researcher): $1.039 million

Loan amount: 75 per cent of the property price or value = $779,250

Downpayment: 25 per cent of the property price or value = $259,750

Estimated monthly instalment: $3,499

Min. gross monthly income to meet the 60 per cent TDSR: $5,832

Frequently asked questions

What is the difference between an EC and a condo?

An EC is a public/private hybrid type of property, while a condo is private property. So a new EC tends to be cheaper, but comes with more restrictions such as a five-year Minimum Occupation Period (MOP) and an income ceiling of $16,000. They’re also only sold to Singaporeans initially, with PRs being allowed to buy them after the MOP.

Is executive condo considered private property?

While Executive Condos are built by private developers and come with condo facilities, they’re considered public housing for the first 10 years. They’re considered private property after the 10-year mark.

Can two singles buy EC?

Yes, under the Joint Singles Scheme. The scheme allows up to 4 single co-applicants to buy a new EC.

This article was first published in 99.