Complete first-timers' guide to buying a new executive condominium (EC) in Singapore

We've written previously on the pros and cons of buying an Executive Condominium (EC), and concluded that if you're a Singaporean who is eligible to purchase an EC, they should definitely be on the top of your priority list before looking at other private properties.

If you do decide that you wish to buy an EC - and enjoy government grants and typically lower selling prices - here is your step-by-step guide.

#1 ARE YOU ELIGIBLE TO PURCHASE AN EXECUTIVE CONDOMINIUM?

Like buying a HDB flat, there are specific eligibility conditions for buying an Executive Condominium.

- You have to purchase an EC under one of these HDB schemes: Public Scheme, Fiance/Fiancee Scheme, Orphans Scheme or Joint Singles Scheme.

- The main applicant must be a Singapore Citizen of age 21 and above, while the co-applicant must be either aSingapore Citizen or Singapore Permanent Resident. If applying under the Joint Singles Scheme, both applicants must be Singapore Citizens above the age of 35. Applicants under the Fiance/Fiancee Scheme need to be above the age of 18 and have written consent from their parents/legal guardians.

- Must not exceed the household income ceiling of $14,000.

- You must not currently own any residential properties (locally or overseas) or have disposed them within the past 30 months.

- Both applicants must also have only purchased up to one HDB, DBSS (Design, Build and Sell Scheme) or EC in the past.

If you don't qualify for an Executive Condominium, then you're left with regular private condominiums or landed private properties.

#2 WORK OUT FINANCING YOUR EXECUTIVE CONDOMINIUM PURCHASE

Before you start shopping for an Executive Condominium, you will need to know what's the maximum price you can afford. There's no point in trying to uncover the EC with the best "value" or potential price appreciation, if you cannot realistically finance that purchase.

Downpayment: Unlike a HDB flat, where you only need to make a downpayment (in Cash/CPF) of as little as 10 per cent, you will need to make a downpayment of 25 per cent when buying an EC.

Home Loan: You will not be eligible to apply for a HDB loan to buy your EC, so you'll need to approach a bank for a loan. Here's an idea of bank loan interest rates, courtesy of our friends over at RedBrick.

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Check out our home loan guide for more information, or if you'd like some help in securing the best home loan package for your home, you can contact the professional home loan brokers at RedBrick for a free, non-obligatory consultation.

MAS Limits: The Monetary Authority of Singapore has limits put in place to prevent homeowners from being over-leveraged and unable to service their home loans.

The Mortgage Servicing Ratio (MSR) states that your monthly mortgage repayment cannot exceed 30 per cent of your combined monthly income, while the Total Debt Servicing Ratio (TDSR) states that your combined monthly loan repayments (including personal loans, car loans, education) cannot exceed 60 per cent of your combined monthly income.

Additional Costs: Beyond the purchase price, you need to pay legal fees of about $2,000 and valuation fees of about $200 for a new EC. There is also the Buyer Stamp Duty, which is 3 per cent of the purchase price or 4 per cent if purchase price is above $1 million.

#3 SHORTLIST UPCOMING HDB EXECUTIVE CONDOMINIUM (EC) SALES LAUNCHES

Now that you know you're eligible to purchase an EC and know the price range that you can afford, it's time to keep a lookout for new EC projects and resale ECs to shortlist.

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At the time of writing, new EC sales launches include the 628-unit Rivercove Residences by Hoi Hup Sunway at Anchorvale Lane and the 800-unit Piermont Grand by City Developments Limited at Sumang Walk.

While you can usually pop by showrooms to find out more about new EC projects, some developments require you to make an appointment online before coming.

If you think there's a chance you want to book a unit, check with the developer what documents they require, such as your NRIC, proof of relationship to co-applicant, and proof of income.

#4 SECURE OPTION-TO-PURCHASE, FOLLOWED BY YOUR DOWNPAYMENT

Booking your new EC unit means getting an Option to Purchase (OTP), a legal document which states that for a stipulated time period, the developer can't sell your chosen unit to anyone but you.

For your OTP, you'll be required to pay 5 per cent of the purchase price in cash/cheque - no CPF or grants can be used at this stage.

After HDB has approved your application to purchase the EC, which takes about a month, you'll receive a Sales and Purchase (S&P) Agreement from the developer. You'll have about 21 days to exercise your right to purchase the unit by signing and mailing back the S&P Agreement.

You'll then need to pay the remaining downpayment of 20 per cent plus Buyer's Stamp Duty, using HDB Housing Grants, CPF monies, or cash.

#5 POST-PURCHASE REQUIREMENTS

The remaining 75 per cent of your EC's cost can be paid using your HDB Housing Grants, CPF monies, bank loan, or cash.

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Unlike a BTO, where you only need to take a loan to cover the balance when you collect the keys, there are two schemes you can choose for paying up the rest of your EC.

Under the Normal Payment Scheme, your home loan will be disbursed to the developer according to the payment schedule set by the developer as construction reaches certain milestones. This means that your home loan repayments will commence much earlier.

Homeowners who opt for the Deferred Payment Scheme will have their home loans disbursed only when their EC receives its Temporary Occupation Permit (TOP) and they collect their keys.

Once you collect your keys, you can commence renovations (if needed) and move in any time you wish. Congratulations on your new home. Enjoy!

This article was first published in Dollars and Sense.