Piermont Grand, a tranquil oasis nestled in the heart of Punggol, made a majestic entrance into the property market last year. It received a great deal of attention from both homeowners and investors alike. With the successful launches of other executive condominiums such as the Parc Canberra, you may be enticed to upgrade your HDB flat to an EC.
What is an EC?
An HDB executive condominium (EC) is an amalgam of public and private housing.
It’s a housing option that’s very well received amongst the ‘sandwiched’ class. Nonetheless, this does not mean that an HDB EC falls short of a private condominium.
If anything, an HDB EC offers the full suite of condominium facilities, at a more affordable price.
Why upgrade to an HDB EC?
Many homeowners who have worked their way up the corporate ladder wish to reward themselves with a lifestyle upgrade.
What better way to enhance one’s way of living than by purchasing a more ‘luxurious’ yet affordable home that’s guarded by security and comes with its own pool and gym facilities?
When to upgrade to an HDB EC?
No matter how attractive upgrading from an HDB flat to an EC sounds, you cannot upgrade as and when you wish. According to HDB’s regulations, you can only do so after fulfilling the Minimum Occupation Period (MOP), which is 5 years.
The Minimum Occupation Period is a period which homeowners are obliged to physically live in the flat before putting it up for sale.
The day when you collect your keys marks the start of the MOP. The MOP does not include any period where the homeowners do not live in the flat, such as when the entire flat is rented out.
The table below outlines the MOP for each flat type:
|Flat type||Minimum Occupation Period|
|Flat purchased directly from HDB||5 years|
|Design, Build, and Sell Scheme (DBSS) flat purchased from a developer||5 years|
|Flat bought under Selective En bloc Redevelopment Scheme (SERS) with portable SERS rehousing benefits||5 years|
|Flat bought under SERS||Either:|
– 7 years from the date of selection of the replacement flat
– Or 5 years from the date of occupationWhichever is earlier
|Resale flat bought from the open market with CPF Housing Grant||5 years|
|Resale flat bought from the open market without CPF Housing Grant||1-room flat: No MOP2-room flat or bigger: 5 years|
|Flats bought under Fresh Start Housing Scheme||20 years|
How to upgrade to an HDB EC?
Essentially, this process involves 10 simple steps.
Step 1: Visit the HDB EC showroom and submit an e-Application
This e-Application is necessary for you to join the ballot for an EC unit.
In the e-Application, you’ll have to state your personal particulars, household status, employment status, income, as well as declare any housing subsidies you’ve received in your previous property purchase.
After signing the e-Application, a queue number will be issued to you. This queue number will be used on the balloting day.
Step 2: Go through the HDB EC’s price list
A few days before the balloting day, the EC’s price list will be issued to all buyers who have indicated their interest to join the ballot.
Take some time to thoroughly analyse the various options (the layout of the unit, the floor area, the floor level, etc.) and think through which unit(s) you prefer.
Step 3: Secure the unit that you fancy
On the balloting day, your queue number will be called at random.
When your turn arrives, this will be when you find out whether that particular unit you have set eyes on is still available.
If it is, and you want to commit to the purchase, pay the 5% booking fee, sign the Option to Purchase (OTP), and that unit is reserved for you!
Step 4: Submit all necessary documents to HDB
The required documents will include the registration form, the buyers’ payslips, etc.
Step 5: Take out a bank loan
Unfortunately, you won’t have the option of an HDB loan if you’re getting an EC. Instead, you can secure a housing loan from a bank.
Compare the rates offered across the different banks to secure the best ones. Your bank loan can cover up to 75% of your purchase price. You’ll have to pay the downpayment of at least 25% using either cash, CPF savings or both.
Confused with all the loan packages available in the market? Unsure which is suitable for you? Chat with a professional mortgage broker and get a non-obligatory assessment and loan product recommendations here.
Step 6: HDB approval
HDB will appraise your application and determine whether you’re eligible to purchase the EC.
Once HDB has approved your application, the developer will be notified. The developer will then send your appointed lawyer the Sales and Purchase (S&P) Agreement.
Step 7: Exercise the OTP
You have to exercise the Option to Purchase (OTP) within 3 weeks of receiving the Sales and Purchase Agreement. This includes paying a 5% Option Fee and 15% Exercise Fee.
Step 8: Pay stamp duty
Beyond the purchase price, you’ll need to pay legal fees of about $2,000 and valuation fees of about $200 for the new EC. You’ll also need to pay the Buyer’s Stamp Duty which is 3% of the purchase price, or 4% of the purchase price is above $1 million.
Step 9: Choose between Normal Payment Scheme and Deferred Payment Scheme
If you have not sold your existing HDB flat, you could opt for the Deferred Payment Scheme. Under this scheme, you’re only required to repay your monthly mortgage loan instalments for the EC after you have collected your keys.
With the Normal Payment Scheme, you’ll have to pay both your current HDB loan for your existing HDB flat, as well as the bank loan that you’ve taken out for the purchase of the EC.
This may put a strain on your finances.
Step 10: Collect your keys
Congratulations on your new home! Before you move in, inspect your home thoroughly and look out for any defects.
Note that you’re entitled to having the defects rectified for free by the developer if you notify them within the defects liability period.
We hope that this guide has served you well. If you wish to know more about the nitty-gritty details involved in upgrading from an HDB flat to an EC, feel free to contact us for a chat.
Have some mortgage questions? Here at FinanceGuru, we seek to help you better prepare for your finances and the upcoming milestones in your life. Get a non-obligatory assessment and loan product recommendations here.