Knowing the EC income ceiling, figuring out how much you need to earn to afford an Executive Condo (EC), and finding the perfect EC for you are part of buying an EC in Singapore. With 53% of Lumina Grand units sold at launch, it can be said that the first executive condo launch of 2024 performed well; demand for an EC is still well and alive.
A hybrid between public housing and private condos, ECs are designed for the sandwich class of Singaporeans. They provide an affordable middle ground between HDB flats and fully private condos, offering all the frills of a typical condo with a subsidised EC price tag. Its affordability is why there is a high demand for ECs in Singapore.
Considering the income ceiling of regular HDB flats and ECs, the target market for ECs is households who earn between $14,000 and $16,000 per month; the EC income ceiling is $16,000. But must you earn that much to be able to purchase a newly launched EC? We work backwards to find out how much, at minimum, you need to earn to own an executive condo in Singapore.
Watch Our Video on Financing Executive Condos in Singapore
Who Can Buy EC? EC Income Ceiling, Eligibility, and Rules
| HDB’s five-year Minimum Occupation Period (MOP) rule | You must wait five years before you’re allowed to sell and/or rent out your EC. After five years, you can sell to other Singaporeans. After 10 years, you can sell to anyone, including foreigners |
| EC income ceiling | Your household cannot earn more than $16,000 a month to meet the EC income ceiling |
| Property ownership rule | You should not own or have disposed of any other property, whether in Singapore or overseas within the last 30 months, and you haven’t bought an EC, HDB and/or DBSS flat, or received a housing grant before applying to buy an EC |
Executive condos are considered to be HDB properties for the first 10 years; as such ECs are called private-public properties. ECs are developed and sold by private real estate developers. However, the Singapore government subsidises the EC prices and allows the use of certain CPF housing grants (more on that below).
This is why newly launched executive condos are considered HDB properties in the first 10 years and are bound by certain HDB rules, just like HDB flats. However, after the Minimum Occupation Period (MOP) of five years has been, ECs can be sold on the open market. However, only Singapore citizens or Permanent Residents can purchase it, barring they meet all eligibility criteria,
But when an EC gets privatised from the 11th year onwards, you can sell your executive condo to foreigners.
Financing Your EC Purchase: Things to Take Note of
Before we show you how to calculate the income you need to afford an EC, here are some important facts about ECs that will affect how you afford and pay for it. Again, a reminder is that the EC income ceiling for newly launched ECs is $16,000. Do read all terms to make sure you meet all criteria before buying an EC.
1. EC Buyers Not Eligible for HDB Loans (Only Bank Loans)
It’s important to note that even though ECs are considered HDB properties in the first decade, you can only finance them through a bank loan. That means the Loan-to-Value (LTV) limit, or the maximum amount you can borrow is capped at 75% of the EC’s price.
Since EC buyers cannot finance their house through HDB loans, they will need to fork out more cash for their downpayment. With a bank loan, EC buyers would need to pay for the remaining 25% as a downpayment (5% of which must be paid in cash, and the other 20% can be paid using your CPF OA savings and/or cash).
2. Debt Servicing Ratios: Both TDSR and MSR Apply for EC
Unlike private condos, where you only have to think about your Total Debt Servicing Ratio (TDSR), or the amount you use from your gross monthly income to pay for all your debts, there is an additional restriction for ECs. The Mortgage Servicing Ratio (MSR), which caps the proportion of your monthly income used for mortgage repayments to just 30%, applies.
With the announcement of the September 2022 property cooling measures, the interest rate floor has been increased by 0.5%. Likely, the amount you can borrow from the bank will be affected, meaning you may have to adjust your budget accordingly to how much loan you can get.
With the EC income ceiling being $16,000 for newly launched ECs, you may want to take this into consideration. You may have to come up with more cash upfront if you purchase a more expensive home and are unable to borrow as much.
3. CPF Housing Grants for Executive Condos in Singapore
Another thing that sets an EC apart from a private condo is that homebuyers of a new EC may be eligible for CPF housing grants such as the Family Grant and the Half-Housing Grant.
However, the caveat is that your monthly gross income shouldn’t exceed $12,000 to apply. While this is under the $16,000 EC income ceiling, you want to ensure you’re not over-extending yourself financially. Your citizenship and your income range would also affect the amount you can receive.
Now, onto the fun part: figuring out how much ECs cost and calculating how much salary you need to earn based on the average EC price in Singapore.
What Is the EC Price in Singapore?
How much does an executive condo cost? EC prices in Singapore are definitely lower than that of most condos. But EC prices in Singapore are by no means ‘cheap’.
ECs are more affordable than private condos for two main reasons: firstly, they are usually built at less accessible locations, typically further away from existing MRT stations and malls. Secondly, the land prices are subsidized by the Government. Generally, ECs are located in the Outside Central Region (OCR) and are 25% to 30% cheaper than their private counterparts at launch.
For this guide, we’ll focus on the prices of 3-bedroom ECs (one of the most popular sizes for an average Singaporean household). Depending on the floor area, project, and location, 3-bedder resale EC prices in Singapore can vary between $950,000 to $2,600,000. New launch EC prices will be more affordable. For this example, we will assume the EC is $1,500,000.
How Much Do You Need to Earn to Buy an EC?
Now that we have an estimate on EC prices in Singapore, let’s work backwards to calculate how much we need to earn.
Disclaimer: In this example, we can only work backwards based on the rules and regulations. However, when we assess affordability, you should consider not just your debt servicing limits, but also your cash flow situation. After all, it wouldn’t make sense even if you pass the legal hurdles but fail to consider your daily living expenses.
1. Calculate EC Downpayment and Loan Quantum
Break down the EC’s price into the downpayment and the home loan. If you are eligible and want to borrow as much as possible from the bank, the maximum LTV is 75% (i.e. 25% downpayment). Assuming a $1,500,000 EC, you can expect to pay $375,000 for the downpayment and take on a $1,125,000 loan
2. Work Out Your EC’s Monthly Mortgage Instalments
Now that you know how much you intend to borrow, you’ll need to calculate your estimated mortgage repayments based on your preferred interest rate and loan tenure. You may use our mortgage calculator to do this.
For this example, let’s plan for an interest rate of 2.80% p.a. (best promotional interest rate for the first year as at 18 July 2024, according to our mortgage comparison tool) and a 25-year tenure. Assuming interest rates remain unchanged and you do not refinance your home loan, you can expect to pay a monthly mortgage repayment of $5,219.
3. Factor in the Mortgage Servicing Ratio for Financing Your EC
As mentioned, the MSR cap of 30% will apply to all EC purchases. Also, note that you can make repayments using the Normal Payment Scheme or a Deferred Payment Scheme, but for the latter, you will need to factor in an additional 2% to 3% to the purchase price before calculation.
For this example, let’s assume you intend to use 30% MSR and pay by the Normal Payment Scheme. That means the minimum total household income needed is $17,397.
This is assuming you don’t have any other outstanding debts to pay (e.g. student loan, car loan, etc.). And even though it is possible to devote 55% of your income to repayments, it is not necessarily advisable.
All in all, financing an EC may require higher earning power than affording a private condo because of the additional MSR rule. However, comparing apples to apples, if you only use 30% of your income to pay for the monthly instalments, an EC is much more affordable.
It is possible to afford an EC while earning below $10,000 per month; you’ll just need to get a smaller unit in an area that is more budget-friendly. If you want to improve affordability further, you can even consider the smaller units, such as the two-bedroom ones.
Second-timer? Don’t Forget About the HDB Resale Levy
| First Subsidised Housing Type | Resale Levy Amount (Households) | Resale Levy Amount (Singles) |
| 2-room flat | $15,000 | $7,500 |
| 3-room flat | $30,000 | $15,000 |
| 4-room flat | $40,000 | $20,000 |
| 5-room flat | $45,000 | $22,500 |
| 3Gen flat | $45,000 | Not applicable |
| Executive flat | $50,000 | $25,000 |
| Executive Condominium | $55,000 | Not applicable |
If this is your first property purchase, the above pretty much sums it up.
However, many EC buyers are second-timers who have bought an HDB flat once before and are now upgrading to an affordably ‘private’ property. If you fall into this group, there is one more consideration when calculating your costs: the HDB resale levy.
The resale levy is payable when you buy a subsidised home (e.g. BTO, balance flat), then sell it and buy another subsidised flat or EC. How much you need to pay depends on your previous housing type.
Say you are selling your 4-room flat to upgrade to an EC. Based on the table above, you will need to pay $40,000 (household) or $20,000 (if you bought it and are selling it as an individual).
Do You Have Questions About Buying an EC?
As with purchasing any property, you’ll still need to pay Buyer’s Stamp Duty (BSD) and other relevant taxes. This will require you to set aside and have on hand more cash. If this EC purchase is for own-stay and you only have this one property, an $1,500,000 EC will set you back by $44,600 in BSD.
If you’re interested in purchasing an EC, whether a 3-bedder or otherwise, but you still have a lot of questions with regards to finding the most suitable mortgage, applying for a loan and/or housing grants, planning your monthly repayments and the like, please don’t hesitate to get in touch with PropertyGuru Finance’s mortgage experts.
We can help you analyse your situation and align your property purchase with your financial goals, all at no cost. All the best!
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