For EC financing, Executive Condominium (EC) buyers are requested to obtain home loans from local banks for purchase EC project as HDB do not provide mortgage loans. Thus before booking an EC unit, you should approach the banks to assess the loan you can be granted. Proper financial preparation will give you assurance to make commitment on the spot where there is any suitable unit.
EC Home Loan Roadmap
The following chart vividly show you the typical home loan procedure including check affordability, Option To Purchase with booking fee, apply and accept home loan, legal work with payment and loan disbursement. You may request your banking partners from DBS, OCBC, UOB, etc. to provide you with the In-Principle Approval for home loan (IPA) for your purchase of EC unit. An IPA is a conditional approval for your home loan. It gives you a clear understanding of your financial affordability and the potential loan quantum which you can use to shortlist suitable residential properties.
With IPA in hands, you can narrow down your property search, commit on the spot to prevent other buyers from competition and avoid forfeiting your booking fee, which in turn you can make the most use of you time from your busy schedule.
EC Home Loan Assessment
How does banker evaluate your home loan when purchase an EC unit? Simply put, they apply Mortgage Servicing Ratio(MSR), Total Debt Servicing Ratio(TDSR) framework, and Loan-To-Value Limits to your situation.
For EC home loan, firstly, your MSR is capped at 30%, that is to say, you are only allowed to use at most 30% of your household income to apply for home loan.
Secondly, your total debt including both property and non-property loans, credit commitment must not exceed 60% of your household income when apply for EC home loan.
Thirdly, your EC home loan is still treated as the 1st property loan even with existing HDB home loan (see in yellow box below), in which Loan-to-Value Limits up to 75% of purchase price will still apply.
From the point of view of EC financing, potential buyers will realize that purchase of EC home is a very prudent investment with well-controlled risk (subject to MSR + TDSR regulations) as low as what you do with HDB resale/BTO flat. For your convenient reference, you can use the Max loan Calculator, UOB TDSR Calculator, and icompareloan Bank Loan Calculator.
Besides considering EC home loan, your CPF savings is also a powerful financial source to be used for the part of downpayment and monthly repayment. For the first-timer applicants, you may also enjoy the CPF Housing Grant up to $30,000 which is aligned with buyer’s income range. For the second-timer applicants, Resale Levy is payable when you book EC home from the developer who bid the EC Land since the land sale of Westwood Residences.