Are you considering buying a property in Singapore? Then you must have come across the term ‘Resale EC.’ For those who don’t know, Resale EC refers to executive condominiums that are older than five years and are available for resale in the secondary market. But the question is, is it worth buying a resale EC?
This blog post will weigh the pros and cons of buying a resale EC to help you make an informed decision.
is it worth buying resale EC?
Buying a resale Executive Condominium (EC) in Singapore can be a good option for those who are looking for a more affordable housing option with condo-like features and facilities. Resale ECs are typically about 25% cheaper than private condos, and they come with amenities such as swimming pools, gyms, and BBQ pits. Additionally, resale ECs can be sold in the open market after the 5-year minimum occupation period (MOP) has been fulfilled, which means that buyers can purchase a unit that is already completed and ready for occupancy.
However, it is important to note that resale ECs may have higher maintenance fees than Housing and Development Board (HDB) flats, and the resale levy may also apply when selling the unit. It is recommended to consider factors such as location, amenities, and future development plans when deciding whether to purchase a resale EC. It is also recommended to consult with a real estate agent or financial advisor to determine whether a resale EC is a good investment for your specific situation.
Lentor Gardens Residences
Resale Executive Condominiums (ECs) can be a worthwhile investment option for those looking for a comfortable living space with modern amenities. However, there are many factors that need to be considered before deciding to buy a resale EC. This article explores the benefits of buying a new EC for first-time buyers and the advantages of choosing fully privatised ECs. While fully privatised ECs offer full flexibility in terms of resale and rental, they typically have higher appreciation potential.
For those interested in buying a resale EC, a good understanding of its costs compared to other private housing types, eligibility criteria, and the Total Debt Servicing Ratio (TDSR) is essential. CPF Housing Grants can be available for resale EC buyers, but they ought to check their eligibility. This article provides tips for buying a resale EC for own stay and investment, and assesses the worth of resale ECs as an investment option.
A Worthwhile Investment Option?
When it comes to purchasing a home, it’s always a big decision that requires careful consideration. For those who are in the market for an affordable, well-located property, resale ECs could be a worthwhile investment option. Not only do they offer a lower price point compared to private condominiums, but fully privatised ECs also provide full flexibility in terms of resale and rental. While new ECs are a popular choice, resale ECs offer an opportunity to maximise profits by buying at lower prices and then selling them a few years down the line.
Plus, those eligible for CPF housing grants can benefit from additional financial assistance. Nevertheless, it’s essential to assess eligibility criteria and calculate Total Debt Servicing Ratio (TDSR) before making a decision. Considering all factors, resale ECs remain a prudent choice for both own stay and investment purposes.
For First-Time Buyers
For first-time buyers, buying a new Executive Condominium (EC) offers several benefits. Firstly, ECs come with lower initial prices than private condominiums, making them more affordable. Additionally, new ECs come with the latest design and technology features, ensuring a modern and comfortable living environment for the buyers. These units also come with warranties from the developers, ensuring that any defects or damages will be promptly addressed.
Furthermore, first-time buyers of new ECs are eligible for CPF housing grants, making the purchase even more affordable. Overall, buying a new EC is a worthy investment option for first-time buyers who want to own a comfortable and affordable private property.
Choosing Fully Privatised ECs
Fully privatised Executive Condominiums (ECs) offer a range of advantages for potential buyers. For one, they provide greater flexibility when it comes to resale and rental, as there are no longer any restrictions on who can purchase or live in the property. This offers buyers greater control over their investment and how they choose to use it. Additionally, fully privatised ECs tend to have higher appreciation potential than those that are still subject to restrictions. This means that buyers are more likely to see a greater return on their investment over time. While resale ECs may offer a greater level of privatisation than brand new units, fully privatised ECs represent the ultimate in flexibility, making them a worthwhile investment option for those looking to secure their financial future.
Fully privatized ECs offer full flexibility in terms of resale and rental
Fully privatized ECs offer a flexible option for buyers who are looking for both short-term and long-term investment opportunities. These condos offer buyers the freedom to rent or sell their units anytime without any restrictions, unlike new ECs that have a minimum occupation period of five years. This flexibility makes fully privatised ECs an attractive investment option for those who do not want to be tied down to any fixed period or location.
Additionally, fully privatized ECs tend to appreciate in value faster compared to new ECs, which could further add to their resale value. Given the benefits of flexibility and the potential for capital gains, fully privatised ECs are definitely worth considering for those looking to invest in Singapore’s property market.
Fully privatised ECs typically have higher appreciation potential
Fully privatised ECs are a great investment option with a higher appreciation potential. As discussed earlier, they offer flexibility in terms of resale and rental and are designed, constructed, and sold by private developers just like condominiums. This means that they have full access to condominium facilities and amenities. Unlike resale ECs, fully privatised ECs provide more room for capital appreciation once they convert into private condominiums.
Furthermore, condos typically appreciate faster than ECs, making fully privatised ECs an even wiser investment for the future. While resale ECs still remain popular among locals and Permanent Residents, it is essential to consider the higher potential for profit margin that fully privatised ECs offer. Overall, fully privatised ECs are a worthy choice for investors looking for a property with high appreciation potential.
Resale EC a Good Choice?
After examining the benefits of purchasing a new EC for first-time buyers and opting for fully privatised ones, the next question is when is buying a resale EC a good choice? Resale ECs are ideal for those who want to move into their own property but are not eligible for a new EC or prefer a lower-priced option. The fully privatised feature of resale ECs after 10 years also means that buyers can sell or rent out their units freely. Additionally, if you plan on buying another private condominium for investment purposes, choosing a resale EC can be a wise financial decision due to its potential for higher appreciation and additional rental income. However, it is important to note that eligibility criteria varies and buyers should ensure that they meet the requirements before making the investment.
Resale ECs vs. Other Private Housing Types
When it comes to comparing resale ECs to other private housing types, costs play a significant role. On average, ECs tend to have a higher price tag than resale flats, but they are still cheaper than other private housing types, such as condominiums. This is due to the fact that resale ECs are considered as public housing during the initial period of their existence, and buyers are not entitled to any housing grants. However, once they convert into private condominiums, the market value has a high appreciation potential.
Based on recorded URA transactions from 2004 to 2019, private condos had a notable price appreciation over ECs, although the gap is said to be narrowing. Despite the cost comparison, choosing a resale EC over a private condominium can still be a worthwhile investment option, particularly for first-time buyers looking to gain a foothold in the property market.
To purchase a Resale Executive Condominium (EC), eligibility criteria must be met. The buyer must be a Singapore Citizen (SC) or a Singapore Permanent Resident (SPR). There is no income ceiling for purchasing a resale EC, unlike a new EC. The buyer must also have completed the minimum occupation period (MOP), which is five years.
This means that buyers who have lived in their ECs for five years and above can now sell their units on the open market. It is also worth noting that in the first 10 years, an EC is considered an HDB property and can only be financed with a bank loan. Buyers of a resale EC will need to make a minimum downpayment of 25% of the property’s value. Overall, purchasing a resale EC can be a good choice for those who meet the eligibility criteria and are looking for more flexibility in terms of resale and rental options.
Total Debt Servicing Ratio (TDSR)
When considering the purchase of a resale executive condo, it is important to keep in mind the Total Debt Servicing Ratio (TDSR). EC buyers must pass both the Mortgage Servicing Ratio (MSR) and TDSR, with the latter limiting the total amount of loans that can be serviced in a month. This means that buyers must carefully calculate their TDSR and ensure that they are eligible for the loan amount they require.
However, with proper planning and budgeting, a resale EC purchase can still be a worthwhile investment option, especially for those who value the flexibility of fully privatised ECs and their higher appreciation potential. It is important to do thorough research and take advantage of any CPF housing grants for which they may be eligible.
|TDSR||Monthly debt repayments cannot exceed 55% of income|
|Loan-to-Value (LTV) ratio||Proportion of the property value you can borrow|
|Loan tenure||Capped at 30 years for HDB properties and 35 years for non-HDB properties|
|Stress-test interest rate||Currently 4% for residential properties|
|Variable income and financial assets||‘Haircut’ applies to variable income and only 70% of assessed income is factored in for TDSR|
The Total Debt Servicing Ratio (TDSR) is a framework in Singapore that limits the amount you can borrow for a home loan, by ensuring that your monthly debt repayments do not exceed 55% of your income. This means that if you have existing debt obligations, such as student loans, car loans, credit card bills, personal loans, and other miscellaneous financial obligations, you may be able to borrow less from the bank for your home loan. You may also need to extend the repayment period of your home loan to comply with the TDSR limits.
Apart from the TDSR, the Loan-to-Value (LTV) ratio, loan tenure, and a stress-test interest rate also affect your home loan. The LTV ratio determines the proportion of the property value you can borrow, while loan tenure is capped at 30 years for HDB properties and 35 years for non-HDB properties. A stress-test interest rate of 4% for residential properties is currently applied, which means that home loan applicants must be able to maintain a TDSR of 55% or below, even if the interest rate increases to 4%.
For individuals with variable income, such as freelancers or self-employed persons, a ‘haircut’ is applied to certain financial assets like rental income. This means that only 70% of their total assessed income is factored in for the TDSR, as they are considered more risky borrowers.
Provide tips for calculating TDSR and making a successful resale EC purchase
To make a successful resale EC purchase, buyers must understand and meet the Total Debt Servicing Ratio (TDSR) requirements. It is important to calculate your TDSR beforehand to avoid disappointment during the property purchase process.
To calculate your TDSR, add up your monthly debt obligations, such as credit card bills and car loans, and divide them by your monthly income. If your TDSR is over 60%, you may find it difficult to secure a loan. It is advisable to seek the assistance of a mortgage broker who can help you navigate the complex regulations and secure the best loan package. With careful planning and attention to the TDSR requirements, you can make a successful resale EC purchase and enjoy the benefits of a fully privatised EC.
Offer examples of successful resale EC purchases and their outcomes.
Recent data shows that resale ECs can be a viable investment option. Successful resale EC purchases have shown that by carefully considering the Total Debt Servicing Ratio (TDSR) and eligibility criteria, buyers can reap long-term benefits.
For instance, in 2020, a resale EC in Woodlands was sold for a record-breaking price of SGD 1.64 million, generating a profit of SGD 1 million. This impressive price appreciation is not uncommon, as resale ECs typically have higher appreciation potential than other private housing types. Additionally, buyers who invest in fully privatised ECs with flexible resale and rental options enjoy even greater benefits. Despite higher initial costs, resale ECs can offer significant value for buyers who prioritize long-term gains over short-term savings. By carefully assessing the worth and potential of resale ECs, buyers can make informed decisions that serve their financial goals.
CPF Housing Grants
For buyers considering a resale EC, one important factor to consider is whether they will be eligible for CPF Housing Grants. The good news is that eligible buyers can receive up to $30,000 in grants to help with their purchase. However, there are certain criteria that must be met, such as income limits and citizenship status. It is important to check the HDB website for the latest information on eligibility and grant amounts. By taking advantage of CPF Housing Grants, buyers can potentially reduce the overall cost of their resale EC purchase and make it a more affordable investment option.
Tips for Buying a Resale EC
When it comes to buying a resale Executive Condominium (EC) for own stay or as an investment, there are a few tips to keep in mind. Firstly, consider the location and its proximity to amenities such as schools, public transportation and shopping centres. The age of the property is also important, as older ECs may require more maintenance and repairs. It’s crucial to engage a reliable agent who has experience in dealing with resale ECs, as they can help to negotiate the best price and navigate the legal processes involved in the purchase. Checking the title deed and financial statements of the EC is also necessary to ensure that there are no hidden liabilities or outstanding issues. Finally, having a clear understanding of your financial situation and affordability is key to ensuring a successful resale EC purchase.
Assessing the Worth of Resale ECs
In conclusion, it can be said that resale ECs can be a worthwhile investment option for buyers who are looking for affordability and flexibility. While buying a new EC may have its benefits, fully privatised ECs can offer full flexibility in terms of resale and rental with higher appreciation potential. On the other hand, resale ECs are generally more affordable and can be a good choice for those who are price sensitive. Eligibility criteria and TDSR are important factors to consider when making a resale EC purchase. Additionally, CPF housing grants can offer opportunities for eligible buyers to save on costs. Ultimately, the market condition and individual circumstances should be assessed before making a decision. With proper planning and research, resale ECs can be a wise investment choice for both own stay and investment purposes.