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Tuesday, 21 May 2013

HDB or EC?


In year 2012, we saw the many launches of EC (Executive condominiums) and many HDBs. Coincidentally, it was the year where I needed to make a choice to buy either of the type of property. I had to make a tough decision back then and finally I decided to choose the type of property which best suits me.

Below are the highlights and lowlights which affected my decision.

HDB Singapore is one of the most popular form of housing in our tiny island. 80% of the residents stay in a HDB. Only Singaporean couples or Singaporean with PR spouse are entitled to apply HDB. The income ceiling cap is 10,000SGD for per household. Singaporeans are also entitled to apply with their parents but these are subjected to other guidelines. There are BTOs and resale HDB. Below are the factors which I had considered:

Pros for BTO
1. HDB is selling at a subsidized price.
2. You get a brand new place and at a brand new lease
3. Wide variety of launches in different areas to choose from every 2 months
4. You get to apply HDB loan which is capped at 2.6% interest for 20 or 30 years.
6. No need to come out with cash upfront,you can get 90% loan and use CPF for first downpayment.
7. You can either sell or rent it out 5 years after you have occupied the place.

Cons for BTO
1. Long wait for completion of construction
2. The chances of getting a good queue is slim
3. Need to wait total of 8 years inorder to sell or rent.

Pros for HDB Resale
1. Immediate occupation
2. Get to choose your choice of location and floor
3. Shorter timespan to rent or sell

Cons for HDB Resale
1. COV
2. Need cash upfront for renovation and agent fees
3. Flats are older and they are already selling at a premium price compared to BTO.

Executive Condominiums (EC) are the hybrid type of private property where it cater for the sandwich class of Singaporeans who earns a monthly income of 12,000$. (for now). Singaporeans can sell them to whoever after 10 years once it becomes privatized.

Pros for EC
1. Better lifestyle
2. Higher capital appreciation
3. Becomes privatized after 10 years

Cons for EC
1. Not in ideal location. (Mainly in Woodlands, Sembawang, Punggol and other far places)
2. Long wait for completion
3. Need to take private bank loans
4. Need to pay monthly maintenance fees
5. More stress to pay
6. Need to pay CASH upfront for downpayment
7. Some of them come with bad layout.

I had set my mind on buying one of the EC launch in Punggol initially, but after considering the factors of location, school, amenities,convenience to work and to parents/in-laws, plus the ideal to slog to pay the house;Everyone needed to have an income monthly inorder to sustain the mortgage. Finally, I decided to drop the idea for EC.
In the end, after 4 attempts, I manage to get my very own BTO in a central location. I am thankful to be able to get my first HDB. In the next 3 years while waiting for completion, I can plan my finances and also be at ease knowing that we will able to live more comfortably without having to worry about mortgage payments.