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How You Can Upgrade To An EC Before Selling Your HDB

Updated: Feb 15

In an ideal world, we can all sell our existing flat, take the sales proceeds, and move into a new Executive Condominium (EC).

But it's rarely as simple as that: besides the issue of financing and down payments, there's the simple fact that we still need a roof over our heads, while the EC is being built.

Here are some possible solutions if you are thinking of upgrading to an EC:

First, we need to take a look at some important financing issues

If you previously used a bank loan to buy your HDB flat, you can skip this section; you probably know most of this.

If you used an HDB Concessionary Loan to buy your flat however, read this first.

Back when you used an HDB loan, you were able to borrow up to 90 per cent of the flat's price or valuation (whichever is lower). The remaining 10 per cent could come from a combination of cash or CPF. It was easy and, if you're like many Singaporeans, you probably didn't pay any cash at all.

But this won't be the same for an EC, because there are no HDB loans for ECs. You will have to take up a bank loan.

Now, for a bank loan, the maximum financing is 75 per cent of the property price or valuation (whichever is lower). Another 20 per cent of the property can be paid through a combination of cash or CPF, but an absolute minimum of 5 per cent of the property price has to be paid in cash.

So if you are buying an EC unit with a price of $900,000, you must be prepared to pay at least $45,000 in cash. Under MAS Notice 632, Singapore banks cannot lend you money to cover this amount, or any part of your down payment.

On a positive note, with an EC, you won't have to pay the Additional Buyers Stamp Duty (ABSD)

Those who are upgrading from HDB to private condos have to pay the ABSD within two weeks of signing the purchase agreement.

They can then apply for a Matrimonial Home ABSD remission upon selling their 1st property and get a refund if certain conditions are met (Read more).

For example, 1 of the condition is that a couple will have to sell their HDB within 6 months of Option Acceptance of their 2nd property (For resale properties) or 6 months of TOP (For building in progress properties) in order to qualify for the ABSD remission.

If you're moving from an HDB to an EC though, this won't apply to you.

Moving on, there are two ways to pay for your EC

The 1st method is to use a Progressive Payment Scheme, which is also referred to as the Normal Payment Scheme (NPS).

Under the NPS, you will have to service the loan for your EC while continuing to service any loan repayments for your flat. As such, it can be financially straining if your finances are not properly planned for.

Progressive Payment Scheme's payment waterfall - More discounts but with earlier outflow of funds

The upside is that the purchase price is usually around 3% lower for those who choose this payment method.

One other factor of the NPS is that the monthly repayments gradually increases over time, and it can be pretty affordable during the earlier stages of building.

Here's the 10 stages of a Normal Payment Scheme in the typical case of a buyer who uses 5% cash, 20% CPF and takes a 75% maximum loan, over the course of a Normal Payment Scheme.

#Take note that all CPF payments can also be paid for using cash.

Stage 1: OTP

- Pay 5% in cash

Stage 2: Sale & Purchase Agreement and stamp duties

- Pay 15% through CPF, at completion of the purchase usually within 9 weeks of your OTP issued.

- Buyer Stamp Duty has to be paid within 2 weeks of the exercise of the Sales & Purchase agreement (you have to pay in cash first, but you can get a refund from your CPF later).

Stage 3: Foundation work completion (approx. 6 months in)

- Pay 5% in CPF and another 5% disbursed from your home loan (Mortgage payments begin)

Stage 4: Concrete reinforced framework completion (approx. 12 months in)

- 10% Payment through your home loan (monthly repayments will increase)

Stage 5: Brick wall Completion (approx. 18 months in)

- 5% Payment through your home loan (monthly repayments will increase)

Stage 6: Ceilings & Roofing completion (approx. 1 year and 9 months in)

- 5% Payment through your home loan (monthly repayments will increase)

Stage 7: Windows, doors, electrical wiring and plumbing completion (approx. 2 years in)

- 5% Payment through your home loan (monthly repayments will increase)

Stage 8: Car park, drainage, and roads complete (approx. two years and three months in)

- 5% Payment through your home loan (monthly repayments will increase)

Stage 9: Temporary Occupancy Permit (TOP) - your developer will give you an indicative date for this. It is usually 3 - 4 years later for a brand new launch.

- 25% Payment through your home loan (monthly repayments will increase)

Stage 10: Completion of Sales & Purchase, issuance of Certificate of Statutory Completion (CSC) and 12 months after TOP

- Remaining 15% Payment through your home loan (monthly repayments will increase)

Deferred Payment Scheme - A much more affordable payment option

For HDB owners who cannot afford to service a second home loan under the NPS while they're paying for their existing flat, another option exists. That's the Deferred Payment Scheme (DPS).

The DPS is much simpler:

You pay the 5% (in cash) to secure the OTP, and the 15% to complete the sale and purchase agreement (in cash or CPF), similar to the NPS above.

(You also need to pay the usual stamp duties within 2 weeks of completing the purchase agreement)

After that, you don't have to worry about financing the new EC until after it receives its TOP.

Yes: if your TOP happens to be 3 years later, you won't have to pay anything else over those 3 years.

This gives you ample time to save up cash and CPF, and then sell your flat closer to the key collection date.

Upon TOP, you will then pay another 65%, and the rest is paid at around the time of the CSC.

The downside to the DPS is that you'll need to pay more for the property - usually a 3% difference in price. But you do save on a few years of interest repayments and buy alot more time without the added financial stress, as you're not servicing any bank loan until you collect the keys.

Need customised advice for your upgrading timeline and financing plans?

Is a private property or EC a better choice for you?

Drop me a note for greater clarity over a discussion in person.

Stuart Chng, Senior Associate Executive Director of OrangeTee & Tie, is a renowned leader, real estate broker and personality in the real estate industry.

He is the co-founder of NAVIS Living Group, a licensed real estate agent, industry trainer and speaker, columnist for several property newsletters and blogs and is often quoted in media interviews on 938FM, Channel 5, Property Report, PropertyGuru,, EdgeProp and other publications.

Throughout his career, he has helped many clients grow their wealth through sieving through great property investments (Usually undervalued deals) and managing their portfolios.

Stuart has also coached many top million dollar producing agents from different real estate agencies in Singapore.

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