Between buying a build-to-own (BTO) flat or executive condo (EC) in Singapore, a BTO flat may be a more prudent choice. Lumina Grand Price Many Singaporeans aspire toward an Executive Condo (ECs), and it’s quite the deal: few other countries have public housing programmes that subsidise an apartment!
But even if an EC is within reach, does that mean you should always go for them? It really depends on your particular predicament. An EC differs from the others from a Developed to Order (BTO) flat, in that it’s built by private developers. An EC is a full suite residence. It comes with the pool, gym, barbeque pits, and other facilities you would expect of a private development.
BTO apartments are the standard HDB deal: accommodations, and the usual void deck, resident’s committee, est recreational revolves, etc.
Unlike BTO apartments, ECs become fully privatised after 10 years. Like other styles of private property, they can be sold even to outsiders or establishments. This widens the pool of prospective buyers and raises the odds of selling for a profit. There are constraints on who can buy an HDB flat, and foreign buyers are definitely impossible.
Even then, some Singaporeans may be better off with BTOs rather than ECs. Here are the potential benefits of that:
Simply because you can qualify for an EC, doesn’t mean you need to splurge on one. A four-room BTO flat can be had for as little as S$400, 000 (depending on the location), whereas ECs will generally be in the S$600, 000 range.
An incredibly cost means higher monthly repayments, and greater financial trouble giving you. Given that a home loan lasts from 25 to 30 years, the more expensive EC is a burden that may last till retirement.
While the EC may look more relaxing, consider that the price difference may be enough to send your children through university or a larger retirement fund.
Because an HDB Concessionary Loan can’t be taken for an EC, you have to take a private bank loan. The good news is that, since 08, loans have been cheaper than HDB loans (around 1. 8 percent, compared to 2. 6 percent per annum).
But this low rate is because of the Global Financial crisis just last year. There is no guarantee that these low rates will continue and for how long. It is worth noting that the home loan rate of interest, before the financial crisis, may reach often four percent.
As you will be paying the loan for a good 25 to 30 years, it pays to look further down the road: while loans may be cheaper now, they may be more costly later.
It is also worth noting that the HDB is more forgiving in case you can’t pay your mortgage. HDB is committed to providing public housing, whereas a bank has to act as a business and uphold the interests of depositors and shareholders.
If you get into financial difficulties, HDB may be able to restructure or stretch out your mortgage. A bank cannot do so and will repossess your home, as it has a corporate responsibility to do something that way.
