Choosing between Resale HDB and Executive Condominium
Our reply: 3 factors you may want to consider
#AskDTF
Our reply: 3 factors you may want to consider
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#AskDTF is a segment where we share some interesting questions asked on our platforms. If you’re wondering the answers to these queries as well, we hope you find this series insightful! Do note as they’re extracted from our direct messages, they won’t be as in-depth as our usual articles.
Background Information
We received a question on Instagram to weigh between HDB resale and BTO EC (refer to the image above for the actual question asked). Although our response is tied to her situation, we hope you find it useful!
Our response
In regards to choosing between a resale HDB and an executive condominium BTO, your decision may depend on the following 3 factors:
1. Waiting time
Resale: You can get a home today & move in as soon as 2 months & renting out can be done 5 years from the date of purchase
EC: 5 years or so till TOP (moving in), additional 5 years thereafter till you can rent out (renting out only to Singaporeans/ PR) and additional 5 years after then (total 10 years from TOP) till it’s privatised and is marketed as a condominium
2. Cash flow
The actual cost of the home. An average 4-room resale home is $450k while the most recent EC launch (Parccentral Residence) was priced at $1.4 million for a 4-room.
The Downpayment cost. Naturally, due to the cheaper price, the downpayment for a resale would most likely be cheaper. Additionally, as you have the option of an HDB housing loan for your resale home, the 10% downpayment can be fully taken from your CPF and you may not need to fork out any cash at all.
As for EC, you can only take a loan through a bank housing loan which equates to 25% of the home price (of which 5% must be cash, the other 20% can be from your CPF).
3. Capital appreciation
When selling and renting out your home, an EC will definitely have a higher potential for capital appreciation. But it would take 10–15 years for it to happen.
Ultimately it depends on what your priority is, whether it is more important to get a house ASAP or you want the maximum potential capital appreciation.
If you want to get maximum capital appreciation and are willing to wait, EC would be a better choice. Despite the downpayment paid in the beginning being high, it may be justified from the capital appreciation you get years later. Again, this depends heavily on the project. So you would need to do more research on this!
Also, did you know:
If you choose to go for an HDB loan for a resale flat, you are only allowed to leave up to $20,000 in your OA (no more than that). So you may end up paying the same amount of downpayment whether you are taking an HDB loan or a Bank loan for the differing prices of homes! Read more about this here.
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