There are 2 kinds of New Executive Condominium EC Payment Schemes & Payment Schedule. They are NPS (Normal Payment Scheme) and DPS (Deferred Payment Scheme).
The Normal Payment Scheme follows a more traditional approach to property payment progressive payment. In this arrangement, payments are typically made in fixed amounts or at specific intervals, regardless of the construction stages. This method provides more predictable payment timelines, but it does not adjust in response to construction delays.
Upon entering this scheme, your developer will provide clear terms for payment schedules, and your legal representatives will inform you when each payment is due. Based on your financial setup, you may need to make payments directly from your funds or through a loan disbursement from your bank.
It’s important to make payments as scheduled to avoid any late fees or penalties, ensuring a smooth process from start to finish.
Below is a clear breakdown of the payment stages for a new condominium unit under the Normal Payment Scheme.
In Singapore’s ever-changing real estate market, the idea of upgrading from an HDB flat to an Executive Condominium (EC) holds a strong appeal. However, many HDB homeowners face the challenge of navigating the financial transition, especially when their funds are still tied up in their current flats, waiting for the right time to cash out.
So, how do you manage this financial tightrope? The Deferred Payment Scheme (DPS) for ECs is for you.
How the Deferred Payment Scheme Works?
The DPS is a flexible financial arrangement designed to make purchasing an EC easier, especially for HDB homeowners. It offers a significant advantage for those who need time to sell their existing flats. Rather than immediately committing to full payments, the DPS gives buyers the chance to secure an EC while managing their finances more comfortably.
The scheme is specifically tailored to ease the financial strain on those transitioning from an HDB flat to an EC. Developers have recognized the financial pressure faced by potential buyers and introduced the DPS to create a smoother property upgrade process.
For instance, when Tenet, an EC in Tampines, was launched, 72% of its units were sold in the first launch, with many buyers opting for the DPS. Similarly, Altura in Bukit Batok saw 62.5% of units sold during its initial launch in August 2023, followed by 87.5% after opening the scheme to second-timers in September 2023.
For HDB flat owners considering upgrading to an EC, understanding the pros and cons of the Deferred Payment Scheme is key, as it can influence their decision to climb the property ladder. The DPS provides financial flexibility, making it a viable option for those navigating the complexities of Singapore’s property market.
Understanding the EC Deferred Payment Scheme
How exactly does the deferred payment scheme for ECs work? The scheme allows buyers to make an initial downpayment of 20%: 5% in cash, and the remaining 15% can be paid with either cash or CPF. The major advantage of the DPS is the 65% deferral until the Notice of Temporary Occupation Permit (TOP) is issued. This means that the remaining 65% of the EC’s purchase price is deferred until the property is ready for key collection. The final 15% is due once the Certificate of Statutory Completion (CSC) is issued.
For HDB owners who haven’t yet sold their flats, the DPS offers a significant advantage. It enables them to avoid managing two mortgage loans simultaneously, offering a reprieve during the construction phase with no monthly payments due on the new EC. This flexibility is a game-changer for many buyers looking to upgrade their living situation without financial strain.
Different Stages of the EC Deferred Payment Scheme
The payments are spread across different stages of the construction process:
A Practical Example of the EC Deferred Payment Scheme
Let’s take the example of Mr. and Mrs. Raja, who currently own an HDB flat and are looking to upgrade to an EC priced at SGD 1.2 million. If they opt for the normal progressive payment scheme, they would need to pay 5% in cash and 20% (either in cash or CPF) for the downpayment. This would result in simultaneous payments for both the HDB flat and the new EC, which may be financially challenging.
If they choose the Deferred Payment Scheme, the structure would look like this:
- Downpayment: 5% in cash (SGD 60,000) and 15% from CPF or cash (SGD 180,000), totaling SGD 240,000.
- Deferral Period: The remaining 65% (SGD 780,000) is deferred until the EC is ready for key collection. There are no monthly mortgage payments during construction.
- TOP (Temporary Occupation Permit): After receiving the TOP, they will start paying off the 65% deferred amount via monthly installments. By this time, they may have sold their HDB flat, freeing up more resources.
- CSC (Certificate of Statutory Completion): Finally, the last 15% is due after the CSC is issued.
This setup helps them manage their finances without the burden of paying two mortgages at the same time.
Pros and Cons of the Deferred Payment Scheme
Pros:
- Financial Flexibility: Especially useful for those waiting to sell their HDB flats, as it defers a significant portion of the payment, improving cash flow management.
- No Double Mortgage: Buyers are not burdened with paying both their HDB and EC mortgages simultaneously.
- Safety Net Against Delays: If there are construction delays, buyers’ money isn’t entirely locked in, as most of the payment is deferred.
- Encourages Upgrading: The DPS makes upgrading from HDB to EC more feasible, especially for those stretched financially.
- Potential for Higher Returns: Buyers can invest the money elsewhere during the construction phase, potentially earning higher returns.
Cons:
- Slightly Higher Cost: The property price is typically about 3% higher under the DPS compared to the normal progressive payment scheme.
- Interest Rate Risk: Buyers may face higher interest rates when they start repaying the loan after construction, depending on market conditions.
- Higher Overall Loan Interest: With the higher purchase price, the accumulated interest over time may be more.
Summary of EC Deferred Payment Scheme (DPS)
The EC Deferred Payment Scheme provides an excellent opportunity for potential buyers to upgrade their homes without immediate financial strain. It’s especially appealing for HDB owners waiting to sell their flats and for first-time buyers seeking more flexible payment options. While the scheme offers significant advantages, including cash flow management and no double mortgages, buyers should consider the 3% price premium and potential higher long-term costs before making a decision. Ultimately, the DPS is a tool for those who prioritize financial flexibility in navigating Singapore’s competitive real estate market.
Comparison between Normal Payment Scheme & Deferred Payment Scheme
In summary, the Normal Payment Scheme is ideal for those who prefer a traditional approach with fixed payments, while the Deferred Payment Scheme offers more flexibility, making it easier for those upgrading from an HDB flat to manage their finances without the burden of paying two mortgages simultaneously. Buyers should weigh the advantages and potential costs of each option before making a decision.
Contact me if you have any questions and interested to buy EC. Call/WhatsApp 98422759
