Buying an EC as our First Home
Our advice to potential couples who want to buy an EC is to get processes right and finances sorted before paying any thing.
If given an opportunity again, how would we do it differently?
We would get an In-Principal Approval from Bank first. This means submitting all the necessary paper work like Credit Bureau and Application Form to Bank. They will take at least few working days before giving you an IPA. Be it a verbal or written IPA, it is SAFER. Okay, so why we did not get it in the first place? We were pretty confused by the bank officers as they said bank don’t do this now. But UOB does when we decided to get the bank loan. The mortgage specialist was pretty shocked that we did not have IPA first! As for agents, we naively showed to our agent this was a letter DBS gave us. Before our booking day, we visited DBS bank and mentioned both of our incomes and then she generated a letter (the amount was enough for us to take up to 80%). We took THIS letter which is not even IPA and boldly decided to buy our first home. Thus, we paid our booking fee, which is 5% of the purchase property.
We would choose a different lawyer firm cos we were charged more than the market rate. We paid $2,854 inclusive of both GST and fees required by IRAS. Another legal firm managed to offer $2,300 nett. It was painful for us plus we did not get a professional service initially. Luckily, we asked someone who is able to act as a professional solicilator to assist us in the exercising of our Sales and Purchase Agreement. It lasted about 2.5 hours.
Finance is very important. Invest Couple forked out $86K cash to buy our first house. It would be lesser for couple who has more CPF accounts.
Typically, a EC needs 5% + 15% of Property Purchase Price ($850K):
Payment of 20% – $170K
Stamp Duty – $20K
Legal Fee – $3k
What to take note during signing of S&P?
3 weeks for you and your partner to decide to exercise S&P. If decide not to exercise S&P, forfeit 25% of the booking fee.
If yes, prepare these below:
Prepare 3 to 4 cheques
- Cheque for 15% of Purchase Price: Amount minus CPF.
It is due at the point of signing the S&P, or within 9 weeks from the date of the Option, whichever is later.
- Cheque for Stamp Duties:
It is due 2 weeks after signing S&P.
- Cheque for Legal Fee:
- Cheque for IRAS
Ownership of Property
This is when you need to decide the ownership of the property, how many percent for you and your partner.
Tenants in common means each party holds a percentage share of the property and the ratio will be decided between you and your partner. If there is no will in this case, the share of the property will be given out according to the law of intestacy.
Discuss this with your partner before visiting the lawyer as you need to sign an agreement on the ownership of the property upon signing of S&P.
3 Items to pay upon taking possession of the house (Delivery of vacant possession (Clause 12) in S&P)
Maintenance fees (clause 13)
Property tax (clause 19)
Title survey fees (clause 11)
Clauses to Take Note for S&P
Tenure (Clause 2)
Payment Schedule (Clause 5)
Repudiation (Clause 7)
Delivery of vacant possession (Clause 12)
Defects liability period (Clause 17)
- Upon TOP, the 12-month defects liability period begins. During these 12 months, the developer is responsible for any defects that become apparent. This is what you should do if you find any defects:
Building specifications and amenities (First Schedule)
Transaction particulars (Fourth Schedule)
A lot of dates to remember:
- OTP Date:
- HDB Approval Date:
- S&P Date that reached to your law firm
- S&P Exercise Date
A lot of things to note:
In the midst of any of the above processes,
- If HDB disapprove, return fully on Booking Fee, which is 5% of Purchase Price
- Failure to exercise S&P – 25% of the 5% of booking fee.