BTO or EC: The Guide to Make Your Choice More Pleasant for You

by Laura Lim

Buying a house is no small issue, wouldn’t you agree?

That’s especially so if you’re planning to stay there, have kids, or retire in the future.

Many factors come into play when first-time buyers select the type of housing they want.

One commonly asked question is – BTO or EC? What do they even stand for?

To save you the headache, read through our easy to digest article below. Ultimately, it really depends on your budget, future expectations, and situation!

What are BTOs?

The Build-to- Order (BTO) scheme is a flat allocation system under the Housing and Development Board. It’s an initiative offered to give buyers greater choice, affordability and flexibility in buying new flats in Singapore. Young couples, or families with lower household incomes especially benefit greatly from it.

What are ECs?

Executive Condominiums (ECs) are slightly different from the regular private condominiums that you know. They are subsidised under the HDB, and are usually cheaper. Targeted at people who can afford something pricier than the BTO flats but cannot afford private property, ECs are a new type of housing that are pretty much for the in-between. They are not built by the HDB, but private developers. Although they start out as subsidised housing, they become private housing 10 years later. We’ll talk about that further on.

Loan Schemes

If you get a BTO, you have the choice of taking up either a HDB or bank loan. If you choose the former, good for you: you don’t have to pay the heftier downpayment fees that come with a bank loan. The maximum loan amount stands at 90%, which also means that your downpayment is effectively only 10%. The 10% downpayment you pay can be fully serviced by your CPF funds, provided that they’re sufficient. There is also the option of the Staggered Downpayment Scheme that allows you to pay it in 2 instalments.

If you’re eligible, you only need to pay 5% upfront and the other 5% when you collect your keys years later. Sounds great if you’re tight on cash, doesn’t it? Do take note that all the funds in your CPF Ordinary Account (CPFOA) have to be emptied out when you make your downpayment – otherwise, it’s a great option for young buyers with limited funds!

On the other hand, you can only opt for a bank loan if you purchase an EC. Under a bank loan, it covers only 80% of the property’s valuation. The 20% downpayment is a mix of 15% paid from your CPF and grants, while the other 5% must be paid in cash. So if you don’t exactly have pockets full of cash, taking that route may be financially difficult for you.

Additionally, thanks to the implementation of the 30% Mortgage Servicing Ratio (MSR), you can only use a meagre 30% of your monthly income to service your debt repayments.

Resale Rules

BTOs can be sold like normal resale flats no matter how long they’re owned for.

For ECs however, the situation isn’t as pretty. Between their sixth to tenth years of ownership, they are sold like any other resale flat. Only Singaporeans and PRs can purchase them.

From the eleventh year onwards, they can only be sold to foreigners and companies. You may be wondering: isn’t this more beneficial, since it greatly expands the pool of prospective buyers?

Of course it does – but it also means that when buyers purchase resale ECs after that year, they cannot get housing grants. Effectively, they would have become private property.

Therefore, you should be considering those scenarios and benefits before making your choice!

Facilities and Finishes

If you’re going for an EC, you’ll delight in the knowledge that they come with the same amenities and facilities as any private condominium. I mean, although they’re subsidised, they’re still condominiums, right?

Contrary to that, the BTO will have fewer finishes and not as great (but still pretty sweet) facilities. So if you’re particular about this, you might want to opt for the EC over the BTO! If not, by all means, go for the EC instead.

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