Strong demand for EC , thanks TDSR

More buyers are now finding cheaper alternatives in the executive condominium (EC) market as stricter loan requirements set for private property,  media reports said.

The Topiary EC

The Topiary EC

The shift is due to the introduction of the Total Debt Servicing Ratio (TDSR) framework, which covers a borrower’s total debt repayment including mortgages. The Total Debt Servicing Ratio (TDSR) framework is to ensure borrowers are not overleveraged. TDSR calculates the percentage of your income that can go into servicing your loan. At present, the highest TDSR  is 60%.

That means your housing loan repayments, after adding all your repayment obligations (Personal loans, car debts, credit loans, renovation loans, etc.), cannot exceed 60% of your income.

This buying trend became evident when recent EC launches reportedly saw bullish sales.

 Sea Horizon EC in Pasir Ris was 3 times oversubscribed after receiving about 1,500 e-applications, the highest for an EC launched in 2013 to date. The Ecopolitan executive condominium (EC) was two times oversubscribed too.
Owners with existing HDB flats and who are applying for an EC unit have more chances to obtain the maximum loan quantum for a mortgage.

Buyers are required to sell their flats upon completion of an EC development under current HDB rules. This means banks will only consider the monthly payment on the EC and other debt obligations when evaluating the buyer’s loan eligibility.

But this is not the case for private property mortgages. Even if an upgrader is thinking of selling his HDB flat after buying a private property, the bank will still include the monthly mortgage instalment of the HDB flat together with the new commitment towards the private property when calculating the loan quantum he is eligible for at the point of application.

This reduces his or her chances of getting a bigger mortgage loan, and affects affordability especially if they have substantial debt obligations.

Source – MAS, Propertyguru, HDB

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