How much must you earn to afford an Executive Condominium (EC)?

Hundred Palms EC sold in a matter of hours! Wow! This makes Hundred Palms EC the most oversubscribed executive condominium in history. In fact, it was sold out so quickly that it makes me wonder if the price of the EC is so cheap.

Which in actual fact, isn’t. The prices for typical units started from S$715,000 for a three-bedroom unit, S$1.03 million for a four-bedroom unit and $1.19 million for a five-bedroom unit.

Hundred Palms Indicative Price Range
Hundred Palms Indicative Price Range

How much would you then need to earn in order to afford each unit then? This article will explore the minimum salary that you need to earn in order to afford the monthly instalment.


How much must you earn to afford an Executive Condominium (EC)?

Assumptions made:

  1. Both owners are less than 35 years old, which means that the loan tenure is the maximum of 30 years.
  2. The couple do not have any debt or financial commitment.
  3. Monthly instalments is calculated using an interest rate of 3.5%, which is the recommended rate from MAS to calculate instalments amount.
  4. Income remains constant for the entirety of the duration.
  5. The couple is taking the maximum loan based on their income in order to reduce the initial cash outlay for the purchase.
  6. The couple opts for progressive payment scheme.
  7. Grant is not considered in the calculations.

3 Bedroom

The median price of a 3 roomer is 845k based on the indicative price range. The maximum amount that a couple can borrow from the bank is up to 80% of the unit value.

maximum amount : 845k * 80% = 676k

One can only borrow a maximum of 30% of your income due to Mortgage Servicing Ratio (MSR).

EC Maximum Loan Quantum
EC Maximum Loan Quantum

Based on the above chart, the minimum income required is slightly above $10k, roughly $10,150 to be more exact. The monthly instalment is $3045.

The initial outlay required is the 20% downpayment would be 169k, $19,950 for stamp duty and $2500 for lawyer fees. These only include the big ticket payment and does not include the miscellaneous fees that you need to fork out here and there.

This means that other than earning a minimum income of $10,150 per month, you will need to also have a savings of at least $191,450.

4 Bedroom

The median price of a 3 roomer is 1080k based on the indicative price range. The maximum amount that a couple can borrow from the bank is up to 80% of the unit value.

maximum amount : 1080k * 80% = 864k

One can only borrow a maximum of 30% of your income due to Mortgage Servicing Ratio (MSR).

EC Maximum Loan Quantum
EC Maximum Loan Quantum

Based on the above chart, the minimum income required is slightly above $13k, roughly $13,050 to be more exact. The monthly instalment is $3915.

The initial outlay required is the 20% downpayment would be 216k, $27,000 for stamp duty and $2500 for lawyer fees. These only include the big ticket payment and does not include the miscellaneous fees that you need to fork out here and there.

This means that other than earning a minimum income of $13,050 per month, you will need to also have a savings of at least $245,500.

5 Bedroom

The median price of a 3 roomer is 1238k based on the indicative price range. The maximum amount that a couple can borrow from the bank is up to 80% of the unit value.

maximum amount : 1238k * 80% = 990.4k

One can only borrow a maximum of 30% of your income due to Mortgage Servicing Ratio (MSR).

EC Maximum Loan Quantum
EC Maximum Loan Quantum

Based on the above chart, the minimum income required is actually more than $14k, which is above the maximum income eligibility of $14k for EC. The couple would need to have an income of $14k in this case, in order to meet the requirements. We will need to assume that the couple can only loan the maximum of $930k and pay the difference in cash or CPF. The monthly instalment in this case is $4200.

The initial outlay required is the 20% downpayment would be 247.6k, the top up difference of $60,400, $31,9740 for stamp duty and $2500 for lawyer fees. These only include the big ticket payment and does not include the miscellaneous fees that you need to fork out here and there.

This means that other than earning a minimum income of $14,000 per month, you will need to also have a savings of at least $342,470.

Do note that this is an estimated figures that help you with your initial financial plans, and does not represent the actual values. You will need to refer to the respective banks for actual loan amounts.


What is the maximum EC price can you afford?

Bonus tips! You can also use the below steps to calculate the maximum EC price that you can afford based on your salary.

  1. Calculate your combined salary.
  2. Monthly Instalment = Calculate salary * 30% (The maximum instalments you can pay per month is 30% of your salary. )
  3. Maximum Loan = Monthly Instalment * 360 (The maximum loan period is 30 years)
  4. Maximum EC value = Maximum loan * 0.760 (Assuming loan interest = 3.5%, o.77 is an estimation of your loan by taking into account loan interest)

Do note that this is an estimated figures that help you with your initial financial plans, and does not represent the actual values. You will need to refer to your respective property agents for advice.


Last words

In actual fact, this is a trick question. You could be earning nothing, and still afford an EC. As long as you have cold hard cash to fully pay everything. However, if you are looking at the minimum monthly income you need to earn based on maximum loan, then the figures are as follows:

No of Rooms Monthly Income
3 Roomer $10,150
4 Roomer $13,050
5 Roomer $14,000

There you go. Do also check out our guide on how much an EC costs if you are interested in getting an EC.

Jamie

Just a typical girl who is interested in improving life without breaking her tiny piggy bank. Enjoys and appreciates simple pleasures in life and cannot resist good deals.

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