Rivercove Residences EC News
The intention of Singapore Government move to raise the income ceiling of buying an executive condominium from the initial of $12,000 to capping of $14,000 allowing more people to have additional choice of selection of house to choose from. Basically EC is much suitable for “sandwich” income class of buyers. This group of homeowners belong to income earners with a combine gross salary between $12,000 to $14,000 which are unable to qualify for new Build to Order flats under the HDB Eligibility. Before the increase of income cap, this group of buyers choice is either resale HDB Housing Flat at a open market price or Private Condominium which has no restriction. These regulation has been for years and recent year on January 2013, MAS introducing new financing loan calculation – Mortgage Service Ratio (MSR). The objective of this measure is moderate the property market and to instill financial prudence to cultivate an affordable and sustainable ECs market. MSR impose capped 30% of the borrower’s monthly income for loans taken from banks or financial institution. Before that, banks are using Total Debt Service Ratio (TDSR) as calculation which used 60% of the borrower’s monthly income instead.
For example, a young married couple at age of 30 with monthly income of $5,000 each are able to roughly loan about $668,000. If they are using this amount as their 80% loan, their maximum purchase price $835,000 assuming they do not have any other credit loans. This calculation is based on MSR. Otherwise, using previous financial calculation TDSR applied, the couple could have easily loan double the amount having the said same gross salary income. It does works to provide homeowners very comfortably in affording their home without overstretch within their means. However, it does not mean that earning this income, home buyers are unable to purchase any other more premium house. For instance, middle aged income family which is interested in getting an 5 bedrooms executive condominium with the price $1.4m. Their loan amount probably will have a shortfall of $400,000 to max 80%. It is still affordable to buy Rivercove Residences if the couple have this shortfall to top up using either cash or cpf.
*Source from Straits Time Business