Housing Loan Information

Residential Home Loan Regulations (MAS)

First Loan Second Loan Third Loan
Loan Tenure Up to 30 years 31-35 years Up to 30 years 31-35 years Up to 30 years 31-35 years
Age Applicant’s age used to calculate loan tenure, will be based on income-weighted
Up to 65 Up to 70-75 Up to 70-75 Up to 65 Up to 70-75 Up to 70-75 Up to 65 Up to 70-75 Up to 70-75
Maximum LTV Limit 75% 55% 55% 45% 25% 25% 35% 15% 15%
20% (non-individuals)
Minimum Cash Downpayment 5% 10% 10% 25% 25% 25% 25% 25% 25%
Gaurantors / Co-borrowers All Co-borrowers must be mortgagors.
Guarantors must be co-borrowers if the latter did not pass the TDSR criteria
Mortgage Servicing Ratio N/A
Total Debt Servicing Ratio 60%
Stress Test Interest Rate 3.5% or prevailing interest whichever is higher

It’s quite common to apply for home loans from local banks to finance your home purchase. Mortgage bankers will use a series of qualification criteria to assess the potential applicants. Under the guidance of the Monetary Authority of Singapore (MAS), home loan applicants must comply with the rules and regulations by Total Debt Servicing Ratio (TDSR) framework and Loan-To-Value Ratio(LTV) limits.

1. Total Debt Servicing Ratio(TDSR) Framework

Total Debt Servicing Ratio(TDSR) framework is a structural and permanent measure package applied to property loans in Singapore. The definite purpose is to encourage financial prudence and avoid any over-borrow behavior that may be beyond one’s financial capacity or put one at the risk of over-leverage. When the market moves away from their advantages, those who have been aggressively relying on bank loans will suffer first from financial trouble.  Simply put, TDSR can be understood as the following chart.

2. Loan-to-Value Ratio (LTV) Limits and Minimum Cash Down Payment (MCDP)

When you apply for a home loan, the banker will apply the Loan-to-Value Ratio (LTV) limits to your application after meeting the rules under the Total Debt Servicing Ratio(TDSR) Framework. LTV limits and MCDP are subject to factors such as numbers of home loans, loan tenure, and age applicants. Please refer to the chart below for a quick review.

3. Work out your Total Debt Servicing Ratio

MAS’ rules set out the minimum requirements for calculating a borrower’s total debt servicing ratio (TDSR). Local bankers will apply a series of assessment process on your total current monthly debt obligations and gross monthly income, and thus work out your current TDSR Ratio. The total debt servicing ratio (TDSR) threshold for property loans is set at a maximum of 60% of the borrower’s monthly income. For example, if a borrower has existing monthly debt obligations equal to 20% of their monthly income, then the maximum amount they can get for a property loan is based on 40% of their monthly income.

Refer to the following TDSR calculation chart prepared by OCBC Bank, the applicant’s monthly debt includes all outstanding debt obligations list here. Bankers will collect all the supporting documents and check with the credit bureau when calculate and confirm these obligations for the home loan applicants. Those debt obligations include the property loan being applied for, car loans, student loans. renovation loans. credit card loans, and any other secured or unsecured loans. For gross income components,

Gross monthly income refers to the borrower’s monthly income before tax and excludes any CPF contribution made by the employer. For variable income such as commission, bonus and allowance, bankers will take the average of the monthly variable income earned in the preceding 12 months. A minimum haircut of 30% will be applied to the variable income and verified rental income from your property investment. Certain eligible financial assets will be considered with respective haircuts, including such as cash or deposits, foreign currency, stocks, gold, business trusts, and collective investment schemes.

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