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Total Debt Servicing Ratio (TSDR) & Mortgage Servicing Ratio (MSR)



These two terms refer to the portion of a borrower’s gross income that goes towards repaying all property loans, including the current loan application. 



Mortgage Servicing Ratio (MSR)


MSR is capped at 30% of a borrower’s gross monthly income and will apply only to housing loan for the purchase of an HDB flat or an Executive Condominium brought directly from a developer. 


A reference example, for a person whose gross monthly salary, is $10,000.  


If he is taking a loan to buy an HDB flat or EC, the computation with the assumption that he/she does not have other loans/financial commitments will be as follows:

 

$10000 * 30% = $3000, and this will be the monthly amount that he/she can use from his monthly salary to pay for the mortgage.


In turn, this amount would be used as a reference to calculate the total amount of loan that he/she will be eligible to loan.





Total Debt Servicing Ratio (TDSR)


TDSR is capped at 60% of a borrower’s gross monthly income and will apply to other private residential properties.


A reference example is shown, for a person whose gross salary is $10,000.


If he is taking a loan to buy a private residential property, the computation with the assumption that he/she does not have other loans/financial commitments will be as follows:


$10000 * 60% = $6,000, and this will be the monthly amount that he can use from his monthly salary to pay for the mortgage.


In turn, this amount would be used as a reference to calculate the total amount of loan that he/she will be eligible to loan.



This is the second article to "Basics to Residential Real Estate (Singapore)". I will be sharing more information on other topics, and I hope to see you along the way as I share more details on the real estate industry in Singapore!


If you would like to know more about the information shared and is wondering about how this may affect you, please do leave a message at my email, homeadviser.sg@gmail.com or +6592767874.


More than happy to share more with you!


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