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Oct 3, 2022 · Share this article. The Mortgage Servicing Ratio (MSR) in Singapore caps the amount that may be spent on mortgage repayments to 30% of a borrower’s gross monthly income. It applies to HDB flats and executive condominiums (ECs) bought from developers.
- The Mortgage Servicing Ratio
- Total Debt Servicing Ratio
- How Does TDSR Affect Your Home Loan?
- What Is The Difference Between MSR and TDSR?
- When Do MSR and TDSR Apply?
- Frequently Asked Questions About MSR and TDSR
Mortgage Servicing Ratio (MSR) is a home loan limit imposed by the Monetary Authority of Singapore (MAS). It applies to two types of properties: HDB flats and Executive Condominiums (EC).
Total Debt Servicing Ratio (TDSR) is also a home loan limit implemented by MAS. It applies to both public and private properties.
The TDSR limits the maximum amount you can borrow for your home loan. Since your total monthly debt repayments, including your prospective home loan, cannot exceed 55% of your gross monthly income, your existing debts directly reduce the loan amount you can qualify for.
MSR limits the amount of money you can borrow based on your income, without considering other loans you might have. TDSR takes into account ALL of your loan repayments, including outstanding non-mortgage loans. If you’re buying an HDB or EC with a bank loan, you need to pass both criteria – MSR calculations followed by TDSR calculations.
When TDSR applies
1. All Property Loans: TDSR applies to allproperty loans, regardless of the property type (HDB flat, Executive Condominium, or private property). 2. New Loan Applications and Refinancing:TDSR applies to both new loan applications and refinancing of existing property loans.
When MSR applies
1. HDB Flat and Executive Condominium (EC) Loans:MSR applies specifically to loans taken for the purchase of HDB flats and ECs (where the minimum occupation period has not expired). 2. New Loan Applications and Refinancing:MSR applies to both new loan applications and refinancing of existing HDB flat and EC loans.
When TDSR and MSR applies
1. HDB Flat and EC Loans from Financial Institutions:If you’re applying for a loan from a financial institution (bank or finance company) to purchase an HDB flat or EC, both MSR and TDSR thresholds will be considered. You must meet both criteria to be eligible for the loan. Note:Loans directly from HDB are not subject to TDSR rules, but they have their own set of eligibility criteria and loan limits. However, MSR still applies to HDB loans.
What is fixed income?
In MSR and TDSR calculations, the Monetary Authority of Singapore (MAS) defines fixed income as stable and regular earnings like base salary, fixed allowances, and 100% of the employee’s CPF contribution. It excludes employer CPF contributions and variable income like bonuses and commissions.
What is variable income?
According to the Monetary Authority of Singapore (MAS), variable income in MSR and TDSR calculations refers to earnings that are not regular or guaranteed. This includes bonuses, commissions, overtime pay, and any other income not considered stable and recurring. Financial institutions are required to apply a 30% haircut to variable income when calculating a borrower’s debt servicing ratios.
What is joint application?
In a joint application for MSR and TDSR, the combined income (fixed and variable) and total debt obligations of all applicants are considered to determine the maximum loan amount and ensure affordability. The combined income increases the loan quantum while the combined debts affect the TDSR, ensuring responsible borrowing for all applicants collectively.
Jun 24, 2019 · What is Mortgage Servicing Ratio? Mortgage Servicing Ratio, or MSR, is a limit imposed by the MAS on how much money you can borrow when you take out a loan to buy HDB property or an EC. Under the MSR, a maximum of 30% of your gross monthly income can be used to repay your loan. Employers’ CPF contributions are not included in the calculation ...
- Joanne Poh
MSR refers to the percentage of total monthly income you can use to service all your property loan payments, including the loan being applied for. Currently, the MSR limit is capped at 30%, which means a borrower can use only 30% of their gross monthly income to repay a mortgage they have taken out to buy an HDB property or EC.
Oct 2, 2022 · Less well-known, but just as important when it comes to qualifying for a loan, is the Mortgage Servicing Ratio (MSR) for HDB flats. As mentioned, the MSR only applies to HDB flats and ECs bought from the developer. The MSR caps the amount that may be spent on mortgage repayments to 30% of a borrower’s gross monthly income. The Mortgage ...
Sep 27, 2023 · It’s vital in Singapore’s property market. MSR for HDB: For HDB flats, MSR is capped at 30% of gross monthly income to ensure borrowers don’t overextend financially. MSR for Bank Loans: Bank loans for private properties have an MSR cap of 35% to maintain property market stability. MSR vs. TDSR: MSR is specific to housing loans, while ...
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May 4, 2022 · The TDSR is currently set at a maximum of 55% of one’s gross monthly income (with effect from 16 Dec 2021) and this applies to property loans offered by financial institutions. Loans from HDB are not subject to the TDSR rules. To calculate the TDSR, use the following formula: Unlike the MSR which only applies to loans taken for HDB flats or ...
