Latest Residential Housing Loan Framework MAS (Updated 2024)
Apply the lower LTV limit if the loan tenure exceeds 30 years or the loan period extends beyond the borrower’s age of 65 years.
|Outstanding housing loans
|Minimum cash downpayment
|75% or 55%
|5% (for LTV of 75%) 10% (for LTV of 55%)
|45% or 25%
|2 or more
|35% or 15%
The Total Debt Servicing Ratio (TDSR) assumes the role of a stringent gatekeeper, delineating the permissible extent of your loan quantum by ensuring that your monthly debt repayments constitute a fraction not surpassing 55% of your income. The proliferation of various debt obligations – encompassing student loans, car loans, credit card bills, personal loans, and sundry financial commitments – inversely impacts your borrowing capacity from financial institutions for your home loan. Concurrently, an extension of the repayment period for your home loan may become imperative to conform to the confines of TDSR. Given the contemporary imposition of a more constrictive mortgage framework, it is incumbent upon you to take cognizance of the concomitant implications on your home loan.
In this discerning financial milieu, the Loan-to-Value (LTV) ratio assumes significance, dictating the permissible proportion of the property’s value that can be leveraged to finance said property. The edicts further extend to the loan tenure, with a prescribed cap of 30 years for HDB properties and 35 years for non-HDB properties. Adding a layer of intricacy, a stress-test interest rate, presently fixed at 4% for residential properties, comes into play. Consequently, prospective home loan applicants are mandated to sustain a TDSR at 55% or below, even under the scenario of an interest rate surge to 4%.
Variable income and certain financial assets, including rental income, undergo a discerning scrutiny, subjecting them to a financial ‘haircut.’ This pertains specifically to individuals tethered to variable income streams, such as freelancers or the self-employed. Given their perceived elevated risk profile, only 70% of their total assessed income is considered in the TDSR calculation.
The landscape of guarantors, mortgagors, and borrowers undergoes a paradigm shift, coalescing into a singular entity. In the context of joint borrowing, where collaborative financial endeavors transpire, the TDSR calculus transcends individuality. It pivots on the aggregate gross monthly income of both co-borrowers, intertwining with their collective debt obligations. Notably, the loan tenure becomes contingent upon the income-weighted average age of the borrowers, adding a nuanced layer to the financial tapestry.
In navigating the labyrinthine contours of contemporary lending regulations, prudence dictates a meticulous understanding of the intricate interplay between TDSR and its concomitant facets. The astute borrower, armed with this knowledge, can navigate the financial terrain with sagacity, ensuring that each stride towards homeownership is informed and strategic.