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 | LTV limit | Minimum cash downpayment |
|---|---|---|
| None | 75% or 55% | 5% (for LTV of 75%) 10% (for LTV of 55%) |
| 1 | 45% or 25% | 25% |
| 2 or more | 35% or 15% | 25% |
 | ||
 | ||
The Total Debt Servicing Ratio (TDSR) acts as a stringent gatekeeper, defining the allowable extent of your loan quantum by ensuring that your monthly debt repayments do not exceed 55% of your income. The proliferation of diverse debt obligations, including student loans, car loans, credit card bills, personal loans, and various financial commitments, adversely affects your borrowing capacity from financial institutions for your home loan. Simultaneously, extending the repayment period for your home loan may become necessary to adhere to the confines of TDSR. Given the contemporary imposition of a more restrictive mortgage framework, it is essential to recognize the associated implications on your home loan.
In this discerning financial environment, the Loan-to-Value (LTV) ratio becomes significant, determining the permissible proportion of the property’s value that can be leveraged to finance the property. The regulations also extend to the loan tenure, with a prescribed limit of 30 years for HDB properties and 35 years for non-HDB properties. Adding complexity, a stress-test interest rate, currently fixed at 4% for residential properties, comes into play. As a result, prospective home loan applicants must maintain a TDSR at 55% or below, even in the scenario of an interest rate increase to 4%.
Variable income and certain financial assets, such as rental income, undergo a meticulous scrutiny, subjecting them to a financial ‘haircut.’ This particularly applies to individuals reliant on variable income streams, such as freelancers or the self-employed. Due to 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, converging into a singular entity. In the context of joint borrowing, where collaborative financial endeavors occur, the TDSR calculation transcends individuality. It hinges on the aggregate gross monthly income of both co-borrowers, intertwining with their combined debt obligations. Notably, the loan tenure becomes contingent upon the income-weighted average age of the borrowers, adding a nuanced layer to the financial landscape.
To navigate the intricate contours of contemporary lending regulations, prudence dictates a meticulous understanding of the intricate interplay between TDSR and its associated 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.
