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Total Debt Servicing Ratio (TDSR) Framework
MAS introduced the Total Debt Servicing Ratio (TDSR) framework for all property loans granted by financial institutions to individuals.
Total Debt Servicing Ratio (TDSR) = Monthly Total Debt Obligation / Gross Monthly Income x 100% ≤ 60%
Total Debt Servicing Ratio (TDSR) provides financial institutions with a basis for assessing the debt servicing ability of borrowers applying for property loans.
Financial institutions need to take into consideration borrowers’ other outstanding debt obligations when granting property loans. They will help strengthen credit underwriting practices by financial institutions and encourage fiscal prudence among borrowers.
Total Debt Servicing Ratio (TDSR) is currently set at 60% for a start to allow both the borrowers and financial institutions to familiarise themselves with the TDSR framework and its computation methodology. To further encouraging fiscal prudence, MAS will monitor and review the 60% threshold over time.
The authority has standardised the methodology for computing the TDSR among all the financial institutions:
How Total Debt Servicing Ratio (TDSR) Applied To Your Home Loan Situation?
|Monthly Gross Income||60% TDSR Limit|
The amount available to service your new monthly home loan repayments will be the difference between your debt obligations and the TDSR limit.
|Monthly Debt Obligations||Monthly Repayments|
|Other Mortgage Obligations||$0|
In this case, you would have $1,700 to use towards your new home loan repayments. $3,000 – $1,300 = $1,700
What Happens If You Exceed the 60% Total Debt Servicing Ratio (TDSR)?
If your monthly home loan repayment, your other mortgage obligations and your monthly debt obligations surpass the 60% TDSR, you’ve got several options: