Total Debt Servicing Ratio (TDSR)

TDSR = Monthly Total Debt Obligation / Gross Monthly Income x 100% ≤ 60%

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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:

Financial institutions to take into account the borrower’s monthly repayment for the property loan that he/she is applying for, plus the borrower’s monthly repayments on all other outstanding property and non-property debt obligations;

Financial institutions need to apply a specified medium-term interest rate or the prevailing market interest rate, whichever is higher, to the property loan that the borrower is asking for;

Financial institutions need to apply a haircut of at least 30% to all variable income (e.g. bonuses, commissions) and rental income (if the borrower is the landlord; need to submit stamped tenancy agreement with minimum six months); and

To convert any eligible financial assets (e.g. SGD Bank deposit, that is pledged with the bank for four years) into ‘income streams’ in computing the TDSR, financial institutions need to apply haircuts to it and amortise the value.

How Total Debt Servicing Ratio (TDSR) Applied To Your Home Loan Situation?

Monthly Gross Income 60% TDSR Limit
$5000 $3000

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
Car Loan $650
Study Loan $350
Personal Loan $300
Total $1300

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:

You can try to extend the loan tenure so that you can lower the monthly home loan repayment.

You can opt for a property with lower price quantum so that you can lower the amount you borrow.

You can increase the cash down-payment so that you can reduce the amount you borrow.

You can sell or reduce the repayments on any other properties so that you can free up the money to use towards your new home loan repayment.

You can try to pay off some of the outstanding debts so that you can free up the money to use towards your home loan repayment.

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