Before you begin on your house hunting journey, it’s important to know how much you can actually afford. Use our affordability calculator to find out how much you can borrow so that you can narrow down on that dream private property or HDB efficiently.
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Frequently Asked Questions
Total Debt Servicing Ratio (TDSR) refers to the portion of a borrower’s gross monthly income that goes towards paying off his monthly debt obligations, including the home loan that the borrower is applying for. Currently, a borrower’s TDSR should be less than or equal to 60%.
Mortgage Servicing Ratio (MSR) refers to the portion of a borrower’s gross monthly income that goes towards paying off all property loans, including the home loan that the borrower is applying for. Currently, a borrower’s MSR should be less than or equal to 30%
The main factors that banks consider when calculating your TDSR
1. Banks will implement a stress-test of 3.50% interest rate while calculating your TDSR to make sure you are still within the TDSR constraints
2. Whether you are employed or self employed will affect the way banks recognise your income. This will affect the home loan amount you are eligible for
3. Income weighted average age (IWAA) is applied when there is more than one borrower. This will affect the loan tenor and therefore affect the home loan amount.
The loan amount granted will be dependent on the TDSR and/or MSR. MSR is applied when you are buying a HDB or EC. The maximum home loan amount will also depend on the Loan To Value (LTV) ratio. In general, you can apply for a maximum 75% LTV if you do not have any outstanding home loan.
Firstly, speak to a professional like Delux to make sure that you have covered all angles. Different banks may have different internal guidelines, which may affect your maximum home loan amount. If your TDSR ratio is still above 60%, there are a few ways we can increase your loan amount
1. Lower your monthly debt obligations
2. Stretch the maximum loan tenor to lower the TDSR
3. Apply for TDSR exemption only for refinancing if your property is owner occupied
4. Make use of existing assets such as stocks or cash on hand to increase the maximum home loan amount
