What is TDSR (Total Debt Service Ratio)?

How much you can get from the bank?

The TDSR limits the amount of money banks and other Financial Institutions (FIs) can lend you – which is 60% of your gross monthly income minus all of your outstanding debts.

The outstanding debts that the TDSR will take into account include:

Credit card balances (including “instalment plans” with retailers)

  • Student loans
  • Personal loans
  • Car loans
  • Other home loans (if applicable)

While being able to borrow up to 60% of your gross monthly income may sound like a lot. the reality is that most of us carry outstanding debts that will affect how much we can borrow.

‘Note on variable income: If you’re a variable income earner, the TDSR framework requires you to take a 30% “haircut” on your average monthly income. Variable income items such as bonuses or allowances can also be factored in.

How the TDSR affects your ability to purchase property?

When it comes to purchasing a property, another item you must take into account is the “stress test” which is used to determine whether you can afford a rise in interest rates without busting the 60% TDSR limit.

The stress test is an important part of the TDSR’s goal of making sure you can survive paying higher mortgage repayments as rates increase.

Currently, the stress test interest rates are 3-5% for residential properties.


Loan-To-Value (LTV) ratio is a financial term to see how much loan you can get

  • A maximum tenure of 30 years or below Age 65 (whichever is earlier), you can either get
  1. 80% loan amount without existing mortgage loan
  2. 50% loan amount with existing mortgage loan
  • If you take up a loan of more than 30 years or extends past the Age of 65. you can either
  1. borrow up to 50% of property value if you do not have an existing housing loan
  2. borrow up to 30% of property value if you have an existing housing loan
  • Non-individual borrowers will now have a cap of 20% LTV
  • Non-individual borrowers will now have a cap of 40% LTV

Below are effects from previous measures:

Loan to value (LTV) is one of the key criteria when a home buyer decides on a housing loan. It Is simply a term to describe the housing loan quantum a bank or financial institution is willing offer as a percentage to the valuation of the property in question. While most 1st time home buyers want to obtain a loan to value ratio of 80%. property Investors usually opt for a ratio of 50%.


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