Mortgage Servicing Ratio (MSR)

What is the Mortgage Servicing Ratio?

• The Mortgage Servicing Ratio is a measure implemented by the Monetary Authority of Singapore, and it refers to the portion of a borrower’s gross monthly income that goes towards repaying all property loans, including the loan being applied for.
• MSR is capped at 30% of a borrower’s gross monthly income
• It applies only to housing loans for the purchase of an HDB flat or an executive condominium bought directly from a developer.

Calculating MSR 

• When you take a loan from a Financial Institution, these will be taken into consideration:
  • All the borrower’s property loans.
  • At least 20% of the monthly debt obligation for any property loan where the borrower is a guarantor.
• A borrower’s MSR is calculated using the following formula:
  • (Monthly repayment instalments for all property loans / Gross monthly Income) x 100% ≤ 30%

Total Debt Servicing Ratio (TDSR)

What is the Total Debt Servicing Ratio?

• The Total Debt Servicing Ratio is a maximum threshold set by MAS. However, FIs may grant property loans to borrowers whose TDSR exceeds the threshold on an exceptional basis, subject to enhanced credit evaluation.
• The TDSR threshold for property loans is set at a maximum of 60% of the borrower’s monthly income.
• It applies to housing loans for the purchase of private properties and executive condominiums

Calculating TDSR 

• Under the TSDR guidelines, your monthly monthly debt obligations and gross monthly income will be taken into account
• A borrower’s TDSR is calculated using the following formula:
  • (Borrower’s total monthly debt obligations / Borrower’s gross monthly income) x 100%

Monthly Debt Obligations

Monthly debt includes all outstanding debt obligations:

• Property-related loans, including the loan being applied for.
• Car loans.
• Student loans.
• Renovation loans.
• Credit card loans.
• Any other secured or unsecured loans, including revolving loans.

For more details, please refer to the MAS website here: Total Debt Servicing Ratio for Property Loans

How Does MSR And TDSR Apply for ECs?

• For the purchase of an Executive Condominium, Financial Institutions will calculate both the MSR and TDSR for the borrower 
• The lower loan amount between MSR and TDSR will be used as the basis for disbursing the loan 
• Although the percentage for TDSR is higher at 60% as compared with MSR at 30%, for borrowers with existing debt obligations, the amount that can be allocated to a property loan under TDSR can actually be lower than MSR. 
• For assistance on working out your loan eligibility, please feel free to contact us

How Much Home Loan Am I Eligible For?

• The advantage of purchasing an Executive Condominium is that you can still obtain up to a 75% LTV (Loan to Value) Ratio for your bank loan, even if you are currently still servicing your HDB home loan
• Please note that the amount of loan that you are eligible for is still subject to MSR and TDSR guidelines

The loan-to-value (LTV) limit determines the maximum amount an individual can borrow from a financial institution (FI) for a housing loan.

LTV refers to the loan amount as a percentage of the property’s value. For example, if an individual borrows $750,000 to purchase a property valued at $1,000,000, the LTV is 75%.

It was announced on 5 July 2018 that LTV limits will be tightened as part of a package of measures to cool the property market and keep price increases in line with economic fundamentals.