All You Need To Know About TDSR and MSR

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What is TDSR?

Total Debt Servicing Ratio (TDSR) refers to the proportion of your monthly gross income that is spent on debt obligations.

According to MAS policy, TDSR must not exceed 60%.

The monthly debt repayment covers loans from financial institutions, money lenders or HDB in the borrower’s name or jointly with another borrower. It includes the new loan, other existing property loans, car loan, study loan, renovation loan, personal/credit card loans, etc.

What is MSR?

Mortgage Service Ratio (MSR) is the proportion of your monthly gross income that is spent on mortgage repayment. This includes debt obligation secured by properties.

According to MAS policy, MSR must not exceed 30%. Applicable to HDB flat only.

How to Calculate TDSR and MSR?

(a) Total Debt Service Ratio (TDSR)

Monthly Total Debt Obligations  /  Gross Monthly Income (excl CPF Contribution by Employer)

(b) Mortgage Service Ratio (MSR)

Monthly Total Mortgage Repayment  /  Gross Monthly Income (excl CPF Contribution by Employer)

What can be considered in Gross Monthly Income?

  • 100% of monthly fixed income
  • 70% of monthly variable income (e.g. allowance, commission, bonus etc)
  • Financial assets, like bank deposit, that are pledged with the bank for 4 years

For joint-ownership, the calculation is based on combined income and combined debt obligations.

How do banks calculate the monthly payment for the new loan? 

The standard calculation is based on:

  1. Medium term rate of 3.5% on housing loan and 4.5% on non-residential property loan or prevailing rate, whichever is higher.
  2. Actual loan tenor that the borrower is applying. For joint borrowers, loan tenor is determined based on the weighted average age of the borrower, weighted based on their gross monthly income.

You can click here for articles related to TDSR and MSR.

If you have any queries on financing, you may contact us for more information.

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