Guidelines on the Application of Total Debt Servicing Ratio for Property Loans under MAS Notices 645, 1115, 831 and 128
Guidelines for all financial institutions on how to apply the total debt servicing ratio (TDSR) to property loans.
Total debt servicing ratio (TDSR) applies to individuals and certain companies. TDSR must be calculated for any loan to purchase a property and any loan secured by a property, as well as the refinancing of these loans.
Any individual applying for a loan to purchase a property or a loan secured by a property is subject to TDSR rules. It does not apply to loans for companies, as they are subject to a different set of credit assessment criteria.
However, if the borrower is a sole proprietor or an individual setting up a company solely to purchase property, FIs are required to apply the TDSR rules to the individual.
Financial institutions (FIs) must calculate their borrowers’ total debt servicing ratio (TDSR) for:
It applies to loans for both residential and non-residential properties (e.g. industrial and commercial properties), and covers properties in and outside Singapore.
TDSR rules apply to all loans applied on or after 29 June 2013.
Exemptions can be made to the TDSR rules in the following situations:
In general, the TDSR rules apply to refinanced loans.
However, an existing borrower looking to refinance his loan to purchase a property is exempted if he is an owner-occupier. This is a concession provided to borrowers who have purchased properties for their own stay.
Borrowers are allowed to refinance their investment property loans above the TDSR threshold if they meet certain conditions.
Type of property loan | Does the TDSR threshold/MSR limit apply at the time of refinancing? |
Owner-occupied housing loans | No |
Investment property loans |
Yes, provided the borrower meets both these conditions:
|
The TDSR rules do not apply to the following:
The TDSR rules do not apply to a mortgage equity withdrawal loan, where the LTV of the loan, when aggregated with any other loans secured on the same property, does not exceed 50%.
MAS relaxed this rule to meet the needs of borrowers who need the flexibility to monetise their properties in their retirement years, i.e. to borrow against the value of their properties to obtain additional cash.