Explainers
Published Date: 05 July 2018

Total Debt Servicing Ratio for 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.

Who TDSR Applies To

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.

When Is It Required

Financial institutions (FIs) must calculate their borrowers’ total debt servicing ratio (TDSR) for:

  • Any loan to purchase a property.
  • Any loan secured by a property.
  • Any refinancing of these loans.

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 from TDSR Rules

Exemptions can be made to the TDSR rules in the following situations:

Refinanced Loans for Properties

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:
  • Commits, at the point of refinancing, to a debt reduction plan with his FI, comprising a repayment of at least 3% of the outstanding balance over a period of not more than 3 years.
  • Fulfils the FI’s credit assessment.

Loans Secured By a Pool of Collateral (Including Property) and Bridging Loans

The TDSR rules do not apply to the following:

  • Loans secured by a pool of collateral where the market value of property in the collateral pool is less than 50% of the credit limit of the loan.
  • Bridging loans where the outstanding balance will be repaid within 6 months.

Loans Secured By Property with LTVs under 50%

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.