As of 7 April 2020, the Monetary Authority of Singapore (MAS) has waived the total debt servicing ratio (TDSR) limits for deferred mortgage repayments. The loan deferment measures were announced by the MAS as part of an industry-wide package to prevent delinquencies and bankruptcies amid the pandemic-induced economic downturn.
The TDSR caps the amount buyers can borrow for a property loan. Typically, a borrower’s monthly repayment for all debts must not exceed 60% of their monthly income. This includes:
- Mortgages
- Credit card bills
- Car loans
- Personal loans
This means that if your monthly income is $5,000, your monthly repayment for all your debts must not exceed $3,000.
Meanwhile, the loan-to-value (LTV) ratio refers to the loan amount as a percentage of the property’s value.
The MAS said that for individuals, including sole proprietors, the TDSR will not apply to:
- Deferment of mortgage repayments for residential, commercial, or industrial properties.
- Refinancing of owner-occupied residential mortgages and unsecured credit facilities such as credit cards and personal loans.
- Mortgage equity withdrawal loans (MWLs) if the LTV does not exceed 50%.
Borrowers are not subject to TDSR when they apply to defer either their principal payment or both principal and interest payments for their home loans. Interest will accrue only on the deferred principal amount.
This relief applies to home loans and MWLs, including those under debt reduction plans. It extends to both owner-occupied (HDB and private) and investment properties.
If you are thinking of buying, selling, or renting property while the circuit breaker measures are in effect, don’t worry! Our team is still hard at work.
Learn more about Ohmyhome services during the circuit breaker period.
Source: The Straits Times
