Mortgage Servicing Ratio - MSR
Bro, having our own flat is super important to be a real adult. Buying a house, which is one of the biggest investments we make, needs careful money planning hor.
How can we jaga our finances properly so we don’t go over budget? One way is to use housing ratios, machiam show how much of our income should go into housing expenses. If we understand these ratios, we can sibei smart about our financial capacity for housing needs. Here are two helpful ratios to keep our housing budget steady.
What is MSR?
When you buy property in Singapore, maybe you know about the TDSR, leh. It’s like a limit on how much of your monthly income can go into paying off debts. For most people, cannot more than 55% of your total monthly income, sia. But wait, there’s also the MSR for HDB flats, also damn important one. It applies to HDB flats and ECs bought from developers.
For HDB loans and bank loans for HDB flats and ECs, the MSR is set at 30%, bro. It means you cannot use more than 30% of your gross monthly income for paying off your mortgage. Like, if you earn $5,000 per month, your monthly loan payments cannot be more than $1,500, bro.Calculating MSR
To calculate the MSR, just divide your monthly mortgage payments (including debts secured by property) by your total gross monthly income. For joint borrowers, divide the total monthly mortgage payments by their combined gross monthly income. Here’s the formula:
(Monthly mortgage payments for all property loans / Gross monthly income) x 100% = MSR (must be less than 30%)
If you want, can use the MSR calculator here to check your MSR. Don’t play play.
What is TDSR?
You also need to know about the Total Debt Servicing Ratio (TDSR), sia. It determines how much of your total monthly income can go towards repaying all your monthly debts. This rule helps make sure you don’t drown in debt, bro.
Remember, debts can be from simisai loans, like property loans, including the one you’re applying for, car loans, student loans, renovation loans, credit card loans, and any other secured or unsecured loans.
Starting from 16th December 2021, the TDSR max limit is 55% of your gross monthly income, bro. But hold up, this limit only applies to property loans from financial institutions. Loans from the Housing Development Board (HDB) don’t follow the TDSR rules, okay?
To calculate your TDSR, just use this formula, bro: