With the new MSR and the TDSR ruling, economists see the private home loan mortgage being easier to apply for than the HDB flat or an EC loan. The new ruling of the TDSR has greatly affected the demand for real estate in Singapore. Since its implementation, the new ruling has discouraged the housing market. It has put the nuts and bolts on both buyers and sellers. It is this total service relationship that determines the livelihood of your dream home. Their calculation usually results in whether you can borrow enough funds, or if you have nothing to borrow. If you are a borrower with many credit card uses, then you should pay them off first to get a larger home loan. The objective of the new resolution is to limit the amount that the bank will lend, as well as regulate the borrower’s credit exposure. The monthly cap rule is at least 60% of the borrower’s gross monthly income, which includes secured and unsecured loans, such as credit card limits.
The MSR affects the borrower in a way that sets the borrower’s monthly payment limit, especially those who purchase HDB and EC flats. The MSR is more interested in regulating only home loans, which must not exceed 30% of the borrower’s monthly income. The EC requires both the TDSR and the EC when calculating monthly payment limits. However, this minimum requirement could be 50% higher than privately owned home loans. Borrowers need to begin to understand that the type and size of real estate they plan to purchase must meet TDSR and MSR standards. Loan tenure is also affected as banks now grant only a maximum of 25 years for an HDB unit. There is a notable difference between HDB unit loan-to-value and private property. Considering that HDB provides a loan of 80% of the value, the private property could offer another minimum income of the loan of 5% to obtain a loan of 80% of the value of the property. For example, a purchase price of $625,000 would only allow for a loan amount of about $500,000. If the EC property costs $1,000,000 then the minimum income must be $11,977 per month. Other loan commitments must be deducted. The result would be a lower home loan amount. Existing home loans would be subject to the same calculations for repricing or refinancing at maturity. Borrowers with a high loan commitment who enjoyed the old rule might have a hard time getting refinance. Owner-occupied HDBs and ECs may not be included in MSR refinance calculations.