Total Debt Servicing Ratio (TDSR) - Gross Income

What is TDSR ?

Total Debt Servicing Ratio ( TDSR ) is a debt servicing measure that Bank/Financial Institution used to determine if the potential borrower is overly geared with debts.

How to compute TDSR?

Based on the newest measure, TDSR should not be more than 60%

Monthly Total Debt Obligations  
_________________________       <      60%

       Gross Monthly Income


Monthly Total Debt Obligation consist of:
1)  Existing Housing Loan Installment
2)  Car loan Installment
3)  Personal Loan Installment
4)  Overdraft Loan Repayment
5)  Credit card etc


Gross Monthly Income consist of:
1) Consistent Fixed salary
2) Bonus /commission (30% haircut)
3) Rental Income (30% haircut)
Tenancy period must be still left with at least 6 month from application date


Example:

Mr Tan , age 39  with a declared income 2013

Employment: $100k
Commission: $60k
Rental : $40k (more than 6 month validity)

Gross yearly income will be compute as:
$100k + ($60k X 70%) + ($40k X 70%)
= $100k + $42k + $28k
= $170k

Gross monthly income will be compute as:
$170k / 12 = $14,166

Based on the TDSR, Mr Tan commitment should not exceed

$14,166 X 60% = $8,499.60

Car Loan $2,500/mth
Personal Loan $890/mth

Mr Tan will only be left with $5,109.60

Stress Test

Newly Purchase Monthly Installment will be computed based on a standard rate of 3.5% (Introduce by MAS) for residential property to access customer debt repayment ability

Although Mr Tan might be paying only $4,000+per month , across the banking industry, Bank will use $5,106.36 to calculate on Mr Tan's debt repayment ability.

Assuming that Mr Tan do not have any other commitment, the maximum loan that he is able to obtain based on 80% loan will be $1.02mil*, 25 years loan tenor.

*Do take note that  there are some bank which take into consideration of credit card minimum payment as a commitment. The above example is compute purely based on his car and personal loan.

If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg