COVID-19: Waiver Of TDSR For Deferment And Refinancing Of Mortgage Payment 2020

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Mortgage Payment

In consideration of the current COVID-19 situation that has caused a significant strain on cash flow and uncertainties for many individuals and businesses, Monetary Authority of Singapore (MAS) has issued a media release on 7th April 2020, clarifying the application of the loan-to-value (LTV) limits and total debt servicing ratio (TDSR) for residential mortgage and mortgage equity withdrawal loans (MWLs).

What Is Total Debt Servicing Ratio (TDSR):

Implemented in June 2013 by MAS, the Total Debt Servicing Ratio (TDSR) is a structure that shields borrowers against over-gearing for their property purchase(s). In general, the TDSR limits the amount individuals can spend on their monthly mortgage repayments, against a certain percentage of their gross monthly income. All banks and financial institutions in Singapore must stick to the TDSR.

The TDSR applies to private properties, not HDB properties. (For Executive Condominiums that are yet to be fully privatized, you have to meet both the Mortgage Servicing Ratio and TDSR.)

The TDSR limits your monthly home loan repayment to 60% of your monthly income. And this 60% is inclusive of all your other debt obligations. For instance, with a monthly income of S$10,000, this implies that your home loan repayment can be approved up to S$6,000 per month - Only if you do not have other outstanding debts. 

However, if you already have other fixed monthly commitments such as your car loan or any other personal loan which costs around S$2,000 per month, then this means that your monthly home loan repayment cannot exceed S$4,000 in this case. (*For credit card outstanding payments, the minimum payment sum will the basis to calculate the TDSR) 

So what does the waiver of TDSR mean for property owners?

For Individuals (including Sole Proprietors)

1   The TDSR will not apply to:

  • deferment of mortgage repayments (for residential, commercial, or industrial properties);
  • refinancing of owner-occupied residential mortgages;
  • mortgage equity withdrawal loans if the LTV ratio does not exceed 50%; and
  • unsecured credit facilities such as credit cards and personal loans.

2   Borrowers are not subject to TDSR when they apply to defer either their principal payment or both principal and interest payments for their residential mortgages. This relief, announced by MAS on 31 March 2020 as part of an industry-wide package, applies to residential property purchase loans and MWLs, including those under Debt Reduction Plans, and extends to both owner-occupied (HDB and private) and investment properties. Interest will accrue only on the deferred principal amount.

3   Most major retail banks have extended payment deferments to individuals with commercial or industrial property loans as well. As in the case of residential mortgages, these borrowers are not subject to TDSR when they defer their repayments. They can approach their lenders to seek assistance and explore possible relief measures.

4   Borrowers are not subject to TDSR and LTV limits when they refinance their loans for owner-occupied residential properties.  This will help borrowers with fixed rate mortgage packages that are out of the lock-in period who want to refinance their loans to obtain a lower interest rate.

5   Borrowers who take up MWLs secured on their existing private residential or non-residential properties are not subject to TDSR if the LTV ratio does not exceed 50%. This adjustment was introduced in March 2017 and is intended to help individuals monetise equity in properties that they already own.

6   Borrowers are not subject to TDSR requirements when they take up unsecured credit facilities, such as personal loans and credit cards. However, there are minimum income requirements for such facilities, and MAS has also put in place measures such as the industry-wide borrowing limit to promote financial prudence and avoid the excessive accumulation of debt that would lead to future financial strain. In this regard, we urge individuals to exercise prudence when tapping into credit lines.

For Business Owners and Small-Medium sized Enterprises (SMEs)
7   SME borrowers [1] are not subject to TDSR when they apply for payment deferments on their secured property loans.  This payment deferment relief was announced by MAS on 31st March 2020 as part of the financial industry’s relief package for SMEs.

8   Businesses [2] that take up MWLs secured on residential or non-residential properties are not subject to TDSR and LTV limits. This is provided under MAS’ current rules to facilitate the provision of credit to businesses, some of which may rely on MWLs to finance their operations.

[1] Defined as firms or sole proprietors which have annual sales turnover of up to S$100m or employment size of up to 200 workers.

[2] These include corporations, limited liability partnerships, and partnerships.

Above are the general guidelines that MAS has advised banks and financial institutions with regards to the TDSR requirements, so as to allow more property owners to refinance their property at lower interest rates. This allows interest savings and also ease of refinancing where in the past when they failed the TDSR guidelines, they were subject to a 3% debt repayment plan.

However, we have realized that some banks and financial institutions have not followed these guidelines, despite the circular from MAS.

There are only a small number of banks and financial institutions that have relaxed their TDSR criteria for refinancing. We have collated a few and their criteria are as follows:

1) Any loan size below S$4 million per property

2) The LTV below 70% (If with equity loan, below 60%)

  • What it means is that if your property is valued at S$1 million and your loan is below S$700,000, TDSR will not be applied in this case


3) Subject to prompt payment of residential mortgage loan of at least 12 months, and the loan need to be effected for more than 24 months

4) Last 12 months personal credit cards payment need to be paid in full

5) No additional equity loan i.e only for pure refinancing but existing equity loan can be refinanced. 

6) Borrowers can apply for refinancing even with no income

7) No requirement for 3% Debt Repayment Plan for both owner-occupied or Investment property. 

The above criteria are especially good for retirees with no income, borrowers who have lost their income at the start of the year, and foreigners as the TDSR ratio can exceed even 1000% as long as they meet the above criteria.*

*Note: Even if all the above criteria are met, it is still subjected to participating banks' and financial institutions' approval.

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