Home Loan Information
What is the purpose of Housing Loan Regulations impose by Monetary Authority of Singapore (MAS)?
One of the reason is to protect you and me from over borrowed when acquiring property.
What are some other objectives of Housing Loan Regulations by MAS.
- Encourage financial prudence among borrowers.
- Prevent borrowers from circumventing LTV limits and TDSR thresholds.
- Ensure long-term household economic health.
- Strengthen credit underwriting standards at financial institution (FI).
- Ensure long-term stability in the property market.
Home Loan Rules
* Maximum LTV Limit and Minimum Cash down payment is based on Purchase Price or Valuation which ever is lower.
* Total Debt Serving Ration (TSDR) is based on Borrowers total salary.
Mr and Mrs Yeo decided to purchase a 3 bedrooms unit at Sengkang Grand Residences at $1.3 million. Mr Yeo is 42 years and Mrs Yeo is 36 years old with a gross monthly income of $8,000 and $6,000 respectively.
To determine their average age, we need to use the formula for income weighted average age :
(Borrower 1's Age * Borrower 1’s gross monthly income / (Total of Borrower 1 and 2’s gross monthly incomes)) + (Borrower 2’s Age * Borrower 2’s gross monthly income / (Total of Borrower 1 and 2’s gross monthly incomes))
(42 * $8,000 / ($8,000 + $,6000)) + (36 * $6,000 / ($8,000 + $6,000)) = 24 + 15.43 = 39.43
Their income weighted average age is 39.43 years old.
Maximum Loan to Value Limit (LTV) = 75% * Purchase Price = 75% * $1.3 million = $975,000
Their maximum loan amount from financial Institution is $975,000.
Please contact us if you need clarification on financial calculation. Our friendly consultants are more than willing to assist you.