While there were already tons of news and posts about the Total Debt Servicing Ration or TDSR, many are still confused as to how it really works. The topic about TDSR is something that must be understood up to the smallest detail especially those who would like to buy their own residential property soon.
The Monetary Authority of Singapore launched the TDSR framework last 2013 to prevent buyers from overextending their property purchase. This is to avert any problems that may result from buying investments that are beyond their means.
Thru banks and other financial institutions, the TDSR limits the amount that you can borrow. They can only lend you an amount equivalent to the 60 percent of your current gross income every month. However, it can still be affected by your outstanding debts such as personal loans, credit card balance, car loan, student loans or term installment plans if you have any and your credit standing as well. It would be easier for you to get an approved application if you can show them the documentations of your outstanding debts.
If in case you want to buy a property say from North Park Residences, Botanique @ Bartley or Adana @ Thomson, and you exceeded the 60% TDSR, you may lower the amount that you want to loan from the bank or pay off your other outstanding debts prior to your application. This would allow you to free some funds from your monthly income and let the bank adjust the loan payment for your property investment.
Many also tried to request their banks to consider refinancing and computing their loan again to score a lower interest rate. It is however restricted to several exemption rules including a credit assessment from your bank, completed your debt reduction plan with the financial institution or if you purchased your property before the June 29, 2013.