Chief Editor April 27 2020

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Total debt servicing ratio (TDSR) waived for deferred mortgage payments

Property owners whom apply to defer payments for their secured mortgage loans will not be subject to the total debt servicing ratio (TDSR) according to the Monetary Authority of Singapore (MAS).

For residential properties, borrowers are not subject to TDSR when they apply to defer either their principal payment or both principal and interest payments on their mortgages. Interest will accrue only on the deferred principal amount.

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.

Those seeking to refinance owner-occupied residential mortgages will not be subject to TDSR and LTV limits. The aim is to help borrowers with fixed rate mortgage packages that are out of the lock-in period, and who want to refinance their loans at a lower interest rate.

In addition, MAS indicated that the mortgage servicing ratio (MSR) is lifted too. The MSR refers to the portion of a borrower's gross monthly income that goes towards repaying all property loans, including the loan being applied for. It applies only to housing loans for the purchase of an HDB flat or an executive condominium (ECs) bought directly from a developer. Otherwise, MSR is capped at 30 per cent of a borrower's gross monthly income.

Therefore, if you wish to refinance your owner-occupied loans for HDB flats or ECs, you will not be subject to both TDSR and MSR.

Those with mortgage equity withdrawal loans secured on their existing private residential and non-residential properties will also be exempted from TDSR limits if the LTV ratio does not exceed 50 per cent, as per an adjustment already introduced in March 2017.

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. 

Small and medium sized enterprises (SMEs) borrowers are not subject to TDSR if they apply for payment deferments on their secured property loans. SMEs are defined as sole proprietors or firms which have annual sales turnover of up to S$100 million or employment size of up to 200 workers. This payment deferment relief was announced by MAS on 31 March as part of the financial industry’s relief package for SMEs.

Businesses that have taken up mortgage equity withdrawal loans (MWLs) secured on residential or non-residential properties are also not subject to TDSR and loan-to-value (LTV) limits. These include corporations, limited liability partnerships, and partnerships.