Real Estate

TDSR, MSR and LTV: How Do They Promote Responsible Borrowing? For almost anyone doing it for the first time, buying a home in Singapore can be a confusing process. Throw in a bunch of acronyms, like ABSD (Additional Buyer’s Stamp Duty) and MOP (Minimum Occupation Period), and things can get baffling real quick. However, if you’re intending to take out a loan on a new home purchase, two terms that you’ll absolutely need to know are TDSR and MSR. In their full form, TDSR stands for ‘Total Debt Servicing Ratio’, whereas MSR means ‘Mortgage Servicing Ratio’, and they’re both Government initiatives to promote responsible borrowing. Below, we explain how TDSR and MSR came about, their purpose, and how to determine your housing affordability using both ratios. What exactly are TDSR and MSR? And how did they come to be? Introduced by the Monetary Authority of Singapore (MAS) in 2013, the TDSR is a framework applying to all property loans extended by banks to borrowers. Its rollout is to promote prudency amongst individuals taking loans, so that they don’t end up borrowing more than they could afford. Therefore, the TDSR, which limits debt repayments to a certain percentage of gross monthly income, is first and foremost a safety net. When the TDSR was first introduced in 2013, borrowers were allowed to spend up to 60% of their gross monthly income on loan servicing. Subsequently, that limit was tightened to 55% in 2021. Put differently, this means that under TDSR guidelines, a borrower should have a total debt value of under 55% of his or her monthly salary to be able to take out a mortgage. Similarly, for the MSR, it places a cap on the percentage of monthly income that borrowers can use for mortgage repayments. In 2013, the MSR threshold was set at 30% for HDB flat purchases that are financed by bank loans, and it has stayed that way since. How are TDSR and MSR applied differently for home purchases? If there’s a key difference between TDSR and MSR that’s worth highlighting, it’s that TDSR applies to all types of housing loans, whereas MSR applies only to loans for buying an HDB flat OR an Executive Condominium (EC) that still hasn’t completed its MOP. Hence, supposing that you’re a homebuyer who wishes to take out a home loan for an HDB flat or EC purchase, you’ll have to comply with both the MSR and TDSR limits.  The differences of both ratios are summarised in the table below. Table 1: Summary of the differences between TDSR and MSR TDSR MSR Definition Refers to the portion of a borrower’s gross monthly income that goes towards repaying the monthly debt obligations, including the loan being applied for Refers to the portion of a borrower’s gross monthly income that goes towards repaying all property loans, including the loan being applied for Properties that this loan applies to All property types HDB flats and ECs only Threshold 55% of borrower’s gross monthly income 30% of borrower’s gross monthly income Debt Obligations included All debt obligations (e.g. Car loans, student loans) Only property loans (Including the one being applied for) How it is calculated TDSR = (Total monthly debt)/(Gross monthly income) x 100% MSR = (Total monthly mortgage repayment(s))/(Gross monthly income)  x 100% It’s also worth bringing up (again) that both TDSR and MSR account for different financial considerations. TDSR factors in all of a borrower’s unsettled debt, including loans taken out for housing, cars, education, credit cards, and so forth. In comparison, MSR is more straightforward as it’s solely calculated on a borrower’s monthly income. For borrowers buying an HDB or EC unit, their household monthly income will first be assessed using the MSR on their loan quantum to calculate the maximum amount they can repay monthly. Thereafter, buyers will be further subject to a second round of assessment, which will consider all their debt repayments are within the TDSR limits. Should the borrowers have outstanding debts such as car loans, it may affect the amount they borrow and they may not get the maximum MSR loan amount. How do you calculate MSR based on your household income? In general, a borrower’s MSR can be derived by dividing their total monthly mortgage repayments by their gross monthly household income. Assuming Party A has a gross monthly income of $10,000, his MSR calculations would be so… $10,000 x 30% = $3,000 In another scenario, if Party A has an existing debt of $4,000 and a gross monthly income of $10,000, his MSR calculations would be so… Maximum MSR loan amount = $10,000 x 30% = $3,000 Maximum TDSR loan amount = $10,000 x 55% = $5,500 Maximum MSR loan amount that can be taken to meet TDSR limit = $5,500 – $4,000 (Existing debt) = $1,500 In other words, even though Party A’s maximum mortgage affordability is $3,000 (based on the current MSR threshold of 30%), their existing debt of $4,000 limits their borrowing capacity to just $1,500. To gauge the estimated loan quantum a household can secure based on MSR, one can refer to the sensitivity analysis table below. With a monthly household income of $16,000, a family can afford a home of up to $1.01mil, which works out to the price of a 2-room condo in the OCR. Table 2: MSR Sensitivity Analysis- Based on Value Of Property on Household Income and Mortgage Rates for a 25 Year Loan Interest Rates Interest Rates Interest Rates Interest Rates Household Income Monthly Payment 3.00% 3.50% 4.00% 4.50% $10,000 $3,000 $633,000 $600,000 $569,000 $540,000 $11,000 $3,300 $696,000 $660,000 $626,000 $594,000 $12,000 $3,600 $760,000 $720,000 $683,000 $648,000 $13,000 $3,900 $823,000 $780,000 $739,000 $702,000 $14,000 $4,200 $886,000 $839,000 $796,000 $756,000 $15,000 $4,500 $949,000 $899,000 $853,000 $810,000 $16,000 $4,800 $1,013,000 $959,000 $910,000 $864,000 $17,000 $5,100 $1,076,000 $1,019,000 $967,000 $918,000 $18,000 $5,400 $1,139,000 $1,079,000 $1,024,000 $972,000 $19,000 $5,700 $1,202,000 $1,139,000 $1,080,000 $1,026,000 $20,000 $6,000 $1,266,000 $1,199,000 $1,137,000 $1,080,000 How do you calculate TDSR? Similar to MSR, it’s possible to derive a borrower’s TDSR with

Bukit Timah Turf City – What You Need to Know About Bukit Timah’s Upcoming Housing Estate Bukit Timah is traditionally known to be a prime residential area consisting predominantly luxury private condominiums and landed homes, as well as being located near the Core Central Region (CCR). But this could soon change over the next 20 to 30 years.  So you see, the Urban Redevelopment Authority (URA) and the Housing & Development Board (HDB) has announced a development plan on May 2024 that will see the Bukit Timah Turf City being redeveloped into a new residential estate.  More importantly, Bukit Timah will see the inclusion of Build-to-Order (BTO) flats for the first time in almost 40 years! Here is what you need to know about this upcoming estate. Bukit Timah Turf City had a colourful past  Spanning 176 ha, Bukit Timah Turf City was  once an area dedicated to sports and recreational activities, and most notably horse racing. Known formerly as the ‘Singapore Turf Club’, the site was used for horseracing from 1933 to 1999, and was a popular haunt for avid punters for over 66 years, According to the Minister of National Development Desmond Lee, “the site was zoned for residential use since 1998, but was leased out for lifestyle and recreational use until the end of 2023”. Since then, Bukit Timah Turf City has been home to a several sports associations such as a saddle club, country clubs, commercial spaces, and other sporting facilities.  When the Singapore Turf Club shifted to Kranji, the site transformed into a shopping complex serving the immediate residents of the private residential enclave.  Football match held at Turf Club Why the Need to Redevelop Turf City?  Currently, the piece of land that was once home to Singapore Turf Club is not being utilised well, and has a high redevelopment potential to make the area lively like it once was. Additionally, Bukit Timah is made up predominantly of private residential properties, available only to a select few, which has cultivated the area’s reputation as a prestigious neighbourhood for the wealthy. Thus, through integrating public and private housing in the upcoming housing estates, this will foster inclusivity among people of different financial background and help breakdown any stereotypes of the area. Furthermore, those working or schooling in the area would be interested in affordable properties that are conveniently located in an esteemed neighbourhood. Diversify Housing options in Bukit Timah This area, together with the rest of Bukit Timah, is widely perceived as exclusive due to the surplus of private residential properties there, and its central and accessible geographical location. Therefore, a greater diversity of housing types would be beneficial to a wider group of people who are looking to live in a centrical location nearer to their workplaces, schools and the CCR. Furthermore, by introducing public housing in this area will allow children from diverse backgrounds to attend popular schools in the area. Better amenities and connectivity Bukit Timah Turf City’s rich history can be seen in the many buildings and structures that represent the former Turf Club’s distinct aspects, and will be studied for retention and repurposing to integrated it with the new residential enclaves in the future. Artist’s Impression of a repurposed Fairways Quarters and community space Other amenities will include recreational spaces and sports facilities, that will bring convenience to users and at the same time, showcasing the area’s distinct past. The new neighbourhood will be built around the former grandstand and the current oval shaped open space will be retained for recreational purposes.  As for transport nodes, Bukit Timah Turf City currently has no bus services, and the nearest MRT station is Sixth Avenue. Therefore, improving the connectivity of Bukit Timah Turf City with new bus services and MRT lines would benefit both new and existing residences living in that area. What Can We Expect with the Upcoming Estate Bukit Timah Turf City is expected to yield 15,000 to 20,000 residential homes, both private and public, across four distinct neighbourhoods, namely Racecourse Neighbourhood, Stables Commune, Saddle Club Knolls and Tinggi Hills.  Map of the 4 New Neighbourhoods in Bukit Timah Turf City To cater to the needs of future residents, these neighbourhoods will feature open public spaces integrated with historic buildings and structures, a variety of amenities including shops, community and recreational facilities, as well as improved transport connections. Additionally, the Bukit Timah Turf City is planned to be car-lite, pedestrian friendly and well-served by public transport. Due to this, there will be fewer spaces dedicated to car parking to free up space for more greenery and community spaces.  Improved connectivity The area is currently served by Sixth Avenue MRT Station on the Downtown Line (DTL), which is 15 minutes away from the site. By 2032, Turf City will have its own MRT station on the upcoming Cross Island MRT Line. Residents will be within a 10-minute walk from either MRT station, increasing convenience and connectivity between Bukit Timah Turf City and the rest of the island, without the need for a private vehicle. Furthermore, new bus services may also be added to allow future residents to have more choices when travelling within and outside the Bukit Timah Turf City estate. Cross Island MRT Line Road improvement works will also be carried out along Dunearn Road, Bukit Timah Road and Eng Neo Avenue to accommodate anticipated traffic to and from future developments at Bukit Timah Turf City. Concurrently, a study is being conducted on the technical feasibility and impact of implementing a new exit ramp from the Pan Island Expressway (PIE) towards Tuas at Bukit Timah Turf City.  BTO flats in Bukit Timah could be a’ golden ticket’ to enter popular Schools After almost 40 years, URA and HDB has announced that HDB flats will be included in this area. The inclusion of HDB flats aims to provide a more affordable housing option for Singaporeans who wish to live in this area. Existing HDB flats are older and area limited in