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How Does The TDSR Debt Servicing Ratio Affect Self-Employed?

+By Sean Lim

Founder of FindaHomeLoan.co

Trusted by clients, Quoted in media

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+TDSR Haircut on Self-Employed Income

Your declared income will be subjected to a 30% haircut or discount before subjected to assessment by banks.

Say your taxable income is $100,000 last year, the bank will regard it as $70,000. This will reduce your borrowing limits.

+30% MSR for HDB flats

For purchase of HDB flats regardless of BTO/ DBSS or resale, there is another restriction! The combined monthly instalments cannot exceed 30% of your gross monthly income.

This rule is known as the Mortgage Servicing Ratio (MSR) and is applicable to HDB purchases only.

Refer to this article for detailed explanation on the HDB mortgage servicing ratio (MSR).

+Pledging Of Assets To Boost Income

MAS allows you to pledge assets that can be amortized over 4 years as income streams. Assets such as cash, stocks are recognized.

Valuations of certain assets are recognized at 100% (meaning no haircut) while some are subjected to a 30% discount. If you choose to pledge less than 4 years, the discount is bigger resulting in a smaller income streams.

Read more about how pledging of assets works.

Para 20 of MAS Notice 645 shows the pledging discounts and assets accepted.

+What Should You Do First?

Obtain in-principle approval will be the recommended and prudent step to do before entering into a sales and purchase agreement. It is a non-committal, no-obligation and free application that banks will process.

To mortgage rates and contact us for in-principle approval. begin, check out this page for an overview on the available

Our expert mortgage specialists will help you.

If you are a non-Singapore citizen, read about how permanent

residents and foreigners are impacted by the cooling measures.

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