Mortgage Servicing Ratio (MSR) limit – HDB for sale Singapore
To ensure financial prudence in purchase of public housing and discourage over-consumption, HDB reduced the maximum tenure for HDB housing loans from 30 years to 25 years. The Mortgage Servicing Ratio (MSR) limit will also be reduced from 35% to 30% of the borrower’s gross monthly income. HDB for sale Singapore.
These measures are in line with those introduced by the Monetary Authority of Singapore (MAS) to encourage financial prudence among borrowers, which is especially important given that the current low interest rate environment is unlikely to be sustained. HDB for sale Singapore.
In tandem, the MAS reduced the maximum tenure of new housing loans and re-financing facilities granted by financial institutions for the purchase of HDB flats (including DBSS flats) from 35 years to 30 years. New loans with tenures exceeding 25 years and up to 30 years will be subject to tighter loan-to-value (LTV) limits. HDB for sale Singapore.
For a borrower who has no outstanding housing loan, the LTV limit will be 80%, if the loan tenure does not exceed 25 years and the loan period does not extend beyond the borrower’s retirement age of 65. If the loan tenure exceeds 25 years or if the loan period extends beyond the borrower’s retirement age of 65, the LTV limit for the loan will be 60% – HDB for sale Singapore.
Where a borrower applies for a re-financing facility in relation to the purchase of a HDB flat or DBSS flat, the sum of the tenure of the re-financing facility and the number of years since the first housing loan granted to the borrower for the purchase of that flat was first disbursed, cannot exceed 30 years – HDB for sale Singapore.
The revised rules on loan tenure will not apply to new loans, if the borrower is able to produce to the financial institution, a letter from HDB inviting him to select a flat from a sales exercise launched before Jul 2013. HDB for sale Singapore,
Effective dates for revised Mortgage Loan Terms
| Transaction Type | For revised HBD loan Terms | For revised bank loan terms |
| Purchase of flat from HDB | Application for HLE letter received on or after 27 Aug 2013, 5:30pm and sales exercises launched from Jul 2013 | OTP granted on or after 28 Aug 2013 and sales exercise launched from Jul 2013 |
| Purchase of resale flat | Application for HLE letter received on or after 27 Aug 2013, 5:30pm | OTP granted on or after 28 Aug 2013 |
| Taking over of ownership of existing flat | Application for HLE letter received on or after 27 Aug 2013, 5:30pm | OTP granted on or after 28 Aug 2013 |
| Purchase of flat under the Design, Build and Sell Scheme (DBSS) | Application for HLE letter received on or after 27 Aug 2013, 5:30pm | OTP granted on or after 28 Aug 2013 |
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