Property finance & financial calculations

Study notes

The numbers section: TDSR, MSR and LTV decide what a buyer can borrow; interest and amortisation decide what they pay. The exam computes — bring the formulas warm.

What you must know

• The total debt servicing ratio (TDSR) caps all monthly debt obligations at 55% of gross monthly income for bank-issued property loans.
• The mortgage servicing ratio (MSR) caps the monthly instalment at 30% of income for HDB flat loans (and bank loans financing HDB flats) — MSR is applied on top of TDSR.
• Loan-to-value limits cap the loan against the lower of purchase price or valuation — the first bank loan on private property reaches 75%, with tighter caps on second and subsequent loans; HDB housing loans run to 80%.
• The cash component matters: bank loans require a minimum cash share that CPF cannot cover, rising with each additional concurrent loan.
• Loan tenures are capped (30–35 years depending on borrower age and property), and longer tenures reduce the permissible LTV.
• CPF Ordinary Account savings can fund the down payment and monthly instalments within the withdrawal limits.
• Simple interest is charged on principal only; compound interest charges on interest already accrued — amortisation schedules weight early instalments towards interest.
• Valuation versus price: a price above valuation widens the cash gap, because the loan caps ride on the lower figure.