Good evening and thank you for your query,
Based on latest measures on TDSR (Total Debt Servicing Ratio) of 60%, you can use a maximum 60% of your salary to service all debts (credit card bills, car loan repayment etc) and keep at least 40% of your salary as living expenses.
The interest rates used by banks to estimate new home loan mortgages based on this TDSR is 3.5%. This ratio is considered prudent, hence if you are able to keep within the ratio and the mortgage interest rates maintain below 3.5% you may not be over-committing.
Illustration of buying first property:
For Property Value: $1.3mil
1. Salary Required to qualify for 80% loan for Borrowers below 35 years old (30 years Loan Tenure): $7,800
*$13k Salary would allow loan for a property of up to $2.15mil, provided you have $490k in Cash/CPF
2. Minimum Cash/CPF Required for $1.3mil Property: $293,600 of which minimum $65k must be in cash
*If age of borrowers are older, salary required will be more
*If taking lesser than 80% loan, salary required will be lower, cash/CPF required will be more
3. Monthly mortgage repayment is as you estimated at $3.8k-$4k and can be fully deducted from your CPF Ordinary Account balances provided that the withdrawal limit on the use of CPF for housing has not been reached (120% VL). More info on buying a property using CPF can be found here: http://mycpf.cpf.gov.sg/CPF/my-cpf/buy-house/CPFHousing_Leaflet.htm
Important note to consider when upgrading if your existing property is a private property and still under mortgage:
1. Ensure you sell first before buying, otherwise you may incur ABSD (payable only in cash, not CPF)
2. If you buy second property before selling the first one and still have existing home loan, the second home loan will only be maximum 50% of the property value and require minimum 25% cash
3. If you buy second property before selling the first one, you can only use CPF after you have set aside half of the minimum sum in OA & SA
I hope my explanation is helpful.
As we do not get prompted when there is a respond here, kindly contact me directly should you require clarification or further assistance.
Have a pleasant week ahead.
Warm Regards,
Karrien N. Chan
CEA Reg. No.: R052532H
Mobile: +65 822 50 212
Email: karrien.realty@yahoo.com
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