Step 1: Derive Your maximum loan Borrowing Capacity.
There are TWO key numbers to determine the maximum loan amount:
a) MSR (Mortgage Servicing Ratio): The *new mortgage repayment amount should not exceed 30% of your combine income. (*based on 3.5% stress test interest rate, and Maximum till 65 years old loan tenure).
b) TDSR (Total-debt-servicing-ratio): The new mortgage repayment & your other existing loan monthly commitment should not exceed 60% of your combine income.
Once you know your maximum loan borrowing capacity, you can always work backward to derive your budget for new HDB.
It is an important step. With a written IPA from bank will give you a peace of mind for securing a mortgage and avoid unnecessary lost of booking fee. We always ask our client do not underestimate this step especially under stringent regulation and check in bank.
We will recommend you a few bank packages based on your criteria, and assist you on the documentation and follow up with respective banker.
Normally, IPA only last for 1 month. Any annoucement of new regulation, IPA will always become obselete.