Loan Eligibility (IPA)
We Advice On:
An In-Principle Approval (IPA) is an informal application to a bank to secure a housing loan without a formal submission of your Option To Purchase (OTP). It is recommended to secure an IPA before you place a deposit for your new property purchase.
It does not constitute a formal offer of a housing loan from a bank but serves as a confirmation of your maximum housing loan eligibility. The validity of an IPA is usually 30 days during which if an OTP is submitted, a formal letter of offer from the bank will be generated.
It is recommended not to apply for any other credit facilities (credit card, car loan, personal loan etc) during the 30 day period which will cause an increase in your debt obligations and invalidate your original IPA.
Our mortgage consultants will assist you to secure an IPA with various banks so that you increase your chances of approval.
*There does not need to be a resubmission of documents during the 30 day validity period if there are no changes to income or debt obligations
- Total Debt Servicing Ratio (TDSR)
TDSR is basically a ratio of your total monthly debt obligations (including the monthly instalment of the future housing loan you are applying for) to your monthly gross income.The TDSR limits are usually imposed at 60% which means that your total monthly debt payments cannot exceed 60% of your monthly gross salary.
- Mortgage Servicing Ratio (MSR) – *Applicable to HDB and Executive Condominiums only*
MSR limits are only applicable for HDB properties and if you are purchasing a HDB unit above $500,000 it would be trickier to clear the MSR limits due to the significantly higher gross monthly income required.
The MSR limits are similar to TDSR limits in the sense that they are both ratios of your gross monthly salary to a debt obligation. The key difference is that unlike TDSR which takes all your monthly debt obligations into account, MSR only takes the applicable monthly instalment of the housing loan you are applying for.
MSR is a ratio of your monthly home loan payments to your monthly gross income. The MSR limits are usually imposed at 30%.
DollarBack Mortgage Consultants will perform TDSR calculations and recommend techniques to secure your desired loan amount.