Personal Finance

How To Calculate Housing Loan Monthly Installment In Singapore

March 18, 2023

Calculating your housing loan monthly installment in Singapore is a crucial step in determining your budget and ensuring you can comfortably afford your new home.

Understanding how various factors such as loan amount, interest rate, and repayment period affect your monthly payments can help you make informed decisions and plan accordingly.

This guide will walk you through the steps of how to calculate your housing loan monthly installment in Singapore and provide useful tips to consider to keep your home loan affordable.

How Much Loan Can You Borrow For Your New Home?

Getting a new home, whether it’s your first or second home can be an exciting experience. For most people, taking out a loan to finance a new home is the most popular option.

Note that you can use a Singapore mortgage loan calculator or a Singapore property loan calculator to have an idea of how much you can borrow without having to do the numbers.

Regardless, how much you can borrow depends on three critical factors.

  1. The Loan-to-Value (LTV) Ratio
  2. Mortgage Servicing Ratio (MSR)
  3. Total Debt Servicing Ration (TDSR)

The Loan-to-Value (LTV) Ratio

This is the maximum amount you can borrow for a home loan. The maximum LTV banks can offer is 75%, while HDB loans are capped at 80%.

Your LTV is calculated by dividing the loan amount by the property value.

To determine your LTV, lenders will take into consideration the following.

  • Loan tenure
  • Monthly repayment installment as a proportion of your gross monthly income
  • All other credits and loans you’re servicing (including outstanding home loans)
  • Discounts, rebates, or any benefit given.

The following table shows the LTV limit you can get when borrowing from a bank depending on if you have or don’t have an outstanding home loan.

Outstanding Home LoansLTV RatioMinimum Cash Downpayment
075% or 55%* 5% (75% LTV)
* 10% (55% LTV)
145% or 25%25%
2 and above35% or 15%25%

Be aware that the lower LTV is used if the loan repayment period is more than 30 years (25 for HBD flats), or if the repayment period goes over “65 years” borrower’s age limit.

Mortgage Servicing Ratio (MSR)

This shows the proportion of your gross monthly income that is used to repay your mortgage(s).

It is calculated as Monthly Mortage Repayment / Monthly Gross Income.

Keep in mind that MSR is only calculated for HDB flats and ECs, and is limited to 30% of your monthly gross income.

For instance, if you receive $6,000 per month in income, all your monthly home repayments cannot exceed $1,800.

Total Debt Servicing Ratio (TDSR)

The TDSR shows the proportion of your gross monthly income that is used to service all of your outstanding debts such as a mortgage, student loans, car loans, renovation loans, etc.

It is calculated by diving your total monthly debt repayment amount by your gross monthly income.

How much you can borrow for your new home depends on your TDSR, which is limited to 55% of your monthly gross income.

What Is A Mortgage Repayment?

A mortgage repayment is a payment made by you to a lender to repay a loan taken out to purchase a property. The payment typically consists of both principal and interest and is usually made monthly over a specified repayment period, which can range from 5 to 30 years.

The amount of each repayment is calculated based on the loan amount, interest rate, and repayment period, and is designed to repay the loan in full by the end of the repayment period.

Making timely mortgage repayments is crucial to maintaining good credit and avoiding additional charges or penalties.

How Much Mortgage Payment Can You Afford?

Before we consider how to calculate your housing loan monthly installment, you have to ask yourself the above question.

The amount of mortgage payment or monthly installment you can afford will depend on your personal financial situation, including your income, monthly expenses, and other debt obligations.

A general rule of thumb is to keep your housing expenses, including mortgage payments, property taxes, and insurance, to no more than 30% of your monthly income, or no more than 2.5 times your annual income.

To determine your affordable mortgage payment, you can use a loan repayment calculator or a monthly installment calculator, or a mortgage affordability calculator that takes into account your income, expenses, and other debt obligations to give you an estimate of the monthly payment you can afford.

It is also important to consider other factors such as interest rates and property prices and keep some cushion in your budget for unexpected expenses.

Additionally, you should also consider other factors that can affect your monthly mortgage payments such as the loan-to-value (LTV) ratio (which has been explained above), interest rate, and the repayment period.

A higher LTV ratio means you need to come up with a smaller downpayment and a lower LTV ratio means a higher downpayment, which can affect your monthly payments.

Higher interest rates will result, and a longer repayment period will result in lower monthly payments, but you will end up paying more interest over the life of the loan.

It is vital to keep in mind that buying a home is a long-term commitment and you should aim to choose a mortgage payment that you can afford not just now, but in the future as well.

This means considering potential changes in your income and expenses, such as having children or starting a business, and adjusting your mortgage payments accordingly.

How To Calculate Housing Loan Monthly Installment

Calculating your housing loan monthly installment involves several steps:

  1. Determine the loan amount: This is the amount you need to borrow to purchase the property.
  2. Calculate the interest rate: This is the cost of borrowing money and can vary based on the lender and loan type.
  3. Determine the repayment period: This is the length of time over which you will repay the loan, typically ranging from 5 to 35 years.
  4. Use a mortgage calculator: Input the loan amount, interest rate, and repayment period into a mortgage calculator to determine the monthly installment. Most online calculators will provide an estimate of the monthly payment, including both principal and interest.
  5. Consider other costs: Your monthly mortgage payment may not include all the costs associated with homeownership, such as property taxes and insurance, so be sure to factor these in when determining your monthly budget.

How To Use A Mortgage Calculator

Using a  Mortgage calculator also called a home loan calculator in Singapore is a simple process:

  • Input the loan amount: Enter the amount you need to borrow to purchase the property.
  • Enter the interest rate: Input the interest rate offered by the lender.
  • Determine the repayment period: Specify the length of time over which you will repay the loan, typically ranging from 5 to 30 years.
  • Calculate: Hit the “Calculate”, “Enter” or “Submit” button to get an estimate of the monthly installment.
  • Review the results: The calculator will provide an estimate of the monthly payment, including both principal and interest, as well as the total amount of interest paid over the life of the loan.

Keep in mind that mortgage calculators are estimates and the actual monthly payment may vary based on the lender’s terms and conditions. It is recommended to approach multiple lenders for a more accurate calculation of your monthly mortgage payments.

Let Housing Loan Experts Help You Calculate Your Monthly Repayments

Get accurate information about your housing loan repayments by contacting us today at GS Credit.

If you also need a downpayment for your new home, you can get a bridging loan with us at an affordable interest rate.

You can also take out a personal loan to finance your monthly installments if you have a financial constraint. To do so, apply for a loan online right away, and get disbursed in minutes.

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