According to the Monetary Authority of Singapore (MAS), certain limits in the delayed payments for consumer loans and mortgages will be renounced to aid the borrowers to get over the economic setback.
The agency made it clear that the total debt servicing ratio (TDSR) will not be applicable to the deferment of mortgage repayments concerning commercial, residential and industrial property dues, unsecured credit facilities including personal loans and credit cards and refinancing of residential mortgages that are essentially owner-occupied.
Furthermore, mortgage equity withdrawal loans (MWLs) will also not be classified under TDSR, if the loan-to-value (LTV) ratio doesn’t go beyond the 50% mark. TDSR principally keeps a track of the amount that buyers can borrow for a property loan.
The borrowers’ due for the monthly repayments for the cumulative debts, shouldn’t nonetheless, surpass 60% of their monthly income. This figure comprises credit card bills, mortgages, personal loans, and car loans. As per the guidelines of LTV, the loan amount is equivalent to the percentage of the property’s value.
MAS has asserted that the borrowers will be relieved from TDSR limitations only if they make an application to adjourn either the principal amount or both the interest and principal payments for the pending home loans. The interest will only build on the deferred principal amount.
This respite is applicable for MWLs and home loans that come under the grouping of debt reduction plans and encompasses investment and owner-occupied properties. The clarification that was put forward by MAS was a response to the doubts and queries of the media and public pertaining to its recommendations for deferment of mortgage payments and secured loans, and assistance for businesses to prompt them to look for recourses that would successfully comply with their cash flow requirements.
Property consultants are of the opinion that the latest statement of MAS will shed light on all the discrepancies that popped up regarding the relief package publicized last week. The chief objective of this step, as per Mr. Desmond Sim’s words, is to lend out a helping hand towards people who are finding it difficult to manage their finances in such tough times and consequently, facing innumerable snags to repay the loans.
The borrowers will be required to individually apply for the relief and this will not affect their credit score in any way. MAS and the government together are delivering support that would suit people in the bigger picture. In yesterday’s statement, MAS explained that individuals who have subscribed to the industrial or commercial property will not be guarded by TDSR.
Nevertheless, the minimum income requirements of unsecured credit facilities will remain the same and so will the industry-wide borrowing limit to eradicate excessive debt accumulation and promote financial transparency.
Moreover, MAS spelled out that small and medium-sized businesses are not to be subjected under TDSR if they rely on payment deferments for their secured property loans which are fundamentally a part of the financial industry’s relief package.
To successfully execute the provision of credit to businesses, MAS’ present rules will be extended to permit them to fall back on MWLs that are reserved for non-residential and residential properties without any limitations from LTV and TDSR whatsoever.
https://www.straitstimes.com/business/property/limits-for-deferred-loan-payments-waived-mas
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