By MoneyBees
Estimate the home loan a bank's in-principle approval could show from your income, debts and age under MAS's TDSR, MSR and LTV rules, with how long an IPA lasts and how it differs from HDB's HFE letter.
A bank's estimate of how much it is willing to lend you for a home, worked out from your income and debts before you commit to a property. Nothing is binding yet: the final loan depends on the price, the valuation and the bank's checks.
DBS states 30 days from the approval date, and OCBC says an approval-in-principle is typically valid for 30 days. Check the date on your own IPA, as banks set their own terms.
HDB says requesting an IPA from participating banks through the HDB Flat Portal is free of charge. If you apply to a bank directly, check its terms.
Under MAS rules your total monthly debt payments, including the new home loan tested at 4% a year or the actual rate if higher, may not exceed 55% of your income (TDSR). For HDB flats and ECs bought from developers, the home loan alone may not exceed 30% (MSR). The loan is also capped at 75% of the price or valuation for a first home loan.
No. The HFE letter is HDB's assessment of whether you can buy a flat and what grants and HDB loan you qualify for. It is valid for 9 months. An IPA is a bank's estimate of its loan. You can request both together on the HDB Flat Portal.
For a resale HDB flat you must have a valid HFE letter before you get the OTP. For a private home there is no such rule, but an IPA first tells you your budget before you pay the option fee.
Variable income such as bonuses counts at 70% at most, other debts reduce what is left for the home loan, and the 4% test rate is usually above the bank's rate. A tenure past age 65, or another home loan still running, also lowers the LTV limit.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).