Document-Ready for TDSR (Part Two: Proof of Incomes & Servicing Abilities)

TDSR (total debt servicing ratio) splits a person’s income into 2 parts: fixed monthly employment income, and others. Only fixed monthly employment income is recognized 100%, all the rest being variable are given 30% haircut, i.e. only 70% will be taken as stable income. The variable income could be your 13th month salary, bonus, rental income (if tenancy has more than 6 months to go upon loan application).

If employment/business and rental incomes are not sufficient, savings may be pledged for 48 months or non-pledged. The pledged savings will give you some level of leverage whilst the non-pledged savings could be even higher than your desired loan amount!

Stocks & shares statement could be used if savings are not sufficient but its haircut rate is even higher.

Below are common income documents to be presented for banks under TDSR requirement.

  1. Latest 3 months pay slips: This is to prove fixed monthly employment. Some banks need salary crediting bank statement to tally with the reported monthly salary. This is the only income with 100% recognition.
  2. Latest income tax assessment: the difference between the reported accessible income and 12 times fixed monthly salary is deemed “variable income”. 70% of it will be recognized. Property income is not part of the variable income and it is calculated separately.
  3. Tenancy agreement: only tenancy with minimum  6 months to go upon loan application will be recognized and as tenancy fluctuate, only 70% monthly rental is considered “stable”.
  4. Savings statement: this is an additional document to prove servicing ability if the above 3 income sources are insufficient.
  5. CDP statement: this is a supplementary document if savings statement figure is insufficient. However as a heavy haircut applies on stocks & shares as its market value changes every day, you will find the leverage power of stocks & shares are minimal.