Easing of Some Property Cooling Measures - Sellers Duty and TDSR

The Government has just relaxed some of the cooling measures in place to reign in property prices in Singapore but ABSD or additonal buyer's stamp duty and the LTV or loan to valuation limits remain unchanged. Not so good news for buyers. For sellers, the SSD is cut from the 4-16% range depending on the holding period to 4-12%, a 4% cut for each holding year. The minimum holding period to escape SSD penalties was aslo reduced from 4 to 3 years.

The current TDSR restrictions state that your total loans cannot exceed a limit of 60% of your monthly gross income but now this limit will no longer apply hwen borrowers borrow against the values of their property to get cash provided the loan to value ratio is 50% or below.

Not what many investors are hoping for but its a start. To read more visit: Govt eases some property cooling measures report in the Straits Times.

One Third of Home Buyers Do Not Understand TDSR

The TDSR or Total Debt Servicing Ratio cooling measure has been highly effective in cooling down the market. According to this article by PropertyGuru - http://www.propertyguru.com.sg/property-management-news/2014/5/37778/1-in-3-home-buyers-do-not-understand-tdsr-survey, a UOB survey has shown that one out of three home buyers do no understand TDSR. Borrowers know less about how TDSR affect them than they think. TDSR takes into account all personal debt including vehicle loans and credit card bills when determining how much a borrower can loan to invest in property.

Without this understanding, buyers may find that they don't qualify for a loan for the property they desire and have to consider downsizing their investment or even give up the idea altogether. They may aspire to own a property in a good location and growth potential only to find that its out of their financial reach. The best way to start the property search is for buyers to visit their banker and get a better idea of how much they can borrow for a new property based on their current debt situation and to consider their overall financial plan carefully.