How To Calculate your Debt Service Ratio DSR

Nan :	My salary is RM 3000, can I buy a house worth RM 400K?
Ng :	Do you have any commitment?
Nan :	I have a car, PTPTN, and a credit card.
Ng :	Look like DSR might be tight
Nan :	What's DSR?
Ng :	Let me explain...

What Is Debt Service Ration DSR?

DSR is a method used by banks to calculate whether or not you can afford the loan you're applying for.

When bank grant the loans, the will also analyze borrower has the ability to apply for a housing loan and to avoid the losses.

My personal advise is to keep the DSR under 60%. 

The lower the DSR ratio, the less risky it is for the borrower.

How Do You Calculate DSR?

DSR =	Existing Commitment + New Commitment		x 100%
	Net Income

Salary	DSR
RM 3,000 below	50%
RM 3,000 - RM 5,000	70%
RM 5,000 - RM 10,000	80%
RM 10,000 above	90%

Do you know which bank calculates income by Gross income or Net income?

Do you know which bank calculates income by Salaries or Income tax?

Do you know which bank taking 100% for basic salary and fix allowance, but overtime, commission, bonus and non-fix allowance are 60% or 80%?

Where Can I Find Records Of My Monthly Commitments?

Commitment : House loan, Car loan, Credit cards, ASB loan, Personal loan, PTPTN, Other term loan, etc.

Income : Basic salary, commissions, fix allowance, overtime, rental income, stock, etc.

How can I get a CCRIS report from BNM website?

How can I get a CTOS report from CTOS website?

Where Can I Calculate Of My New Monthly Instalment?

I believe everyone is concerned about the Monthly Mortgage Payment. In fact, we can search through apps, online, or even calculate manually. Of course, it's much easier to check online. 

Online :

1. Property Guru : https://www.propertyguru.com.my/mortgage/home-loan-calculator

2. Calculator : https://www.calculator.com.my/home-loan-calculator

3. iMoney : https://www.imoney.my/home-loan

4. Loanstreet : https://loanstreet.com.my/calculator/home-loan-legal-fees-stamp-duty-calculator

5. iProperty : https://www.iproperty.com.my/financing/mortgage-calculator/

6. PropertyPage : https://www.propertypages.com.my/loan-calculator

Apps store :

Android : Financial Calculator 

IOS : Ez Calculators

What Affect My DSR?

Example 1 : 

Nan want to buy a RM 300K house (90% Loan, 35 years, 4% Interest)

New Commitment	RM 1195.49
Existing Commitments
Car Loan	RM 500
PTPTN	RM 150
Net Income	RM 4500

How's the DSR ratio? Is the loan pass?

DSR =	Existing Commitment + New Commitment		x 100%
	Net Income

DSR =	500 + 150 + 1195.49		x 100%
	4500

=	41.01% DSR (Loan Approve)

Example 2 : 

Nan want to buy a RM 500K house (90% Loan, 35 years, 4% Interest)

New Commitment	RM 1992.49
Existing Commitments
Car Loan	RM 1000
PTPTN	RM 150
Credit card	RM 3000 = RM 150
(Outstanding Balance Calculate by 5%)
Net Income	RM 3500

How's the DSR ratio? Is the loan pass?

DSR =	Existing Commitment + New Commitment		x 100%
	Net Income

DSR =	1000 + 150 + 150 + 1992.49		x 100%
	3500

=	94.07% DSR (Loan Reject)

How Can I Improve My DSR?

Reduce commitment and increase income.

There's Another Factor You Need To Consider

Affordability

Nowadays, our expenses have increased due to inflation! Today RM 1 can buy a cup of coffee, and tomorrow RM 10 can buy a cup of coffee! Will you buy it?

Just like developers giving discounts or rebates, if you don't do your homework and investigate, you may lose your future value, which is your debt!

Now You Know How To Breeze Through Getting A Home Loan!

The main reason for getting loan approval depend on income documents and property documents.

Check your CCRIS / CTOS before submitting the application. Know your commitments and make sure everything okay. Find the solution before problem arise.

DSR is important, and only by understanding income and commitment can we make a better plans.