Self-Assessment – Monthly Income

How to derive your monthly income based on TDSR formula?

Part 1: Understanding Fixed income & Variable Income

Part 2: Combine Income

Part 3: To proof your net worth

Part 1: Understanding Fixed income & Variable Income

For fixed salaried employee, it is quite straightforward, your monthly income always consist of Fixed income & Variable income. Please note that, the variable income always has a “haircut” of 30%. 

For self-employed or company owner, your income, by default,is classified as “variable income”.

Apple-to-apple comparison, an employee and a self-employed both declared income is $120,000, for simplicity calculation, the employee income will be $10,000 per month, and the self-employed is $7,000 per month.

Which means self-employed borrowing capacity is lower with the same level of income. 

Different banks apply slightly different approach in referencing self-employed income, we encourage you to talk to our consultants and we will be able to assist you on the calculation.

Who will be classified as self-employed?

Full commission based job (eg, insurance agent, property agent etc) & company owner with share more than 20%. 

Fixed Income
Your basic monthly salary + fixed allowances

Income for TDSR calculation 

Variable Income

Bonus, commission,  investment property rent & certain oversea income.

X 70%

Example 1:

Eddy works as a senior manager in a MNC and withdraws a fixed salary is $10,000 per month. His last two years income tax declaration is $150,000. Which means, the company paid him $30,000 as bonus. 

His income for TDSR calculation is:

$10,000 + ($30,000 / 12) x 70% = $11,750

If I’m working in oversea?

It depends on which country. Normally, the bank will just apply a 30% haircut on your monthly salary and convert it into SGD currency with the bank’s rate. 

Part 2: Combine Income

As the co-borrowers, all individuals’ incomes could be able add up together and normally it could enhance the borrowing capacity. 

You could use Part 1 method to derive individual income and add up the numbers together. 

Part 3: To proof your net worth.

The TDSR calculation allows banks to approve mortgage based on individuals’ net worth. The net worth are only referring to LIQUIDITY asset, generally it includes, listed co share, bonds, bank deposit, saving & unit trust. Liquidity asset simply means the assets could easily convert into cash. 

Even if you own 10 paid up properties in prime area, all these properties value could not be included in TDSR calculation. If you really own paid up private properties, you could seek our consultancy services. <link or button to Request>

There are two ways to obtain approval based on net worth. One is SHOW FUND method and the other one is PLEDGING method.  

If you would like to apply mortgage based on SHOW FUND method, you are required to show your statement to the subject two times – upon application and just before disbursement of mortgage. 

For PLEDGING method, normally, you are required to transfer your fund to the subject bank before the disbursement of mortgage. The pledging fund amount is always smaller than SHOW FUND. However, you could not make use of the money for 2 – 3 years. 

Please talk to our consultants by exploring REQUEST. 

Fixed Income
Your basic monthly salary + fixed allowances

Show Fund
Your listed co share, saving bank deposit, bonds, unit trust. 

Variable Income

Bonus, commission,  investment property rent & certain oversea income.

Pledge Fund
To pledge a certain amount of money as deposit with the subject bank. 

Income types for TDSR calculations.