Navigating Malaysia’s DSR: Understand your loan eligibility with bank-specific guidelines & tips for calculating your DSR.
Introduction: Navigating Debt Service Ratios (DSR) in Malaysia’s Banking Landscape
In the intricate world of personal finance, understanding the criteria that financial institutions employ to assess creditworthiness is paramount. Debt Service Ratios (DSR) stand as a pivotal metric, shaping the lending landscape and determining an individual’s capacity for taking on financial obligations. This comprehensive guide delves into the nuances of DSR as adopted by prominent Malaysian banks, shedding light on the intricate calculations and supporting documents required.
What is Debt Service Ratio (DSR)?
Debt Service Ratio (DSR) is a financial metric used by banks to evaluate an individual’s ability to manage debt repayments in proportion to their income. It serves as a crucial indicator, providing insights into an applicant’s financial health and the feasibility of servicing additional debt. Typically expressed as a percentage, DSR reflects the proportion of an individual’s income allocated to debt repayment, including mortgages, loans, and other financial commitments.
Bank-Specific DSR Guidelines:
Maybank:
- Nett salary above RM3.5k: 70% DSR
- Nett salary below RM3.5k: 40% DSR
Supporting documents:
- Rental income: 80%
- Fix Allowance: 100%
- Non Fix Allowance / Commission: 67%
- Bonus: 2 years EA Form
Cimb
- Nett Salary RM3k – RM5k: 75% DSR
- Nett Salary RM5k – RM7k: 80% DSR
- Nett Salary RM7k – RM9k: 85% DSR
- Nett Salary above RM9k: 90% DSR
High Net Worth Exemption Criteria:
- Minimum RM1 Million FD/Cash: Maintain a fixed deposit or cash savings of at least RM1 million with banks.
- Clean Properties Worth RM1 Million: Own properties with a cumulative value of at least RM1 million, presenting a testament to financial stability.
Supporting Documents:
- Rental income: 80%
- Fix allowance: 80%
- Non fix allowance / commission: 80%
Ambank
- Nett Salary below RM10k: 70%
- Nett Salary above RM10k: 75%
Supporting Documents:
- Rental income: 80%
- Fix allowance: 100%
- Non fix allowance / commission: 85%
- Commission earner: 70%
- Bonus: 2 years EA Form
UOB Bank
- Gross Salary less than RM3k: 60% DSR
- Gross salary RM3k – RM5k: 65% DSR
- Gross salary RM5k – RM7k: 75% DSR
- Gross salary RM8k – RM15k: 80% DSR
- Gross Salary above RM15k: 85% DSR
Supporting Documents:
- Rental income: 70%
- Fix allowance: 100%
- Non fix allowance / commission: 70%
Hong Leong Bank
- Gross salary RM3k – RM5k: 60% DSR
- Gross Salary above RM5k: 85% DSR
Supporting Documents:
- Rental income: 80%
- Fix allowance / OT: 100%
- Commission: 3 months 80%, 6 months 100%
- Bonus: 2 years EA Form
OCBC Bank
- Gross Salary minimum RM5k: 60% DSR
- Gross Salary RM5k – RM7k: 60% DSR
- Gross Salary RM7k – RM15k: 70% DSR
- Gross Salary above RM15k: 80%
Supporting Documents:
- Rental income: 80%
- Non Fix allowance / Commission 80%
- Great Eastern Agent: 100%
Alliance Bank
- Gross Salary RM3k – RM5k: 60% DSR
- Gross Salary RM5k – RM10k: 80% DSR
- Gross Salary RM10k – RM15k: 75% DSR
- Gross Salary above RM15k: 90% DSR
Supporting Documents:
- Rental Income: 80%
- Fix Allowance: 100%
RHB Bank
- Gross Salary less than RM3k: 55% DSR
- Gross Salary RM3k – RM5k: 65% DSR
- Gross Salary RM5k – RM8k: 75% DSR
- Gross Salary RM8k – RM10k: 80% DSR
- Gross Salary above RM10k: 85%
Supporting Documents:
- Rental Income: 80%
- Fix Allowance: 100%
- Non Fix Allowance / Commission: 50% – 80%
- Bonus: 2 years EA Form
Affin Bank
- Gross Salary below RM5k: 60% DSR
- Gross Salary RM5k – RM10k: 70% DSR
- Gross Salary above RM10k: 80% DSR
Supporting Documents:
- Rental Income: 100%
- Fix Allowance: 100%
- Variable Allowance / Commission / OT: 80%
- Bonus: 3 years EA Form
Conclusion: Navigating the DSR Challenge
By understanding your individual DSR and familiarizing yourself with specific bank requirements, you can make informed decisions about your borrowing capacity and increase your chances of loan approval. Remember, a healthy DSR demonstrates your financial responsibility and paves the way for securing the credit you need.
Here are some key takeaways to keep in mind:
- Stay informed: Regularly monitor your income and expenses to understand your financial standing.
- Calculate your DSR: Use the provided formulas to calculate your DSR based on your specific bank’s guidelines.
- Prepare supporting documents: Ensure you have all the necessary documentation to verify your income and financial assets.
- Consider alternatives: Explore alternative financing options if your DSR falls short of the required benchmark.
- Seek professional advice: Consult a financial advisor for personalized guidance and tailored strategies.
By taking these steps, you can confidently navigate the DSR maze and secure the funding you need to realize your financial goals. Remember, responsible borrowing practices can pave the way for a more secure and prosperous future.
