Loan Calculators
This calculation is based on standard reducing-balance monthly amortization (EIR). Actual bank rates and interest schedules are subject to CBS risk assessment and lender approval.
How Singapore Loan Calculations Work
In Singapore, retail and commercial bank loans operate on a reducing-balance amortization formula. Unlike a flat-rate calculation, interest is computed solely on the remaining outstanding principal balance at each monthly repayment cycle. As you pay down the principal over your loan tenure, the interest portion of each installment decreases while the principal repayment component increases.
Borrowing amounts in Singapore are strictly regulated under the Monetary Authority of Singapore (MAS) Total Debt Servicing Ratio (TDSR) framework, which mandates that an individual's total monthly debt obligations cannot exceed 55% of gross monthly income. For residential properties subject to the Mortgage Servicing Ratio (MSR), monthly mortgage payments are capped at 30% of income.
What Determines Your Approved Interest Rate?
The interest rate displayed on comparison tables represents indicative headline pricing. When financial institutions underwrite your loan, your final approved rate is determined by several core underwriting parameters:
- Credit Bureau Singapore (CBS) Risk Grade: Scores range from AA (lowest risk) to HH (highest risk), directly influencing the bank's risk margin.
- Income Documentation: Salaried employees with fixed CPF contributions often receive preferential pricing compared to self-employed individuals evaluated on 2-year NOA averages with standard haircuts.
- Collateral & Quantum: Secured loans (such as property equity financing) typically carry lower rates than unsecured personal or business credit lines.
Loan Calculator FAQs
Most Singapore bank loans use standard reducing-balance monthly amortization. In this method, each monthly installment pays off both the accrued interest on the remaining principal balance and a portion of the principal. As your principal reduces over the tenure, the interest component decreases while the principal repayment portion increases.
A flat rate calculates interest on the entire original principal for the entire loan tenure, meaning your monthly interest charges never reduce even as you repay the loan. A reducing-balance loan (EIR) calculates interest only on the remaining unpaid principal. Because reducing balance interest drops each month, a flat interest rate of 3.5% p.a. often equates to an Effective Interest Rate (EIR) of approximately 6.5% to 7.0% p.a.
The Monetary Authority of Singapore (MAS) enforces the Total Debt Servicing Ratio (TDSR), which caps your total monthly debt obligations—including home loans, car loans, personal loans, and credit cards—at 55% of your gross monthly income. For HDB flats and Executive Condominiums, the Mortgage Servicing Ratio (MSR) further caps monthly mortgage installments at 30% of gross monthly income.
Lenders determine your interest rate based on your Credit Bureau Singapore (CBS) risk grade (AA through HH), employment stability, income documentation (fixed payslips vs NOA tax assessments for self-employed/directors), existing debt commitments, and whether the facility is secured by collateral or unsecured.