Property: Age-Based Loan Tenure Restrictions

[jcleow]

Summary

Add age-based loan tenure restrictions to ensure realistic loan scenarios. Singapore has strict rules on maximum loan tenure based on borrower age, which directly affects loan quantum and affordability.

Why This Matters

• Older borrowers have shorter maximum loan tenure
• Shorter tenure = higher monthly payments = lower affordability
• LTV (Loan-to-Value) may also be reduced for older borrowers
• Stress testing at 4% is required in certain scenarios

Loan Tenure Limits

Property Type	Maximum Tenure	Age Limit
HDB (HDB loan)	25 years	65 - age of youngest borrower
HDB (Bank loan)	30 years	65 - age OR 30 years (whichever lower)
Private (≤30 yrs old)	35 years	No restriction
Private (>30 yrs old)	35 years	75 - age of youngest borrower

LTV Adjustments by Age

When loan tenure + borrower age exceeds certain thresholds:

• LTV reduced by 5% (e.g., 75% → 70%)
• MSR/TDSR stress tested at 4% instead of actual rate

Thresholds

• HDB: Tenure + age > 65
• Private (≤30yr tenure): Tenure + age > 65
• Private (>30yr tenure): Tenure + age > 75

Proposed Data Fields

interface BorrowerAgeConfig {
  borrower1DateOfBirth: string     // For age calculation
  borrower2DateOfBirth?: string    // For joint borrowers
}

// Computed
interface LoanConstraints {
  maxTenureYears: number           // Based on age
  adjustedLTV: number              // May be reduced for older borrowers
  isStressTestRequired: boolean    // If tenure + age > threshold
  stressTestRate: number           // 4% for stress test
}

UI Integration

• Age input for each borrower (or derive from linked income record)
• Warning when tenure exceeds age-based limits
• Auto-suggest maximum allowed tenure
• Display stress-tested MSR/TDSR alongside actual ratios
• LTV adjustment indicator when applicable

Acceptance Criteria

• Borrower age can be entered or derived from profile
• Maximum tenure auto-calculated based on age and property type
• Warning shown if user enters tenure exceeding limit
• LTV adjustment applied when threshold exceeded
• Stress-tested MSR/TDSR displayed when applicable
• Joint borrower scenario uses youngest borrower's age

References

• MAS Loan Tenure Rules
• HDB Housing Loan Rules

Labels

property, enhancement, P1

[linear]

ASS-71